Irish v. Clayes & Morse , 10 Vt. 81 ( 1838 )

The opinion of the Court was delivered by

Collamer, J.

The plaintiff claims title as the levyixxg creditor of Elwood Irish, the former owner of the land. It appears the defendants had a deed from Elwood Irish, including this, with other lands, delivered previous to the plaintiff’s levy. This deed, the plaintiff insists, was fraudulent and void. One of the defendants held, a mortgage tleed of the same land, -of a still previous date, but the notes, fob which that mortgage was given, were given up, in part, for the consideration of the deed, now said to be fraudulent. If this last deed was fraudulent, merely as to Elwood Irish, then the plaintiff cannot avoid it, and therefore, cannot recover. If this last deed was fraudulent and void as against the creditors of Elwood Irish, as has been argued, then it presents this question; can the Creditors of Elwood Irish, attach and hold on his debts, not only all, which he fraudulently conveyed, but hold it, relieved of the xncumbrances previously, bona fide, created and then still existing upon it, in favor of the same grantee, who-received the fraudulent conveyance.

Contracts are frequently called void, which are only voidable. An infant’s deed is called void, but it is only so when he shall have avoided it. A contract, in which one of the parties is defrauded, is said to be void as to him, but it is only so when he has avoided it. A usurious contract is called void ; but it is only so, when it is avoided by the party, on whom the usury is practised. The general rule of law is the same in all such cases, that is, where the contract is avoided, the parties are restored to their previously existing rights. They are in “ status ante helium,” and not in “ uti possidetis.” The person defrauded by a contract, if he would avoid it, returns what he received. The infant, by avoiding his deed, rescinds his whole contract. Bigelow v. Kinney, 3 Vt. R. 353. When a party avoids a usurious contract the opposite party is restored to all his previous legal rights, and may recover on any legal claim, previously existing, though it may hav-e been subsequently mingled in the usurious contract, and so been cancelled. t Edgell v. Stanford, 6 Vt. R. 551. These are all defences confined to particular persons, not to be made by others, and when made, and the contract is avoided, it then becomes void as to both parties, and it is as if never made, and both parties are reinstated in their former rights. In the case before us, the statute makes this last conveyance void, as to the creditors of the grantor. By perfect parity of reasoning, by analogy of principle, by every rule of consistency and symmetry, it must be held that, |vhen the creditors avoid the deed, the law remits and restores the other party to his previously existing legal rights. This gives to the statute its proper and legitimate effect, that is, it permits the purchaser, to hold'nothing by his fraudulent contract, and the creditors to take all their debtor fraudulently conveyed, and no more. To hold otherwise, would create penalties beyond the statute, and compel the defendant to surrender, not only all he may have fraudulently purchased,' but also to give up his previous bona fide securities thereon.

But it is said, this enables a man to hold by mortgage without producing the mortgage, and the notes mentioned therein, in court. That rule of law is founded only on the presumption that notes, not produced, are paid. In this case the absence of the notes is accounted for, and the presumption of payment is rebutted. It is a solecism for the plaintiff to avoid the very contract which paid these notes, and, at the same time, to insist it remains an operative payment. It is still insisted this is keeping on foot a mortgage, after the debt is discharged. This is but another form of stating the same objection. It assumes that the debt is paid, when, as to the plaintiff, who has avoided the contract of payment, it is not paid. The mere circumstance that this is so situated, that the debt cannot be enforced against the original debtor, does not prevent the mortgage being kept on foot. This has always been done, in Chancery, when equity required it. This principle has been adopted as law, in this state, if the legal title still remains in the mortgagee. Marshall v. Wood, 5 Vt. R. 250.

The case of Hoyt v. Himon, 5 Day’s R. 479, fully sustains the doctrine of this case.

Judgment affirmed.