McDowell v. Goldsmith , 6 Md. 319 ( 1854 )

Tuck, J.,

delivered the opinion of this court.

It is conceded that there is no question before us as to the deed of the 14th of July 1841.

Of all the creditors who offered proof of their claims, none was such prior to the 5th of November 1842, the date of the mortgage, except Walter Crook, Jr.; and if the plea of limitations can avail the defendant, none of them have a standing in court except Sarah Ann Truitt, whose claim can be enforced, if at all, only against the equity of redemption conveyed by the deed of the 16th of February 1844. The first question then to be disposed of relates to the plea of limitations, relied on by Goldsmith.

There are decisions to show that, in cases like the present, this defence has been rejected, but whether correctly or not we are not at liberty to inquire, because the point has been definitively settled in this State. The chancellor, after having discussed the question upon principle as well as authority, referred to the case of The Farmers Bank vs. Mullikin, in this eourt, December term, 1840. We have carefully examined that record and the proceedings on the appeal, and find that it fully sustains the view taken here on behalf of the defendant below. The amended bill and answers distinctly raised the issue of fraud in fact. It was asserted that the deeds-were made by contrivance and conspiracy between the parties, with intent and for the purpose of defrauding the complainants and other creditors of the grantor, and that that unlawful purpose would be accomplished if the deeds were allowed tc stand as valid, inasmuch as the grantor had no other property •wherewith to satisfy his creditors. It appears by the minutes for the decree, taken down by the clerk of the court, and by the decree itself, that the deeds were' “adjudged to have been' made in fraud of the creditors of the grantor/ and that the defence of limitations relied on in the answers of three of the defendants was sufficient to protect the interests of two of them; but that the benefit of that defence' was denied’ to the' other only because it had been waived by him.- It was urged in argument there, as here, that the grantee should bfe treated as a trustee for the creditors, and as such,-could not interposé' this defence against those for Whose use he held the property. This point is thus answered in the minutes for the decreet “Limitations will bar as to trusts created by operation'of law, though it may not in express trusts.” There being no difference between the cases, we must yield to its authority without reference to’ the decisions in other Courts.-

This view of the case disposes of all the claims except those of Truitt and relieves Us from the necessity of passing upon the mortgage of the 5th of November 1842, there being on party in Court in whose behalf it can be assailed.- Moreover,» we agree with the chancellor as' to the effect of the proceedings ih equity, under the act of 1833, ch. 181, as a protection to the defendant against inquiry, in this case, into the question of fraud in obtaining that deed.

The remaining questions on thesé' appeals rélaté to Truitt’s claims and the charge of fraud as to the deed of the 16th of February 1844.- This complainant did not set out her cause of action in the bill of complaint, but subsequently filed two' notes of Osborne under the commission to take proof, one for' $1100, dated the 6th of November 1843,and another for $2800, dated the 21st of October 1844, whieh wasnot due when the bill was filed. We can express' no opinion as to- the last of these claims. The chancellor has neither allowed nor rejected it; but, on the contrary, has reserved it for further directions.

We think that her claim' on the note for $1100 was properly allowed. It was signed by Osborne and endorsed by Goldsmith, the payee. The objection is, that it does .net appear that she held this note when the bill was filed, but we are of opinion that she must be regarded as the owner at that time until the contrary appears. She is described in the bill as a creditor, and at the proper time for proving her case she filed and proved this note under the commission. It does not appear when Goldsmith endorsed it, but the inference is that it was endorsed, if not on the' day of its date, at least Ipefore its maturity. Pinkerton vs. Bailey, 8 Wend., 600. Anderson vs. Weston, 37 Eng. Com. Law Rep., 388. Burckmyer vs. Whiteford, 6 Gill, 1.

The decision of the question of fraud depends on the bill', answer and proofs. We might rather say on the proofs, as we do not attach much consequence to the answer. The evidence on the part of the creditors was assailed as general', contradictory, and unworthy of credit. This affirmation,- we think, was more justly applied to the answer, for the contradictions are striking and irreconcilable, while the' gross carelessness and want of system and precaution in large money transactions, which, according to the answer, appear to have signalized the defendant’s habits of business, are calculated to impair the weight which an answer should have when furnishing no reason to suspect unfairness in the transactions of which it speaks. Concurring with the chancellor in what he has said respecting the case as disclosed by the answer, we proceed to consider the proofs; and, first, the admissibility of the declaration of Osborne, as proved by Spurrier and McGee.-

