Otis v. Kennedy

• Decision Date: 10 December 1895
• Citation: 65 N.W. 219,107 Mich. 312
• Court: Michigan Supreme Court
• Parties: OTIS v. KENNEDY ET AL.

65 N.W. 219

107 Mich. 312

OTIS v. KENNEDY ET AL.

Supreme Court of Michigan

December 10, 1895

Error to circuit court, Wayne county; Willard M. Lillibridge Judge.

Ejectment by Hattie Otis, by her next friend, against George Kennedy and another. Defendants had judgment, and plaintiff brings error. Affirmed.

James H. Pound, for appellant.

John W Beaumont and F. A. Baker, for appellees.

LONG J.

This is an action of ejectment for the recovery of 18 acres of land in Greenfield township, Wayne county. Plaintiff and defendant George Kennedy both claim through a common source, to wit, George E. Pillard; plaintiff by devise, and defendant by executor's sale. George E. Pillard died testate. He owned at his death the 18 acres in suit, 30 acres in Dearborn township, and a policy of life insurance of $1,000, and a small amount of cash. The will divided the property into two parts, giving one moiety thereof to his nephew, Frank G. Pillard, a son of the executor, and directed the executor to take and hold the same in trust for said nephew until he was 21 years of age. Out of the other moiety he directed his executor to first pay Charles F. Pillard, a brother, $75, and the remainder of it he gave in equal shares to plaintiff, Hattie Otis, and to her sisters, Jennie and Emma Otis, directing his executor to take the same, and care for it, in trust to be divided to each one her share when she arrived at the age of 21 years. George F. Pillard was appointed executor and trustee. The will was duly probated. At the testator's death the Dearborn 30 acres were worth about $1,800 and the Greenfield 18 acres $3,150. There was a mortgage on both parcels of $1,700 to the Springfield Savings Bank of Vermont. The debts proved against the estate amounted to $3,449.94 in addition to the mortgage. George F. Pillard under license of the probate court, sold at executor's sale both pieces of land, the 18 acres to one James Leonard for $3,000, and the 30 acres to Joseph Goodrich for $1,800 on March 13, 1886. Both sales were duly confirmed by the probate court, and deeds were executed to the purchasers on March 22, 1886. As far as the probate records show, these sales were legal, and the proceeds were used to pay the debts of the estate, and nothing was left for the devisees. Leonard's deed for the 18 acres was not recorded until April 21, 1886, and on that day he executed a special warranty deed back to George F. Pillard, covenanting against his own acts only, for the consideration of $3,100. This deed to Pillard was recorded April 22, 1886. Pillard owned 2 acres of land lying at the northeastern corner of the 18-acre parcel, and on April 27th he sold the entire parcel of 20 acres to William Kennedy for $3,600. Afterwards, on April 3, 1888, William Kennedy sold the 20 acres to George Kennedy for $8,000. Samuel Kennedy claims no title. At the time of the purchase by William Kennedy he had an abstract of title examined by Mr. Hoyt Post, an attorney at law, who pronounced the title good and sufficient. Defendant George Kennedy had a like examination made when he purchased it, and claims to have relied upon it in making his purchase. Both William Kennedy and defendants were bona fide purchasers without notice of fraud or irregularities, except as may be imputed to them from the records. During William Kennedy's ownership he built a house on the two acres of land at an expense of about $2,000. In addition to this, he built a barn, cleared the land, dug ditches, and thoroughly tiled it, and expended large sums each year in bringing it under cultivation. He also set out two acres of grape vines, and built new fences around it. During George Kennedy's ownership an orchard of 800 fruit trees was set out, which is now alive and bearing. He also built two greenhouses and a bee and honey house. It is claimed that the land is now in excellent condition, valuable, because of the improvements made by the defendant and his immediate grantors, and also by reason of the rise in values in Detroit suburban real estate. No claim is made for improvements, and counsel says for the reason that he had, previous to the inception of this suit, begun a suit in equity to quiet his title against all parties interested, and he relies upon that proceeding for a more effective and complete remedy.

