Coffey v. Scott

• Decision Date: 16 September 1913
• Parties: COFFEY v. SCOTT.
• Court: Oregon Supreme Court

135 P. 88

66 Or. 465

COFFEY v. SCOTT.

Supreme Court of Oregon

September 16, 1913

Appeal from Circuit Court, Grant County; Dalton Biggs, Judge.

Suit by John B. Coffey, as administrator of the estate of Grant Scott, deceased, against Elizabeth J. Scott. Decree for plaintiff, and defendant appeals. Reversed, and suit dismissed.

This is a suit by an administrator of an estate, confessedly insolvent, to set aside a conveyance by the decedent in his lifetime, alleged to have been made with intent to defraud creditors. It is charged that the defendant, the mother of the decedent, to whom the land was sold, paid no consideration for the deed, but conspired with him to cheat and defraud his creditors, in pursuance of which he voluntarily executed the conveyance in question. The complaint is challenged by the answer in material particulars, and the defendant further alleges, in substance that she paid a valuable consideration for the realty, and took title to the same as a purchaser in good faith, without any notice of any intent on the part of her grantor to defraud creditors. The answer, in turn, is traversed by the reply.

I.N Smith, of Portland (John F. Logan, of Portland, on the brief), for appellant.

Raphael Citron, of Portland (John C. Shillock, of Portland, on the brief), for respondent.

BURNETT, J. (after stating the facts as above).

In Oregon the law pertinent to cases of this kind is statutory. It is enacted in substance by section 7397, L.O.L., that every conveyance of any estate or interest in lands, made with the intent to hinder, delay, or defraud creditors of their lawful suits or debts, as against the person so hindered, delayed, or defrauded, shall be void. Other sections applicable are here quoted in full:

"Sec 7400. The question of fraudulent intent in all cases arising under the provisions of this chapter shall be deemed a question of fact, and not of law.

"Sec 7401. The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration, unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor or of the fraud rendering void the title of such grantor."

It is necessary under this section to ascertain whether or not a valuable consideration was paid for the real property in question; and, if that is determined in the affirmative, the matter is still open to the further inquiry of whether or not the purchaser had previous notice of the fraudulent intent of his grantor, if there was such intent.

On the question of notice, while it is true that from the very nature of things notice and intent must be proved often by circumstantial evidence, and that it is frequently impossible to get direct testimony on these points, yet, as said by Mr. Justice Wolverton, in Raymond v. Flavel, 27 Or. 219, 40 P. 158: "The notice must be more than would excite the suspicion of a cautious and wary person; it must be so clear and undoubted, with respect to the existence of a prior right, as to make it fraudulent in him afterwards to take and hold the property."

It is also stated by Mr. Justice Watson, in the case of Hurford v. Harned, 6 Or. 362: "That a court of equity will never presume fraud when the transaction under their investigation is equally susceptible of two explanations, one of which is consistent with a fraudulent intent, and the other with good faith and fair dealing. In such case, that construction of the acts of the parties which is consistent with good faith and fair dealing will be preferred." See, also, Sabin v. Columbia Fuel Co., 25 Or. 15, 34 P. 692, 35 P. 854, 42 Am.St.Rep. 756. The standard approved by Mr. Justice Moore, in Garnier v. Wheeler, 40 Or. 198, 66 P. 812, and derived from Wait on Fraudulent Conveyances, is this: "Three things must concur to protect the title of the purchaser: (1) He must buy without notice of the bad intent on the part of the vendor; (2) he must be a purchaser for a valuable consideration; and (3) he must have paid the purchase money before he had notice of the fraud." With these principles in view we proceed to examine the testimony in the case.

The land consisted of two quarter sections of timber land in Grant county, the title to which was in the decedent prior to the conveyance in dispute. He had been operating a liquor saloon in Portland for a number of years. After his death all the property which came into the hands of the administrator was only of the value of about $1,500, while claims in the neighborhood of $5,000 had been presented against the estate. For about two years the deceased had lived with his mother and sister. Prior to that time he had lived in rooms in the city of Portland, having been divorced from his wife, who had removed to California with their two children. He died of pulmonary tuberculosis about seven weeks after the execution of the deed in question. His sister was a pianist, who gave music lessons, belonged to the Musicians' Union, and played in theaters and for dancing parties as a regular business. She testified that, as a result of several years' savings, she had accumulated $1,900, which at the time of the execution of the deed was on deposit in the savings department of the Security Savings & Trust Company, a bank in the city of Portland. As to the fact that she had the money on deposit there, she is corroborated by the testimony of the paying teller of the bank. There is no intimation in the testimony that the money was or could have been obtained otherwise than as stated by the defendant's witnesses.

For some time prior to the execution and delivery of the deed creditors of the deceased had been urging him to some extent to reduce his indebtedness. He told them of his ownership of the realty in dispute, and said that when he could make sale of the property he would pay them. No action was taken to compel him to pay, and he was allowed to continue in business. The testimony shows that he worried considerably about his creditors, and communicated his troubles to his mother. She, in turn, laid the case before the daughter, and the upshot of the matter was that the daughter loaned the money to the mother, who paid it to the decedent and took the conveyance in...