It is a general and very salutary rule of evidence, that a party will not be permitted by his own declarations to defeat a prior deed; but it is also well settled, that in some cases the declarations and admissions of a grantor will be received where the effect may be to impair the title of persons claiming under him. Dorsey vs. Dorsey, 3 H. & J., 410. Walls vs. Hemsley, 4 H. & J., 243. 1 Greenl. Ev., secs. 189, 190. Another principle is, that all such facts as have not been admitted by the party against whom they are offered, or by some one under whom- he claims, ought to be proved under solemn sanctions by persons having knowledge of the facts, but to this certain exceptions have also been recognized, some from very early times, on the ground of necessity or inconvenience; and among these is proof of the quality and intention of acts by evidence of declarations accompanying, or so nearly connected with them in point of time as will serve to explain their true character and purpose. We are informed by Professor Greenleaf, (Vol. 1, sec. 108,) that it is very difficult to bring this class of cases within the limits of a particular description. The points of attention are, whether^ the circumstances and declarations are cotemporaneous with | the main fact, and whether they are so connected with it, as ) to-illustrate its character. Where a party does an act material to be understood, his declarations expressive of the character, motive or object of it are regarded as “verbal acts indicating a present purpose and intention.” Their admissibility is to be determined according to the degree of their relation to the principal subject matter of dispute, in the exercise of a sound discretion by the court. The cases will show that they need not take place immediately with the occurrence of the act, but may be before and sometimes after, provided they be calculated to unfold the nature and quality of the facts they are intended to explain, and so to harmonize with them as to constitute one transaction. 1 Greenl. Ev., secs. 108, 109, 110. Broom's Maxims, 442, (50 Law Lib.) 7 A. & E., 384, (34 Eng. C. L. Rep.) Kolb vs. Whitely, 3 G. & J., 188. Cross vs. Black, 9 G. & J., 210. Burckmyer & Adams, vs. Whiteford, 6 Gill, 14. Garner vs. Smith, 7 Gill, 1. Miller vs. State, 8 Gill, 141. Handy vs. Johnson, 5 Md. Rep., 450.

This doctrine has been applied in cases like this, in which the object was to vacate deeds at the instance of creditors. Merrill vs. Meachum, 5 Day, 341, cited by the chancellor, is clearly in point, where the declarations of the grantor, “tending to show that the deed was executed for the purpose of securing the land against the attachments of his creditors,” were admitted. But, the correctness of the principle had been questioned, if not denied, in Beach vs. Catlin, 4 Day, 284. The case of Barrett vs. French, 1 Conn., 354, relied on by the defendant, is pot like the present. It does not appear that the declarations of the grantor were offered in evidence as part of the res gesta.

In Harshaw vs. Moore, 12 Iredell, 247, where a deed was jmpeached for fraud as against creditors, the declarations of the grantor, immediately before and ip .contemplation of the act, were received to show his object in d.oing it, as strong eviden.ce bearing upon the very point ip issue against the party claiming .under him. See also Ford vs. Elliott, 4 Excheq. Rep., 78.

Cases li^e th.e present .have also occurred in Maryland, ip .which the declarations of the grantor were introduced, to impeach the deeds. Duvall vs. Waters, 1 Bland, 588, Birely vs. Staley, 5 G. & J., 432. Strike vs. McDonald, 2 H. & G., 206. In the latter case one of the grantors was .also examined for that purpose. The Court of Appeals did not pass ppon the .question, although the point was made. However, jhe chancellor in Duvall vs. Waters, appeajrs to have relied on the grantor’s .declarations as evidence of the alleged fraud.

