Garnier v. Wheeler

• Decision Date: 09 December 1901
• Citation: 40 Or. 198,66 P. 812
• Parties: GARNIER et al. v. WHEELER et al.
• Court: Oregon Supreme Court

66 P. 812

40 Or. 198

GARNIER et al. v. WHEELER et al.

Supreme Court of Oregon

December 9, 1901

Appeal from circuit court, Washington county; T.A. McBride, Judge.

Action by Jean Baptiste Emile Garnier and others against Ira E Wheeler and others. From a judgment for defendants plaintiffs appeal. Affirmed.

This is a suit to set aside a deed as to a part of the real property conveyed thereby, and to subject such part to the payment of a judgment. The admitted facts are that the defendant Ira E Wheeler executed to B. Phillips, August 19, 1893, three promissory notes, each for the sum of $200, payable in 90 150, and 210 days, respectively; that Wheeler was then the owner of the property so conveyed, which, on October 5, 1893, for the expressed consideration of $8,000, he conveyed to his brother, the defendant David R. Wheeler; that said notes were assigned to the plaintiffs, and, no part thereof having been paid, they, on April 13, 1895, secured a judgment in the circuit court for Multnomah county against the maker for the amount due thereon, and on February 25, 1897, executions theretofore issued thereon to the sheriffs of Mutnomah and Washington counties were returned nulla bona; that David Wheeler conveyed away a part thereof, and now owns only lots Nos. 1, 2, 3, 4, 5, 7, 8, 10, 11, 12, and the west half of lot 9, in Wheeler's subdivision, in Washington county, as appeared by the recorded plat thereof. It is alleged in the complaint that Ira E. Wheeler fraudulently conveyed said land to his brother without consideration, and with intent to hinder, delay, and defraud his creditors; that upon the execution of the deed he became, and still is, insolvent; and that no part of said judgment has ever been paid. The defendant David R. Wheeler, answering the complaint, denied the material allegations thereof, and averred that at the time said deed was executed his brother was indebted to him in the sum of $2,700; that said premises were subject to the lien of a mortgage to secure the sum of $1,250 and interest, the payment of which he assumed; that he paid his brother the sum of $1,500, and executed to him a promissory note for the sum of $2,000, in consideration of said land, and that he had fully paid said note; that he purchased said premises, and paid full value therefor, without notice or knowledge of plaintiff's claim, and without fraudulent intent of any kind or character whatever. The reply having put in issue the allegations of new matter in the answer, a trial was had, resulting in a decree dismissing the suit, and plaintiffs appeal.

H.H. Emmons and J.W. Bell, for appellants.

S.B. Huston and T.H. Tongue, for respondents.

MOORE J. (after stating the facts).

The question presented for consideration is as to whether David R. Wheeler was an innocent purchaser for a valuable consideration, without knowledge or notice of any bad intent on the part of his brother. "Three things," says Mr. Wait in his work on Fraudulent Conveyances (section 369), "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." Every conveyance of any estate or interest in lands made with the intent of hindering, delaying, or defrauding creditors is voidable as to them. Hill's Ann.Laws, § 3059; Bradtfeldt v. Cooke, 27 Or. 194, 40 P. 1, 50 Am.St.Rep. 701.

The grantor's intent to defraud his creditors, however, will not defeat the title of a purchaser for a valuable consideration, unless it appears that the latter had previous notice of such intent (Hill's Ann.Laws, § 3062; Lyons v. Leahy, 15 Or. 8, 13 P. 643, 3 Am.St.Rep. 133; Philbrick v. O'Connor, 15 Or. 15, 13 P. 612, 3 Am.St.Rep. 139); the rule being that the deed will not be set aside for fraud unless it appears that the grantee accepted a conveyance with knowledge of the grantor's fraudulent intent, thereby participating in the fraud ( Bonser v. Miller, 5 Or. 110). The fraudulent intent is a question of fact (Hill's Ann.Laws, § 3062), which may be established by direct proof, or, in a suit in equity, inferred from the facts and circumstances surrounding the transaction ( Coolidge v. Heneky, 11 Or. 327, 8 P. 281; Lyons v. Leahy, supra; Philbrick v. O'Connor, supra). A conveyance of real property to a relative is always closely scrutinized when the bona fides of the transaction is challenged by the grantor's creditors; the presumption in such cases being that the fraudulent intention of the grantor, by reason of the intimacy of the parties, must have been known to, and participated in by, the grantee. Jolly v. Kyle, 27 Or. 95, 39 P. 999; dman v. Nicolai,

28 Or. 34, 40 P. 1010; Flynn v. Baisley, 35 Or. 268, 57 P. 908, 45 L.R.A 645, 76 Am.St.Rep. 495. The evidence shows that the defendant Ira E. Wheeler owned lot 3, block 22, in Wheeler's addition to East Portland, which was attached October 4, 1893, in an action brought against him in the circuit court for Multnomah county by the Gambrinus Brewing Company to recover the sum of $400, with interest from August 19, 1893, James Hume, who lived in Washington county, near the residence of David R. Wheeler, appearing as plaintiffs' witness, testified that on the day Ira E. Wheeler's property was attached he met the latter in Portland, and was requested by him to tell his brother David R. to meet him in Hillsboro the next day, and accept a transfer of said real property. The witness, being requested to "state what that conversation was,"said: "I was in there, and Mr. Wheeler asked me if I was going out, and I said I was going out to-night, and he asked me if I would come down to his brother's, and tell him what to do,--to come up here. Q. What...