Chantland v. Midland National Bank , 66 Kan. 549 ( 1903 )

The opinion of the court was delivered by

Smith, J. :

I. Wé are clearly of the opinion that the bank cannot recover the farm property from the plaintiff in error in an action of ejectment. The attachment proceedings which preceded and led up to the sheriff’s deed under which the bank claims title were against Hans Hanson alone. The title to the property never rested in him. Hans Hanson bought in the property at sheriff’s sale under foreclosure proceedings against the Clarks, and caused the sheriff to convey the Clarks’ title to Neis Hanson. Whatever was paid for the land at this sale was paid Hans Hanson, who afterward became the debtor of the bank. In such cases the statute steps in. It provides :

“When a conveyance for a valuable consideration is made to one person and the consideration therefor paid by another,'no use or trust shall result in favor of the latter; but the title shall vest in the former, subject to the provisions of the next two sections.” (Gen. Stat. 1.901, § 7880.)

Immediately upon the execution and delivery of this sheriff’s deed a trust by operation of law resulted in favor of the creditors of Hans Hanson. This ■conveyance, by section 7881, General Statutes of 1901, was presumed to be fraudulent as against existing creditors of Hans Hanson, and a trust also resulted in favor of subsequent creditors, if there was sufficient evidence'of fraudulent intent. The claim and judgment of the bank placed it in the latter class.

Counsel for defendant in error would have us give a different effect to this sheriff’s deed to Neis Hanson than the law gives to it. We do not understand that there is a denial by the bank that Hans Hanson paid the consideration for this sheriff’s deed. In fact, counsel for defendant in error insist that the Clark notes always belonged to Hans Hanson after Maltby assigned them. The amount of these notes made up almost the entire sum of the consideration for the sheriff’s deed.

By the terms of the statute, Neis Hanson became trustee for all the creditors of Hans Hanson. The present action was not brought to enforce a trust instituted by a beneficiary, and for an accounting with the trustees, but is an action in ejectment by one creditor who seeks to have and to hold the entire trust estate regardless of the claims of others similarly situated. The law in such cases,is equally solicitous for the rights of all creditors. See Minor v. Lane, 87 Wis. 348, 57 N. W. 1105.

By the attachment proceedings against Hans Hanson at the suit of' Wedge & Co., which afterward ripened into a judgment and a sheriff’s deed to the bank, the latter got no interest in the farm. Hans Hanson, after he paid the consideration for the sheriff’s deed in the foreclosure suit and caused the sheriff to convey the .title to another person, had no estate, legal or equitable, in the land. There was nothing to which an execution against Hans Hanson could attach. (Garfield v. Hatmaker, 15 N. Y. 475.) In McCartney v. Bostwick, 32 N. Y. 53, 59, the court said :

“This resulting trust, in favor of the party paying the consideration, and of those claiming in his right, was annihilated by the statute of uses and trusts ; and the absolute title, as between the original parties, was vested in the nominal grantee. No interest whatever, either legal or equitable, inured to the party paying the price ; and he had no remaining right on which, through judgment and execution, creditors could by any process fasten a specific lien. All claims in or through the actual purchaser were utterly extinguished ; and if the statute had gone no farther, his creditors would have been without redress in the courts, whether of law or equity. But to prevent this precise abuse, the statute proceeds to declare a new and independent resulting trust, in favor of the general creditors of the party paying the consideration, in every case where the conveyance is fraudulently made to another with his assent; and, to render the provision still more effectual, the burden of proof is cast upon the grantee to repel the presumption of fraudulent intent which is attached to the transaction by operation of law.”

A plaintiff in ejectment must show some title before he can recover. A creditor having a mere equitable right, with others similarly situated, to the payment of his demand out of real estate constituting a trust fund in the hands of a trustee, cannot in a possessory action eject the trustee. In the present case, the bank had no equitable title to the land; it had no title whatever, but only an equitable right to have its debt paid out of a trust fund held by Neis Hanson as trustee.

Counsel for the bank insist that the making of the sheriff’s deed to Neis Hanson was a design on the part of Hans Hanson to hide his property in the name of his brother, and that the real ownership was intended to remain in Hans Hanson. It must be remembered that Hans Hanson never owned this property; the title at no time vested in him. If the ownership of Neis Hanson, the grantee, from the sheriff, is ignored, the title still rests in the Clarks, the mortgagors. The bank is thus forced into the position of recognizing the sheriff’s deed. The case of Morgan v. Field, 35 Kan. 162. cited by defendant in error, is not in point. There the title at one time vested in the party making the deed.

II. Title to the opera-house property was in Hans Hanson until November 1, 1893, when he conveyed it to his brother Neis, subject to a mortgage held by Maltby for $3000. While the evidence is not strong in the direction of showing a design on the part of Hans Hanson to defraud his subsequent creditors, yet we cannot say that the finding of the trial court to that effect was without support. The judgment of the court, being general, includes findings of fact necessary to reach the result.

The payment of a consideration by Grant to Neis Hanson for the assignment of the $3000 note secured by mortgage on the property is not satisfactorily shown. Chantland testified that $1500 was sent to Campbell at Kansas City to secure an assignment of the note, which Campbell said he never received. There was evidence tending to show that Hans Hanson was pressed by his creditors in 1893, when he deeded the opera-house to his brother.

The rights of the bank under the Wedge & C.o. attachment proceedings were not cut off by reason of the Grant foreclosure suit in which Wedge & Co. were parties defendant. The subsequent decree against them could not affect the rights of the bank. It had an assignment of record, which appeared on the judgment docket of the court, showing that for more than twenty days before the foreclosure suit of Grant was instituted the bank had been the owner of the judgment. After this assignment no decree against. Wedge & Co., the assignors, could affect the rights of the bank.

The judgment of the court below will be reversed so far as it affects the farm property, with directions to proceed further in accordance with this opinion. With respect to the opera-house property the judgment of the trial court will be’ affirmed.

All the Justices concurring.