Roberts v. Jackson, ex dem. Webb , 1 Wend. 478 ( 1828 )

By the Court,

Savage, Ch. J.

It is perfectly well settled, whenever a greater estate and a less coincide in the same person, without any intermediate estate, the lesser is merged. (2 Cowen, 284.) This rule, at law, is invariable and inflexible ; (2 Cowen, 300;) though in equity it is not so,hut depends upon intention. Previous to .the time when Joshua Clark obtained the assignment of the mortgage from Smith, the legal estate, as to the premises in question, had been in' him; and had it continued in him, the mortgage as to those premises would have been extinguished. The conveyance, howeveiyby which he held that estate, had been avoided in equity on a bill filed by the lessors of the plaintiff; and though, as a general rule, a fraudulent deed is binding upon the ¡parties to the transaction, the reason of the rule does not apply to this case. The rule isj that if a party will convey away his property with the intent to" defraud his creditors, the1 law will not aid him when he subsequently seeks to recover it back.' Here, as well the grantee as the grantor had lost the property which was fraudulently conveyed; and we cannot-consider in force, a deed which had been avoided by the court of chancery, and the property restored to the grantor for the benefit of his creditors, and impose the further penalty upon the grantee, (considering the assignee of the mortgage to stand in the place of the assignor,) of losing a mortgage security, on the assumption that he has the legal estate in which is-merged his equitable estate as assignee of the mortgagee, when that estate has been avoided by a decree of the court of chancery. - Having lost, by that decree, the legal estate which he had fraudulently obtained in the premises, it is to him as if it never had existed; and more especially would it be unjust to apply this rule of law to the defendant in this action. He is the assignee of a mortgage interest, was not a party to the fraudulent conveyance, claims nothing under it, and is not affected with notice of the transaction. The deed from Stephen Clark to Joshua Clark, therefore, being considered as void, there is no merger.,

Under this branch of the defence, it is proper to notice a question as to the proof of the assignment of the mortgage horn J. Clark to Stroud. It was objected, that this assignment could not be read in evidence upon being acknowledged before a commissioner. I incline to the opinion that this objection was properly overruled. The mortgage, for the purpose of proof, is considered a deed concerning lands; and as the assignment conveys the interest of the mortgagee, it must also, for the same purpose, be considered, if under seal, a deed, conveyance or writing, concerning lands, tenements or real estate, in the language of the act, and may be proved in the same way as the mortgage. It is true, that the recording the assignment is not necessary to its validity; but it may be recorded, and proof under the statute is prima facie sufficient.

The second ground of defence rests on the deed from Webb. In relation to this point, the jury have found, that the deed from Webb to the defendant was never delivered ; and.this verdict is fully warranted by the evidence. The only question here is, whether parol evidence could be received to shew the non-delivery. It is always competent to shew that the deed was delivered as an escrow, or that the grantee obtained possession of it by fraud, or in an unwarrantable manner. This must, of necessity, be shewn by parol ; and this species of evidence has never been considered as coining within the rule which rejects parol proof when offered to contradict a deed.

The third branch of the defence is sustained by a deed from C. Hill, who purchased at sheriff’s sale, under a judgment against S. Clark, docketed February 17, 1818. This judgment was confessed four days after the injunction was granted in chancery. The rule as to lis pendens is, that an alienation pending a suit is void; and though the purchaser pays a full consideration, if he had only constructive notice, the conveyance is inoperative. (1 Johns. Ch. R. 577, 581.) Chancellor Kent says, the Us pendens begins from the service of the subpoena after the bill is filed. (1 Johns. Ch. R. 576.) When the subpoena was served in this case does not appear. The bill was filed Fcbma'ry 13, 1818, and a decree was obtained June 16, 1818. The defendant did not purchase under this title till December 85, 1819. He had, in April previous, entered into a contract with Spencer to. purchase from Webb, the agent of the plaintiffs in chancery. Most clearly, therefore, he had notice of the lis pendens in chancery, or rather -he knew that Webb had purchased under the decree in chancery; and this deed from Hill seems to have been taken to fortify him in the title which he had surreptitiously possessed himself of, by procuring the deed from Webb, and the contracts between himself and Spencer. Under all the circumstances of this case, it. seems to me that notice of the lis pendens may fairly be inferred, as to the defendant, but not as to the plaintiffs in the judgment. There is no proof of the service of the subpoena, or of actual notice before judgment docketed. The sale under this judgment, therefore, conveyed a valid title; and, as the conveyance from S. Clark to J. Clark, was fraudulent and void as to the plaintiffs, the sale under the judgment conveyed to the purchaser the title of 8. Clark.' The defendant, by purchasing of Hill, became possessed'of the title of S. Clark, discharged of the deed to. J. Clark, and therefore has the elder title.

The defendant offered in evidence a written declaration of J. Clark, that the conveyance to him was without consideration. This was properly rejected. This instrument was executed in 1821, after all interest in J. Clark had ceased. It was shewn, also, that S. Clark had confessed a judgment to J. Clark, which-was assigned to a third person; and also a quit-claim from' the Clarks in 1821, and an engagement to indemnify the defendant against the judgment. I cannot see the relevancy of this testimony, as the title of the Clarks ceased in 1818.

I am therefore of opinion that the motion for a new trial be granted, with costs to-abide the event,