Opinion
07-26-1881
PLATT v. McCLONG et al.
William B. Knight and Samuel H. Richards, for complainant. A. H. Swackhamer, for defendant George G. Green. W. J. Kraft, for defendants Thomas McClong and Elbridge Kemble.
Suit by George H. Piatt against Thomas K. MeClong and others. Pill dismissed as to defendant Green, and a reference ordered as to the others.
William B. Knight and Samuel H. Richards, for complainant.
A. H. Swackhamer, for defendant George G. Green. W. J. Kraft, for defendants Thomas McClong and Elbridge Kemble.
GREY, V. C. (orally). The complainant files his bill in this case as a judgment creditor of Thomas K. McClong. He sets up the recovery of a judgment, without mentioning the issuing of any execution and levy upon the premises alleged to have been fraudulently conveyed. He states that McClong, the defendant in the judgment, purchased of Green a farm in Gloucester county, describing the premises, 50 acres or more; and that Green, on November 8, 1899. executed to him a deed for the land, in blank as to the grantee, and delivered the deed to McClong, allowing McClong to insert therein the name of any one he might choose. The complainant charges that the deed is void, and that Green holds title to the land in trust for McClong. It is further alleged that McClong caused his own name to be inserted in the deed from Green as grantee, and then made and executed a deed to the defendant Elbridge G. Kemble, and lodged both deeds for record. The complainant also alleges that since the execution of the deed to Kemble, McClong has exercised actual ownership over the land, etc.; and, although $1,000 was mentioned as the consideration, it did not pass, or at least no adequate consideration passed. He then charges that the deed to Kemble was made by McClong for the purpose of keeping him (the complainant) from collecting his debt, and that Kemble holds title in trust for McClong, and that in equity the land should be subjected to the operation of the complainant's judgment. The bills prayed for answer without oath, and for discovery as to the transactions in question against all the defendants, and that the land may be decreed to be the property of McClong, or, if it be more equitable, that Green and Kemble may be declared to be trustees, and that the land may be sold under execution, or by the decree of this court, and that the complainant may be paid out of the proceeds of the sale, and that the defendant may be decreed to join in a conveyance to the purchaser, if necessary, and in the meanwhile for restraint against conveyance by the complainant, and for further relief. There are three answers; one by the defendant McClong, another by the defendant Green, and another by the defendant Kemble. The defendant McClong leaves the proof of the judgment of the complainant to be made by him as he is advised, and denies the execution of the deed in blank as to the grantee, and asserts that when Green signed, sealed, and delivered the deed this defendant's name was written therein as grantee, and that it was not delivered in blank. He denies that Green has any interest in the land, equitable or legal; denies that the deed was executed with blank consideration; admits that it is true that the deed from the defendant to Kemble was made at the time set forth in the bill; denies that he (McClong) has exercised any act of ownership over the property, or claims to have any power over it to make title; denies that the conveyance to Kemble was without consideration, or for any purpose to hinder or defraud the complainant in the collection of his debt, and that Kemble has acquired any title in trust for the defendant. He narrates the circumstances under which the deed was made to Kemble, stating a pro-existing indebtedness on the part of the defendant McClong to Kemble of the sum of $3,670.81 at the time of the filing of the answer, February 15, 1900, for cash loaned and advanced by Kemble to the defendant McClong, and then further states that the deed made by the defendant McClong to Kemble was given as security for money owing by McClong to Kemble, upon agreement that he should make such a deed; denies that the defendant McClong has any interest whatever in the land; denies that Kemble at the time knew anythingabout McClong's indebtedness. The answer of Kemble sets up the indebtedness of McClong to him, stating it to be $3,670.81; states that he knew nothing about the transaction of McClong's financial business affairs; knew nothing about the claim or contemplated suit of the complainant; that he had no knowledge whether the deed of Green to McClong was executed in blank; states that when he saw it McClong's name was inserted therein; that he (Kemble) believed it was inserted before signing and delivery, and charges that to be the fact. Kemble further answers that McClong has no interest in the lands; that they are worth about a thousand dollars; denies that McClong is exercising any acts of ownership over the premises since the deed to him; avers that the conveyance to him (Kemble) was not made to hinder and defraud defendant in the collection of his debt from McClong; denies that he holds the land in trust for McClong. The answer of the defendant Green is limited to transactions relating to the delivery of the deed, denying that its consideration and the name of the grantee were left in blank, when it was delivered, in such manner that McClong might insert as grantee any name that he might choose; alleging that the defendant Green had no interest in the transaction except to receive the consideration money for the conveyance: that he has no interest whatever in the premises, does not hold any lands in trust for McClong, or any other person. On these answers issues have been joined, and the case has come to a hearing.
