Lynch v. Burt

• Decision Date: 24 August 1904
• Docket Number: 1,895.,1,894
• Citation: 132 F. 417
• Parties: LYNCH v. BURT et al. BURT et al. v. LYNCH et al.
• Court: U.S. Court of Appeals — Eighth Circuit

132 F. 417

LYNCH v. BURT et al.

BURT et al. v. LYNCH et al.

Nos. 1,894, 1,895.

United States Court of Appeals, Eighth Circuit.

August 24, 1904

[Copyrighted Material Omitted]

George S. Grimes (Robert M. Pollock, on the brief), for Lynch Dwinnell, and Grimes.

James B. Kerr, W. P. Warner, and Stiles W. Burr (D. G. Maclay and Charles G. Lawrence, on the brief), for Burt and Phipps.

Before SANBORN and VAN DEVANTER, Circuit Judges, and SHIRAS District Judge.

VAN DEVANTER, Circuit Judge.

These are cross-appeals from a decree declaring certain transfers and mortgages of lands in Steele county, in the state of North Dakota, fraudulent and void against the creditors of Bartholomew Pickert, quieting (subject to the performance of a prescribed condition) Lynch's title to these lands obtained through execution sales upon judgments against Bartholomew Pickert, and dismissing Burt's cross-bill seeking to have such execution sales declared unauthorized fraudulent, and void, or, if they should be sustained, to effect a redemption therefrom. The printed record and the briefs of counsel are voluminous, the former covering 1,400 pages and the latter 500 pages. There is much conflict in the evidence, and counsel differ widely- as to the facts proved and the rules of law applicable. The printed record and the briefs have been attentively read, and, with the oral arguments, have been carefully considered, but the reasonable limits of an opinion permit only a statement of what we deem to be the salient facts and the controlling principles of law.

