Crandall v. Lee

• Decision Date: 07 January 1916
• Docket Number: 12877.
• Citation: 154 P. 190,89 Wash. 115
• Parties: CRANDALL et al. v. LEE.
• Court: Washington Supreme Court

154 P. 190

89 Wash. 115

CRANDALL et al. v. LEE.

No. 12877.

Supreme Court of Washington

January 7, 1916

Department 1. Appeal from Superior Court, Kitsap County; Walter M French, Judge.

Suit to quiet title by W. F. Crandall and others against Elizabeth M Lee. Judgment for defendant, and plaintiffs appeal. Affirmed.

Shorett McLaren & Shorett, of Seattle, for appellants.

Thomas Stevenson, of Bremerton, for respondent.

CHADWICK J.

On Feb. 6, 1911, the appellant W. F. Crandall an another brought suit against Milton S. Lee, husband of the defendant, in the district court of New Mexico. Judgment was rendered in the courts of that state on April 20, 1911. On February 1st Milton S. Lee conveyed the land now in controversy to respondent by deed sufficient in form. The property is situate in the county of Kitsap, in this state. At the same time Lee conveyed to respondent 480 acres of land in the state of Arkansas. The deed to the Kitsap county land was recorded in the office of the auditor on the 7th day of February, 1911.

On June 19, 1911, the judgment creditors began an action upon the foreign judgment, making Lee and his wife defendants. The Lees are nonresidents. Service was obtained by publication after the lands had been subjected to an attachment. The defendant Elizabeth M. Lee, respondent here, made answer, tendering the general issue, and that the court rendering the judgment had obtained no jurisdiction over her or the subject-matter of the action. Judgment was entered on June 29, 1912, against Milton S. Lee and the community consisting of Milton S. Lee and Elizabeth M. Lee. The property was thereafter sold at sheriff's sale to these appellants. The sale was confirmed and a sheriff's deed executed. Thereupon appellants brought an ordinary suit to quiet title to the land as against the outstanding deed of the defendant.

After a trial upon the merits the court, following the case of Wagner v. Law, 3 Wash. 500, 28 P. 1109, 29 P. 927, 15 L. R. A. 784, 28 Am. St. Rep. 56, as we are told, held that plaintiffs could not recover under their complaint. It is not clear from the record, but it would seem, that the court treated the action as a suit by creditors to subject land alleged to have been conveyed in fraud of their rights to the payment of their claims, and, under the authority of the case mentioned, held that it was necessary for the plaintiffs to allege and prove that the debtors had no other property subject to execution at the time the conveyance was made, and rendered a judgment in favor of the defendant upon the theory that the complaint did not state a cause of action.

Appellants contend: First, that they are within the rule of Wagner v. Law, if it be in point; and, second, that it is not in point, for the reason that in that case the conveyance was not made by a husband to a wife, and therefore 'presumptively fraudulent' as to creditors; and, further, that the case went off on demurrer, whereas the present case was tried upon its merits, and we will, under a settled line of authority, deem the pleadings amended to conform to the proofs. Appellants brought their action, alleging no more than that they were the owners in fee of the property, that defendant claimed some right or title in it adverse to them, the exact nature of which they could not aver, and prayed that she be required to come in and set up her interest, if any, and that title be quieted in them.

The case of Wagner v. Law settled two legal propositions. They are: A creditor may levy an execution upon property theretofore conveyed in fraud of his right and sell it without resort to a creditor's bill and without having an execution returned nulla bona; and, second, if he brings an action to quiet the title acquired at an execution sale, he must go further than to assert merely that the sale was made in fraud of his rights, as was done in Wagner v. Law. He must allege and prove that the grantor had no other property out of which he could have satisfied the judgment. The case has been followed in: Hamilton Brown Shoe Co. v. Adams, 5 Wash. 335, 32 P. 92; Samuel v. Kittenger, 6 Wash. 266, 33 P. 509; Sawtelle v. Weymouth, 14 Wash. 21, 43 P. 1101; Preston Parton Mill Co. v. Dexter Horton Co., 22 Wash. 236, 60 P. 412, 79 Am. St. Rep. 928. In the latter case the court said of Wagner v. Law:

'A careful examination of this case shows that it was an action by the judgment creditor to set aside a fraudulent conveyance which was alleged to be a cloud upon plaintiff's title. The plaintiff was a creditor, and had, under execution, purchased the property. The real question in the case seemed to be that the judgment creditor had a right to maintain his action to set aside the fraudulent conveyance after he had enforced his execution under his judgment; that it was not then too late for him to maintain his action. The suit was between the judgment creditor and the fraudulent grantor and grantee. But it was also held in that case that the complaint did not state facts sufficient to constitute a cause of action, when it failed to allege that there was no other property of the judgment creditor at the time of the conveyance out of which the creditor could satisfy his judgment.'

It is clear that appellants' complaint is bad under the doctrine of these cases, unless, as it is contended, the burden was upon the defendant wife to come forward and plead and prove that the deed was executed in good faith, or that appellants were not creditors having an existing equity.

After mature consideration and a rereading of the cases referred to, we are inclined to hold that one who questions a deed must plead the facts upon which he relies. This must of necessity be so, unless we admit appellants' contention that a deed from a husband to his wife is 'presumptively fraudulent.' If it is not to be treated as a void thing as to third parties, the complaint is clearly insufficient. Appellants contend in their brief that it is a void deed. The complaint does not in any way describe the deed, although it was a matter of record and reveals the relationship of the parties. To hold the complaint good would permit a plaintiff to claim title merely and put a defendant to the burden of setting up the deed which is assumed to be fraudulent and the facts which are relied on to exonerate it from an imputation arising from the single fact that the grantor was a husband and the grantee a wife.

If the law is as appellants inist it is, they would be entitled to judgment on the pleadings unless defendant had set up the good faith of the deed, although it is nowhere mentioned in the pleadings. On the other hand, if respondent had set up the deed and nothing more in answer to a complaint charging no fraud, but only title and an outstanding adverse interest, defendant would be entitled to a judgment on the pleadings, for the obvious reason, as we shall show, that the deed was neither fraudulent nor 'presumptively fraudulent.' In other words, respondent is not to be put to her burden of proof (there is no presumption; the difference in these terms is explained in Welch v. Creech, 153 P. 355) until a charge of fraud actual or constructive is made. This is but another way of saying that appellants' complaint does not state a cause of action.

We understand the rule governing the conduct of a creditor who questions a transaction of the kind now under consideration, as it is gathered from our decisions, to be: If he levies an execution and sells property assumed to be conveyed in fraud of creditors, he may do so, but such proceeding will not remove the cloud of an outstanding deed. If he does so sell, and would remove the cloud, he must make a direct attack upon the deed by alleging its fraudulent character, and by pleading and proving that his debtor has no other property out of which he can satisfy his debt.

Expressions to the effect that a deed from a husband to a wife is 'presumptively fraudulent' have crept into some of our opinions. Dill v. Carver, 70 Wash. 103, 126 P. 86; Patterson v. Bowes, 78 Wash. 476, 139 P. 225. In its proper setting of fact this statement may be true, but it cannot be laid down as a fundamental either of substantive law or of pleading. Such a deed may be questioned as any other deed, and, if attacked by a sufficient pleading and preliminary proof, the burden is upon the one who claims the benefit of the transaction to explain it by clear and satisfactory evidence. One who would do so must be a creditor having an existing equity--a cause of action--at the time of the transfer, and he must allege the relationship, the transfer, and that the grantor is without other property to satisfy his debt. Whenever the question has been squarely put up to the court, it has held that a deed from a husband to his wife carries no presumption of fraud. Such deeds have the sanction of the statute (Rem. & Bal. Code, § 8766).

'As between the parties [husband and wife] the conveyance was absolute and good as against the grantor,' so good in fact, as the court continues, 'no interest, legal or equitable remained in the grantor upon which

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