But th.ere is a .class of decisions in England, as well as here, .so analogous that it seems to ps they should be governed by .the same rules of .evidence. We allpde to .cases in bankruptcy, and those .arising under .opr insolvent laws, ip which deeds and transfers of property hav.e been h.eld to b.e good op ba.d, according to t.be intent pf the party ip making them, In both these .classes of cases, the quality of Jh.e act depends upop the same principle. “In questions respecting acts .of bankruptcy .the iptentipn js almost always flip yery point jp issue, and this js p.onjmonly .to be collected from the conversations importing .the existence pf those apprehepsipns which giye a character and quality to the copcomitant a.cti.ops.” 2 Evans Pothier, 247; Appendix, No. 16, sec. 11. 1 Ph. Ev. Hearsay. 3 Gill & Johns., 188. In Bateman vs. Bailey, 5 Term Rep., 512, a declaration of the debtor mpd.e the day after (head, was held admissible; and the established doctrine in England, pow is, that the court will, in each case, consider whether the declaration proposed to be received does or does not copie within a reasonable time of the disputed act. As, if th.e question arise, whether a security were given by way of fraudulent pro-Terence, the material inquiry will be, what was the situation, conduct, and language of the bankrupt with reference to the whole transaction? Broom’s Maxims, 441. 9 Bing., 352, 355. And this doctrine is fully recognized in Kolb vs. Whitely, 3 Gill & Johns., 188, as applicable to cases under the insolvent laws. There, certain entries in the books of the insolvents, and the declarations of one of the firm, made a few days before the property was delivered to the appellant, were received to show that, at the time of the transfer, the parties contemplated becoming insolvent debtors. The rule stated is, that, “where it is necessary, in the course of a cause, to inquire into the nature of a particular act, and the intention of die persons who did the act, proof of what the person said at, the time of doing it, is admissible evidence for the purpose of showing its true character.” And “in general, where the evidence is offered as a mere fact which is connected with the matter in dispute, and not with a view to affect the party otherwise than as the actual existence of the fact affects the nature of the transaction itself, then, although it was a transaction between others, yet, as a mere fact, and part of the res gestee, it is evidence.” We do not understand the court as having admitted the evidence, as might be inferred from the last clause of the opinion, because there was no reason for supposing that the insolvent had made the declarations under sinister motives, or as having designed to qualify the general rule announced; but rather as using those remarks in answer to the argument of the appellant’s counsel. It is true, that generally the declarations of a party under whom another claims, are received, when made against his own interest, and at a time when he had no motive to misrepresent the truth; but we apprehend that the doctrine of res gestee is not governed by this principle. Greenleaf states the general rule, sep., 109, but he adds, “no reason is perceived why every declaration accompanying the act of possession, whether in disparagement of the declarant’s title, or otherwise qualifying his possession, if made in good faith, should not be recieved as part of the res gestee; leaving its effect to be governed by other rules of evidence.” Indeed, such declarations arc admissible in some cases, where the party has a manifest interest at the time, as where an entry is made (o take advantage of a forfeiture, to defeat a disseizin or to foreclose a mortgage, or the like. Green. Ev., sec. 108. For the same reason, in actions by bailor against bailee, for loss by negligence, the declarations of the latter, colemporaneous with the loss, were held to be admissible in his favor, to show the nature of the loss. Story on Bailments, sec., 339. The explanations or admissions of bankrupts, are received, no matter in whose favor they may operate in the suit in which they are offered; but we have not found a case in which the question of their admissibility was determined with reference to any supposed considerations of interest of the debtor, at the time of making them. If they may fairly be regarded as resulting from the cotemporary motives acting on his- mind and influencing his conduct, they may be received. 2 Ev. Poth., 248.

Several cases have occurred in this court under the insolvent laws. It appears, by the record in Dulaney vs. Hoffman, 7 Gill & Johns., 170, that one of (he insolvents was examined, and his declarations were also offered in evidence, to show that the assignment was fraudulent in view of these laws, and the case was decided on this proof. In Hickley vs. Farmers and Merchants Bank, 5 G. & J., 377, and in Davis vs. Beatty, 9 Gill, 211, the grantors were examined; and in Powles vs. Dilly, 9 Gill, 229, the conversations and declarations of the debtor were received, to show the true character of the acts alleged to be void as against creditors. The court held, that the declarations and conversations, (though occurring some time before,) were part of the res gestee, concomitant with the principal act, and served to explain the motives and circumstances surrounding the assignment. The transfer was. also assailed as void under the statute of Elizabeth.

If, as in the three cases last cited, (he declarations or evidence of the debtor may be invoked as proof of an honest purpose, why may not the party who denies the validity of the act, resort to the same source for evidence of his intent, when the act is done with an illegal purpose? The rule being, that wherever the nature and quality of the act depends on the intent of the parties, cotemporaneous statements may be taken to show the intent, there appears to be no stronger reason for receiving such evidence in one case than in the other.

The same doctrine has been applied to assignments under the act of 1829, eh. 51. In Crawford vs. Brooke, 4 Gill, 213, the assignor of a chose in action was called by the defendant in an action by the assignees, to show that he had made the assignment for the purpose of qualifying himself as a witness to establish the claim, and to take it without the statute of limitations, by proving a promise on the part of the debtor within three years. His testimony was admitted, because an assignment so made could not be regarded as bona fide within the meaning of the act of 1829, and was liable to be assailed on the ground of the fraudulent character of the transaction, and that the assignor was a competent witness to discover the motives that governed him in making the transfer.

Under the statute of Elizabeth, the insolvent laws, and the act of 1829, ch. 51, transfers of property or dioses in action, are void or not, according to the intent of the parties, in view of their provisions respectively. If the grantor or assignor may be called, or his declarations given in evidence, to impeach his own act, in cases within these acts of Assembly, there is not perceived any reason for excluding them when offered to ascertain his motive in a transaction denounced as fraudulent under the statute. The doctrine, that “in questions of fraud or bona fules an adequate judgment can, in general, only be formed by having a perfect view of the whole transaction, which, of course, includes the conversation which forms a part of it, and, according to the phrase usually applied to this subject, the language which is used on any occasion forms a part of the res gestee,” (2 Ev. Poth., 247,) equally applies to this, as any other case of fraud; and upon the authorities, as well as analogies of the law, vre feel warranted in receiving the declarations of Osborne, made before the execution of this deed, as given in evidence.