The plaintiff claims that the defendants are not bona fide purchasers for the reasons: (1) That an examination of the records showed fraud, as any person inspecting them would have ascertained that, while the land purported to have been sold to James Leonard, yet that Leonard within a short time deeded back to George F. Pillard, the executor, and that under the statute such conveyance is void. (2) That the defendants knew, and had known all their lives, the people affected, and were advised of the fact that George F. Pillard, through whom they derived title, was the executor of the estate of George E. Pillard, deceased; that defendant's grantor, William Kennedy, was his brother, and a partner in the business, and was a commissioner on claims and appraiser of the Pillard estate; that the evidence shows a conspiracy between William and George Kennedy and George F. Pillard to defraud the plaintiff out of the land; or that at least there was sufficient evidence to go to the jury for their consideration of that question. (3) That the sale by the executor to Leonard was not bona fide, but was an indirect sale to Pillard himself, as Leonard paid no money to Pillard; and that the $3,000 paid by William Kennedy was paid in to the estate, and accounted for by the executor, to pay the debts of the estate; and that the executor fraudulently manipulated the estate, and appropriated it to his own use.

We shall dispose of the last two questions first. The evidence shows that William Kennedy was one of the commissioners on claims on the estate, but it fails to show that he had any knowledge, or that George Kennedy had any actual knowledge that the sale from Leonard back to the executor was not a bona fide transaction. The record discloses that the sale of the lands was necessary to meet the debts preferred against the estate, which appear to have been in an amount almost equal to its value. But, whatever may be said of the knowledge of William Kennedy, or notice to him by reason of his having been one of the commissioners on claims, there is nothing to show that George Kennedy had knowledge or notice of the situation of the estate, or that he had knowledge or notice that the sale to Leonard was not made in good faith, and for a valuable consideration, except such notice as the recording of the deed would disclose; so that the only question which need be discussed is whether, under the circumstances, George Kennedy can be said to be a bona fide purchaser. How. Ann. St. � 6042, provides: "The executor or administrator making the sale and the guardian or any minor heir of the deceased shall not, directly or indirectly, purchase or be interested in the purchase of any part of the real estate so sold, and all sales made contrary to the provisions of this section shall be void," etc. Counsel for plaintiff contends that under this statute the transfer from Leonard to the executor was absolutely void, and therefore defendant took no title. At the common law, a purchase by the executor or other person acting in a trust capacity was forbidden, as it is by the above statute. This statute was before this court in Hoffman v. Harrington, 28 Mich. 90. That was an action of trespass, and plaintiff claimed title under administrator's sale. Hamilton, as administrator of the estate, sold the land to one Minnie, and Minnie's heirs conveyed back to Hamilton, and he conveyed to plaintiff. Chief Justice Christiancy held that under this statute all sales made contrary to its provisions were null and void. He said: "There is no exception or qualification, and no saving of the rights in favor of purchasers of any kind, with or without notice, nor in favor of any person whatever." That opinion was concurred in by Mr. Justice Cooley. Mr. Justice Graves dissented from those views, and said that the provision was a mere enactment of the rule which the courts had laid down prior to its passage, and, like many others, was simply intended as a legislative recognition of a doctrine developed by the tribunals, and considered worthy of being made stable by adoption into the statute book. Speaking of the methods and principles guiding the courts in the acceptation of the rule before it was crystallized into a statute, he says: "These principles were not set aside or impugned. They remained as vital as ever. And since the only change effected was in carrying this rule, which was already law, from the unwritten to the written code, I cannot see why it should be administered in a new spirit, and contrary to the principles natural to it. They accompanied the rule into the statute book, as I think, and should be recognized in applying it. If we reject these principles, and take the provision as one to be applied in a sense as universal as the terms will literally allow, then every sale by the executor, administrator, or guardian in which the trustee has an interest, however secret, is ipso facto void in the sense of being a nullity. It has no force whatever. It is bad as to everybody and all transactions. No one is bound by it, and no one can be benefited by or through it. Whether the deed given on the public sale is recorded or unrecorded, whether a full price was or was not paid and applied for the estate, whether the sale was or was not confirmed in regular form by the court, whether or not the party claiming title under it through a subsequent purchase bought in good faith for a full price and without notice, can make no difference. It never...