January 20, 1892, Bartholomew Pickert, the owner of the legal title to the lands in controversy, embracing 10 1/4 sections executed to the Pickert Land, Grain & Stock-Raising Company a deed for nine sections, but the deed was withheld from record until March 1, 1893. October 10, 1892, he executed to Fannie Pickert (now Fannie Snow), a brother's daughter, a $5,500 mortgage on the remaining section and a quarter. October 17, 1894, he executed to the same niece, upon the same lands, a $1,500 mortgage. This deed and these mortgages were without any consideration, and the purpose of their execution was to cover up Bartholomew Pickert's property and place it beyond the reach of his creditors. The execution and recording of the deed to the stock-raising company were not followed by any change in the possession, control, or management of the nine sections, or by any change in the use of the income therefrom. June 12, 1896, all of these lands were sold to George S. Grimes under an execution upon a judgment recovered by Allen, Moon & Co. against Bartholomew Pickert, which had been a lien upon the lands since October 1, 1892. Grimes purchased for the benefit of Allen, Moon & Co., and bid the full amount of their judgment. A certificate of sale was issued to him by the sheriff, which was to be followed by a deed at the expiration of one year from the sale, if in the meantime the lands were not redeemed. June 9, 1897-- three days before the expiration of the period for redemption-- the sheriff's certificate was assigned to Flora J. Burt, and, there being no redemption during the year, a deed was executed and delivered to her by the sheriff. The amount paid to Grimes for the assignment of the sheriff's certificate was $790.34, the amount required to redeem from the sale. The lands were then worth more than $30,000 in excess of the only other bona fide incumbrance thereon. Bartholomew Pickert had an indebtedness of many thousand dollars, contracted in 1892, and, if he had openly redeemed from this execution sale, the unsecured holders of this indebtedness would have been thereby invited to enforce payment of their claims in the same way Allen, Moon & Co. had done. Burt did not purchase the sheriff's certificate with her own means or for her own benefit. She had never bought any land, had not seen these lands, and did not know their character or value, the extent to which they were incumbered, or the state of the title. She says she was led to make the purchase by overhearing conversations between Bartholomew Pickert and Rozel F. Pickert, his brother, and between them and attorneys with whom they conferred. The money with which the purchase was made was obtained from a prize package tea business, in which Bartholomew Pickert and Rozel F. Pickert were partners, but which was not conducted in their names. Burt had been and personally attended to procuring the assignment to Burt of the sheriff's certificate. In this he was assisted by an attorney who was employed chiefly to ascertain whether the proceedings supporting the Allen, Moon & Co. judgment and sale were regular. Before the purchase of this certificate Rozel F. Pickert was Bartholomew Pickert's general agent, and acted for him in practically all the transactions relating to these lands, particularly in respect of the deed to the stock-raising company and the mortgages to Fannie Snow. Subsequently he acted in a like capacity for Burt. Nothing of importance relating to the lands was done by Bartholomew Pickert or by Burt except under Rozel F. Pickert's direction. His was the master mind in everything, whether relating to these lands or to the prize package tea business. There is a suggestion in the evidence that he may have been the secret owner of both at all times, and some of the contentions of counsel for Burt are predicated upon a hope that we will take that view of the evidence. However much such a conclusion may be supported by portions of the evidence when isolated from the remainder, it is not tenable when the pleadings and all of the evidence are considered. In their pleadings the parties unite in ascribing to Bartholomew Pickert full ownership of the lands on January 20, 1892, and the evidence fully satisfies us that throughout the subsequent transactions it was the purpose of the Pickerts to secretly preserve the existing control and ownership, whether it was in Bartholomew, in Rozel F., or in both, and that, as between the Pickerts and Burt, this control and ownership underwent no change when the assignment to her of the sheriff's certificate was procured or when the sheriff's deed was issued to her. During the year 1892 Rozel F.Pickert, on behalf and in the name of Bartholomew Pickert, contracted the indebtedness hereinbefore named, including that which is the foundation of Lynch's title. In doing this he repeatedly represented that Bartholomew Pickert owned these lands, and extensive credit was extended to Bartholomew on the faith of that representation and ownership. March 23, 1897, in making a payment of $2,500 on behalf of Bartholomew Pickert upon a mortgage which constituted the only bona fide incumbrance upon the lands superior to the Allen, Moon & Co., claim, Rozel F. Pickert asked that the payment be not applied upon the mortgage debt for the time being, and expressed a desire that the mortgage should appear to still cover as large an amount as possible, as it might become advisable to acquire the mortgage and foreclose it as a means of getting the property straightened out as against other interests. July 9, 1897-- 30 days after Burt's purchase of the sheriff's certificate and 27 days after the expiration of the year of redemption-- Rozel F. Pickert, in a letter to the same person, said, 'The title has now been perfected since I saw you. ' Less than one-third of this $2,500 would have redeemed the lands from the Allen, Moon & Co. sale, but that would have subjected them, as before stated, to the claims of other creditors. If the fraud should not be detected, the title of Bartholomew Pickert could be apparently extinguished, and the collection of the demands of creditors probably prevented, by acquiring in the name of a third person the outstanding sheriff's certificate and obtaining a deed thereon upon the expiration of the redemption period, or by acquiring in like manner the prior mortgage and perfecting title through a foreclosure. Both methods were in the mind of Rozel F. Pickert, but he adopted the former. It required a much smaller immediate expenditure, and could be more readily and quickly consummated. It is perfectly clear that in effecting the purchase of the sheriff's certificate through Flora J. Burt with moneys obtained from the tea business, in which Bartholomew Pickert was a partner, Rozel F.Pickert was either acting for with intent to defraud his brother, who had clothed him with full authority to look after the lands, or was acting on behalf of his brother with intent to defeat his brother's creditors. His prior performances, the influence of kinship, and Bartholomew Pickert's participation in the attempt to sustain Burt's title, convince us that Rozel F. Pickert's cunning was directed against his brother's creditors, and not against his brother. The ultimate conclusion from the evidence is that in purchasing the sheriff's certificate and taking the sheriff's deed Burt was acting at the instance and on behalf of Bartholomew Pickert; that the money used therein was his money; and that the purpose of that transaction, as of those which preceded it, was to cover up his property, and place it beyond the reach of his creditors. In considering these same transactions, this court, in Burt v. Gotzian & Co., 43 C.C.A. 59, 102 F. 937, while declaring the various transfers fraudulent and void as to creditors, expressed the view that Rozel F. Pickert was secretly the real owner of these lands at all times, that Burt's purchase of the sheriff's certificate was at the instance and on behalf of Rozel F. Pickert, and that the money used therein was his; but there is sufficient difference in the two cases as presented by the records made in the court below upon their separate trials to justify the somewhat different conclusion at...