Donaldson v. Jacobitz
| Decision Date | 06 June 1903 |
| Docket Number | 13,168 |
| Citation | 67 Kan. 244,72 P. 846 |
| Parties | ARMINTA E. DONALDSON et al. v. A. JACOBITZ |
| Court | Kansas Supreme Court |
Decided January, 1903.
Error from Marion district court; O. L. MOORE, judge.
Judgment reversed and cause remanded.
SYLLABUS BY THE COURT.
LIMITATION OF ACTION--Action to Set Aside Fraudulent Conveyance. An action by a creditor to set aside as fraudulent a deed made to his debtor's wife, and to subject the property to the payment of his debt, is ordinarily barred in two years from the time the deed was recorded, where the creditor knew of the execution of the deed at the time it was made but supposed that it named his debtor as grantee. The fraud is deemed to have been discovered whenever in the exercise of reasonable diligence it might have been discovered, and in such a case reasonable diligence required an examination of the record, which would necessarily have disclosed the fraud alleged. While the action referred to could not be brought until the claim was reduced to judgment, the running of the statute of limitations could not be indefinitely postponed by the delay of the creditor to begin proceedings for that purpose, and such delay could in no event exceed two years without resulting in a complete bar to the action.
Dickerson & Miesse, for plaintiffs in error.
R. L King, for defendant in error.
OPINION
In August, 1895, A. Jacobitz became surety for George T. Donaldson on a note to H. M. Thorp for $ 3000. This note was renewed at intervals of several months by new notes signed by Donaldson as principal and Jacobitz as surety until June 2, 1899, when such a note was given for a balance of $ 1068.63. This note not being paid, Thorp sued Donaldson and Jacobitz, and on December 10, 1900, obtained a judgment against both. On February 18, 1901, Jacobitz paid the judgment, and by proper notice under section 480 of the code (Gen. Stat. 1901, § 4926) preserved the judgment for his benefit in enforcing repayment from Donaldson. On March 30, 1897, a tract of land was conveyed to Arminta E. Donaldson, the wife of George T. Donaldson, by a deed which was recorded on the same day. On October 22, 1901, Jacobitz brought an action to subject this land to the payment of his judgment, alleging that it had been bought and paid for by George T. Donaldson; that the title had been taken in his wife for the purpose of defrauding plaintiff and other creditors, and that plaintiff did not discover the fraud until the summer of 1900. Upon a trial, judgment was given for plaintiff, which defendants now seek to reverse.
The only serious question involved is whether the statute of limitations had barred the action. Plaintiff in error maintains that the recording of the deed was constructive notice to plaintiff, and that the statute of limitations began to run from the time it was recorded, citing Black v. Black, 64 Kan. 689, 68 P. 662, as decisive of the question. Defendant in error contends, first, that constructive notice is not sufficient in such a case; that the right of action did not accrue until actual notice of the fraud, and relies on Duffitt v. Tuhan, 28 Kan. 292; and second, that, the action being in the nature of a creditor's bill, it could not be brought until the claim was reduced to judgment, and that the statute of limitations did not begin to run until then.
The case of Laird v. Kilbourne et al., 70 Iowa 83, 30 N.W. 9, cited in Black v. Black, supra, holds that in an action to set aside a fraudulent conveyance of real estate the fraud is conclusively presumed to be discovered when the conveyance is filed for record. This rule, which is followed in several later Iowa cases, is exceptional only in that it makes the recording of the deed notice of the fraud as well as of the mere fact of the making of the deed. The usual rule is that the recording of the deed is notice of its execution and contents, but not of the fraud. (14 A. & E. Encycl. of L., 2d ed. 355, note 2; Black v. Black, supra, and authorities there cited; Lewis v. Duncan, 66 Kan. 306, 71 P. 577; Gillespie v. Cooper, 36 Neb. 775, 55 N.W. 302; Hughes v. Littrell, 75 Mo. 573.) In the present case the circumstances are such that notice of the terms of the deed would necessarily be notice of the fraud, since plaintiff testifies that he knew of the purchase of the property and supposed that the deed was made to his debtor. The alleged fraud consisted in having the deed name Donaldson's wife as grantee, and showed upon the face of the deed.
There is no conflict in principle between the decision in Black v. Black, supra, and that in Duffitt v. Tuhan, supra. In the latter case it was said, the language being adopted almost literally from McMahon v. McGraw, 26 Wis. 614:
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Cratin v. Cratin
... ... Co. v. Williams, 127 S.W ... 791; Duphorne v. Moore, 107 P. 791; Black v ... Black, 64 Kan. 689, 68 P. 662; Donaldson v. Jacobitz, 67 ... Kan. 244, 72 P. 846 ... A ... judgment that merely ought to be nullified is still a ... judgment ... ...
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... ... Tel. Co. v. Williams, 127 S.W. 791; Duphorne v. Moore, 107 P ... 791; Black v. Black, 64 Kan. 689, 68 P. 662; Donaldson v ... Jacobitz, 67 Kan. 244, 72 P. 846 ... A ... judgment that merely ought to be nullified is still a ... judgment ... ...
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...discovered has been the settled law of this state as announced in a continuous succession of cases. A few of them are: Donaldson v. Jacobitz, 67 Kan. 244, 72 P. 846; Dusenbery v. Bidwell, 86 Kan. 666, 676-677, 121 P. 1098; Rogers v. Lindsay, 89 Kan. 180, 181-182, 131 P. 611; Foy v. Greenwad......
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...P. at 826. The first exception to the Black rule that may apply here is the exception for fiduciary relationships. In Donaldson v. Jacobitz, 67 Kan. 244, 72 P. 846 (1903), the court reconciled Black with an earlier case, Duffitt v. Tuhan, in which no constructive notice had been found from ......