It was argued that there is danger in admitting such proof, because of the temptations it holds out to grantors to arm themselves, in advance, with testimony, by making such declarations as will defeat their own act. All rules of evidence are liable to abuse, and not unfrequently fail to accomplish their real object, the ascertainment of the truth. The objection, however, cannot apply here. It must be observed that in cases like the present the grantor is bound by the deed, and has no interest in setting it aside; What does not go to the creditors remains in the grantee. The declarations or explanations made at the time of the act cannot avail the grantor in any controversy between him and his grantee, involving the title. As between them the deed is conclusive, except it be different in terms from that which the parties intended it should be. In which cases- relief is granted on the ground of accident, mistake or fraud. Rut as to strangers assailing the deed the principle is different. 4 Gill, 220. This case is not varied by Osborne’s statement of an agreement on the part of the defendant to execute a writing for the reconveyance of the property. If this was really so the fraud is established. On the other hand we cannot assume that the sale was bona fide on the part of Goldsmith, and that she made the declarations for the purpose of fabricating testimony for the recovery of the property, without ascribing to her a degree of ignorance that the law does not impute to any one, for she knew, in legal contemplation, that her own- statement, that such an agreement existed, could not have that effect. In- addition to this, the declarations, when admitted, do not per se establish the fraud as against the grantee. They are only part of the case, to be considered in connection with the rest, and to be governed as to their effect by other rules of evidence. Fraud shrouds itself in mystery. Parties may seek to- protect themselves by various subterfuges and pretences, which- it is- impossible' to- detect and expose by direct-evidence, though- when all the circumstances are combined and considered together, they may be such as to show that both parties to the deed were influenced by the same illegal-purpose.-

Upon-a careful consideration “of all the facts and circumstances-of the case, and drawing such inferences as a jury -might reasonably make,” (5 Gill & Johns., 450,) we think there cannot be a well founded doubt that the parties to this deed designed (o hinder and delay the creditors of the grantor. .Independently of the suspicion that surrounded the dealings between them, as disclosed by the answer itself, the evidence shows that Osborne was under gicct apprehensions lest her creditors would press for settlements and take her property; and that this fear was excited by Goldsmith; and that he advised the transfer to him as the only means of saving her property. lie informed Spurrier that she would call and give directions about a deed, and her declarations made at that time,' when the fraud was in course of being perpetrated, (9 Gill & Johns., 211,) show that this was her understanding of the transaction. Wo caimofc exclude the testimony of these witnesses. Spurrier is not impeached, nor is McGee’s veracity directly assailed. Some portions of her evidence may be inconsistent wibi other portions, but the whole is not to be rejected on this account alone. In narrating transactions long past the memory of a witness may be at fault as to some particulars, and be correct as to others, and especially where they were such as the witness bad no reason to suppose he would be called on to explain afterwards. She had no interest in misstating the transactions between Osborne and Goldsmith, nor any motive, as far as we can discover, for testifying on one side rather than on the other. In the main points of the case, bearing on the question of fraud, she is corroborated by other proof in the record. It is urged that she should be discredited because she states the deed to have been executed •u January 1841, when it bears date in Februarry 1844. But she does not slate this positively; she expresses her belief of 'the time, ami though in error us to the date of the transaction she may remember that it occurred, and recollect the principal facts connected with it. The question is, whether the circumstances stated by her took place with this particular instrument? The interrogatories on both sides and her answers relate to the deed of 1844. She speaks of declarations and acts of the parties in connection with a deed executed, when certain creditors, (the complainants among them,) were demanding payment of their claims. It so happens that these complainants were creditors in 1844, and not in 1841 or 1842, when the other deeds were executed, and this is shown, not by this witness, but by their causes of action. The identity of this instrument, as the one referred to by her, is also sustained by its relation in point of time to the declarations of Osborne, as proved by Spurrier, and to the period of her removal to New York, which occurred in the year 1844.

It may be that the defendant paid his money as a consideration for this deed; but we cannot believe, from the whole case, that it was a bona fide purchase, and not designed to defraud the creditors of the grantor. If it was actual and bona fide, and Goldsmith cannot explain the transaction in the face of the evidence offered by the creditors, it was his error, if not fault, to have carried on for a number of years large dealings with an illiterate woman, without the guards and precautions generally observed in business with such persons, as well for his own protection as hers. Upon the whole case we think the decree of the chancellor was correct and must be affirmed on both appeals, and that the case should be sent to the circuit court of Baltimore city to carry the same into effect.

Decree affirmed, and cause remanded.