Letson v. Reed

• Decision Date: 10 November 1880
• Citation: 7 N.W. 231,45 Mich. 27
• Court: Michigan Supreme Court
• Parties: LETSON v. REED and another.

7 N.W. 231

45 Mich. 27

LETSON v. REED and another.

Supreme Court of Michigan

November 10, 1880

Where a fraud has been committed, third persons claiming rights based thereon must show themselves bona fide purchasers. This cannot be shown from a purchase alone. The evidence in this held insufficient to show that defendant was a purchaser in good faith.

Appeal from Cass.

Edward Bacon, for complainant.

O.W Coolidge, for defendants and appellants.

MARSTON C.J.

That Letson was most grossly defrauded by Abel in their land trade has not been and could not be controverted. It but remains to ascertain whether Reed is a bona fide purchaser from Abel and we are of opinion that he has not shown himself to be such. This court has distinctly held that where a fraud has been committed, third parties in order to build up a right thereunder must establish the fact that they are bona fide purchasers and that this cannot be inferred from showing a purchase alone. Berry v. Whitney, 40 Mich. 71.

There is evidence tending to show that Reed was such a purchaser but it would be far from satisfactory even if standing alone and when considered in the light of the surrounding circumstances, its effect as such is entirely destroyed.

The exchange of conveyances between Letson and Abel was made December 24, 1877. On January 2, 1878, Letson suspecting that he had been defrauded went to Pokagon, saw Abel and requested him to trade back farms which Abel agreed to do and the next day at Niles was agreed upon as the time and place for such exchange. After this interview and on the same day, January 2d. Abel conveyed the Letson farm to defendant Reed subject to two mortgages thereon which Reed was to pay as part of the consideration. Abel was indebted to Reed in the sum of $374.84 and to Reed & Post $25--these sums were to be deducted and the balance was to be paid to Abel. One of the mortgages had been given to Letson and there was about $71 due thereon; the other had been given by Abel to one Newton, but not recorded, as his, Newton's, share for assisting Abel in making the trade with Letson.

Reed before making the purchase did not go to see the land, but claims he had some knowledge of its location and value; he examined an abstract of title furnished him which did not show the Newton mortgage, or the amount due on the mortgage given by Letson; he took Abel's statement as to the amount due or to become due upon these...