Fleming v. McFerson

• Decision Date: 06 November 1933
• Docket Number: 13038.
• Citation: 94 Colo. 1,28 P.2d 1013
• Parties: FLEMING et al. v. McFERSON, Bank Com'r.
• Court: Colorado Supreme Court

28 P.2d 1013

94 Colo. 1

FLEMING et al. v. McFERSON, Bank Com'r.

No. 13038.

Supreme Court of Colorado, En Banc.

November 6, 1933

Rehearing Denied Jan. 22, 1934.

Error to District Court, City and County of Denver; Charles C Sackmann, Judge.

Action by Calvin Fleming against Grant McFerson, as State Bank Commissioner. To review a judgment in favor of the defendant and against the plaintiff and the Union Indemnity Company of New Orleans, Louisiana, surety on a bond given to obtain release of property from the defendant's asserted lien the plaintiff and the surety bring error.

Judgment affirmed.

HILLIARD and BOUCK, JJ., dissenting.

Benedict & Phelps, of Denver, for plaintiffs in error.

Van Cise & Robinson and J. E. Robinson, all of Denver, for defendant in error.

BUTLER Justice.

On December 29, 1930, Grant McFerson, as state bank commissioner, was in possession of the property and assets of the Farmers' State Bank of Brighton, for the purpose of liquidation on behalf of the creditors, and Wellington J Campbell was the owner of thirteen shares of the bank stock. At that time the record title to three parcels of land, referred to as parcels 1, 2, and 3, stood in Campbell; but the purchase price had been paid by Calvin Fleming, who caused title to vest in Campbell for convenience only. It is stipulated that a resulting trust arose in favor of Fleming. There was nothing of record showing that he had any interest in the property. Acting pursuant to section 2696, Compiled Laws, as amended by Session Laws of 1923, c. 67, § 1, p. 185, McFerson, on the date given above, without any knowledge or notice of Fleming's secret equity, filed in the office of the clerk and recorder of Denver a statement claiming a lien on account of Campbell's liability as stockholder. Thereafter Campbell conveyed the property to Fleming.

On May 28, 1931, Fleming sued McFerson to remove from the former's title to the property the cloud created by the filing of that statement. McFerson filed an answer, and in a counterclaim sought a foreclosure of the lien. By agreement, a bond was substituted for the property, which was thereupon released from the lien. It was stipulated that in case the lien should finally be adjudged to be valid and enforceable against the property, or any part thereof, judgment for the amount thereof should be rendered against the principal, Fleming, and the surety, Union Indemnity Company of New Orleans.

The court found the issues in favor of Fleming as to parcel 3, and decreed that the cloud upon his title thereto be removed. As to parcels 1 and 2, the court found the issues in favor of McFerson, and rendered judgment for $2,808 against Fleming and the Union Company, who are here seeking a reversal of the judgment against them.

1. It is said that as the act of 1923, supra, gives the lien upon real estate 'of' the stockholder, the property in question was not subject to the lien because it did not belong to, was not the property of, the stockholder, Campbell, for he held merely the naked legal title in trust for Fleming, who alone was the beneficial owner.

A contention somewhat similar to that has been made in cases of execution and judgment liens. Section 5898, Compiled Laws, provides that 'the judgment shall become a lien upon all the real property of such judgment debtor,' and that 'all and singular the * * * real estate of every person against whom any judgment shall be obtained in any court of record' may be sold on execution. Where a judgment debtor having the record title to real property conveys it to another, he parts with his title and thereafter does not have even a naked legal title; and yet if Before the recording of the deed the judgment creditor, without notice of the conveyance, files a transcript of the judgment, the lien of his judgment is superior to the rights of the grantee in the deed. In Wedman v. Carpenter, 65 Colo. 63, 65, 173 P. 57, 58, we said: 'It is settled in this state that the lien of a judgment creditor stands upon the precise footing as that of an innocent purchaser or incumbrancer in good faith, subject to the same tests as to good faith and regularity generally. * * * It is well settled in this jurisdiction that the rights acquired by a bona fide purchaser of real estate without notice of an unrecorded deed are not measured by the actual interest of the seller in the land, but rather by his apparent interest.' And see Donahue v. Kohler-McLister Paint Co., 81 Colo. 244, 254 P. 989. The same rule applies as between a judgment and a resulting trust. In Western Chemical Mfg. Co. v. McCaffrey, 47 Colo. 397, 107 P. 1081, 135 Am.St.Rep. 234, we said: 'Authorities are cited holding that a judgment lien does not prevail over prior equitable claims, and that it attaches to the actual, rather than to the apparent, interest of the judgment debtor. But these authorities are not from the appellate courts of this state, and in this jurisdiction a contrary doctrine prevails. McMurtrie v. Riddell, 9 Colo. 497, 13 P. 181; Campbell v. Bank, 22 Colo. 177, 43 P. 1007. No resulting trust nor unrecorded deed can operate to defeat the right of a judgment creditor who has caused his judgment to become a lien by proper record, unless the creditor had notice of the trust or unrecorded deed at the time his lien attached.' And in this respect an execution creditor stands in the same favorable position as a judgment creditor. McMurtrie v. Riddell, 9 Colo. 497, 13 P. 181; Hallett v. Alexander, 50 Colo. 37, 114 P. 490 [34 L.R.A. (N. S.) 328, Ann.Cas. 1912B, 1277]. There is no substantial reason why the same rule should not be applied in favor of a bank commissioner who files a statement claiming a statutory lien. The act of 1923, supra, provides that 'from the date of filing of such statement the same shall be a lien upon any real estate of such shareholder located in such county.' McFerson is a lienor. A lien is an incumbrance. Fisk v. Cathcart, 3 Colo. App. 374, 33 P. 1004. Lienors, and other incumbrancers, stand in the same position as purchasers.

2. As we have seen, when he filed the statement, thereby acquiring a lien, McFerson had no knowledge or notice of Fleming's secret equity. It is said, however, that at the time of the filing of the lien statement Fleming was in possession of parcel 2, and that his possession was notice of his interest therein. But at the time of the filing of the lien statement parcel 2 was vacant and unoccupied, unless, as contended by Fleming, he caused material to be delivered there thirteen days Before such filing, preparatory to the erection of a house. There is some uncertainty, whether or not the contention is supported by the stipulation. Be that as it may, no such contention is made as to parcel 1. As the lien was adjudged to be valid and enforceable as against that parcel, if we sustained the present contention as to parcel 2, it would not affect the result, for the stipulation provides that judgment should be rendered against the principal and the surety on the bond if a lien should finally be adjudged valid and enforceable against any part of the property. 3] 3. Another point urged by counsel for Fleming is that the act of 1923, supra, as we construe it, deprives their client of his property without the due process of law guaranteed by the federal and state Constitutions (Const. U.S. Amend. 14, § 1; Const. Colo. art. 2, § 25), and for that reason is void. The specific objections are that the act attempts to create a lien upon the mere filing of the lien statement without any preliminary notice or hearing, and that the act provides no steps for foreclosure of...