As I understand the issue here presented, the complainant undertakes to prove two elements: First. That the deed from Green to McClong, here produced in evidence, was inoperative, because at the time of its delivery from Green, the grantor, no grantee was named in it, and no consideration was set forth. It is extremely doubtful whether the complainant can impugn the deed on those grounds. The complainant is neither party to the deed nor does he claim title under the grantor. His interest in the property conveyed by this deed arises by virtue of a judgment against a person who he alleges was not named as grantee in the deed when it was delivered, but who, the complainant avers, was the person who had advanced the consideration, and therefore was entitled to be named grantee, and who was afterwards, as he alleges, named as grantee by putting his name in the deed. I say it is doubtful whether the complainant has any status to impugn the validity of the deed, the operation and effect of which, as it presently stands expressed. Is to put the title in the person in whom he is interested, and who, he contends, advanced the consideration. But, if it be deemed that he had a right to raise the question, he must then show that the alleged circumstances necessary to raise the question actually took place. He claims that there was no conveyance because of the omission from the deed, and that Mr. Green still holds the title in trust for McClong. If Green does so hold the title in trust for McClong, it must be because McClong paid for it. In my opinion, the evidence shows just the reverse of this claim of a defective deed because of the alleged omission. The deed, it is admitted, was not, when signed by Mr. Green, passed to any grantee finally by way of delivery, but was sent to the West Jersey Title Company to be what is called "O. K.'d"; that is, to be passed upon by that company as to the title. Mr. Livermore (Mr. Green's agent) swears—and there is nobody who disputes his testimony—that he gave the deed to McClong, signed by Green, and without the name of any grantee, for the purpose of taking it to the West Jersey Title Company. A memorandum is indorsed on the back of it, showing that at the time when it got to the title company it was O. K.'d. This memorandum calls attention to the fact that the deed has no named grantee and no stamp. The testimony very clearly shows that at or previous to that time there was no delivery of the deed to McClong. The absence of stamps at that time strongly corroborates the testimony of Livermore to the effect that the handing of the deed to McClong was not a delivery. This is the sum of the testimony of Livermore, who conducts the business of Mr. Green; of Mr. Carroll, the scrivener who drew the deed; and of McClong, who received it for transmission for the inspection by the West Jersey Title Company. The deed was submitted to the West Jersey Title Company, and was then brought back again by Mr. McClong to Mr. Livermore. and was afterwards completed, and delivered to McClong. This delivery of the deed after it was completed was made in the presence of Mr. Green, and with his knowledge and consent. Mr. Livermore, who was Mr. Green's secretary, testifies to this, and so does Mr. Carroll, the scrivener. The latter's testimony is more definite. He says that McClong was at Green's office for the purpose of concluding the transfer; that Mr. Green was also there, and cognizant of the business there being done. Mr. Carroll says there was previous conversation between Green and Mr. Livermore; that Mr. Livermore then instructed him (Carroll) to insert Mr. McClong's name in the deed. This was done, and, thus completed, it was passed to Mr. Livermore. Mr. McClong then says he then received it from Mr. Livermore. It seems to me that there can be no doubt but that Mr. Green approved of and directed the insertion of Mr. McClong's name in that deed coincident with the act of delivery. It was done in Green's presence, and with his assent, by his secretary, and was Green's own act. The mere fact that it had theretofore come into Mr. McClong's possession in an imperfect condition did not prevent a subsequent perfect delivery, after the deed had been completed by inserting McClong's name as grantee. The point is, what was its condition, when it was given to McClong, forthe purpose of operating as a deed to pass title? All the indications of the memorandum on the face of the deed as well as the testimony of the witnesses go to show that at that time there was a consideration named in it, and that the grantee's name had been inserted. Irrespective, therefore, of the status of the complainant, as a mere creditor of McClong, to attack an antecedent conveyance appearing on its face to have been made to McClong on the ground that it is inoperative because not perfected at the time of its delivery,—irrespective of that, I say,—the proofs show that the deed was in fact completed before it was delivered, and that it passed title to McClong according to the face of the deed. This transaction took place in entire good faith. No fraud is imputed, and there is no allegation that there was any contrivance between Col. Green and McClong to hide the fact that McClong had an interest in the property. Indeed, if that were the case, if the theory of the complainant be correct, and there was a purpose on the part of McClong to hide his property from his creditors, and he received the deed in blank, he certainly would not have put his own name in the deed as grantee. He might, if it was given to him in blank, have put in any name as grantee, and, if he intended to evade the claim of the plaintiff or other of his creditors, whether in judgment or out, he would naturally have inserted the name of Kemble, or of some friend, and thus have obtained the transfer of the title to be made directly from Green to the selected grantee. McClong would then not have appeared to have any interest at all. However, the weight of the testimony is all one way to show that, when the deed was actually delivered to McClong for the purpose of conveying title, it was a complete deed as to consideration and grantee, and operated to pass Green's title to McClong. The plaintiff has, therefore, failed to show one element which he sets up, namely, the inefficiency of the deed from Green to McClong, and has also failed to establish any trust in Green for the benefit of McClong, because, the deed being effectual, all title went out of Green. The bill of complaint as to the defendant Green, who is brought here to answer solely because he is alleged to be trustee of the title for McClong, roust be dismissed, with costs in favor of the defendant Green.
That, however, does not dispose of the case, because the complainant claims that the conveyance from McClong to Kemble is without consideration, fraudulent, and void, and undertakes the responsibility of proving that. The issue between these parties has been raised and joined. I find adversely to the complainant upon that issue to this extent. There has been proof to show that the conveyance to Kemble was for the purpose, as stated in Kemble's answer, of securing a debt owing by McClong to Kemble. Kemble has foolishly attempted to secure a (Sebt by a deed. There is no evidence of any fraudulent purpose on his part in doing this. There is no proof that at the time he took the deed he knew of the existence of debts owing by McClong to his creditors. Nor is there any proof which shows that Kemble took this title by a deed, rather than a mortgage, for the purpose of hindering McClong's creditors in collecting their claims. The utmost the testimony shows is that Kemble knew that McClong was not able to pay him (Kemble). That does not show that he knew that McClong was indebted to other persons, and to defeat them took this conveyance of his property. As I said, he was foolish enough to take a deed, instead of taking a mortgage, to secure his debt due him from McClong, and he will have to assume the obligation of showing what the amount of that debt was. The showing of the case is adverse to the defendant Kemble on one of the issues made; that is, he alleges (and so does McClong) that McClong has no interest in the premises. It is an impossibility that there can be a conveyance of McClong's property to Kemble to secure a debt owing by McClong to Kemble, and yet McClong have no interest in the land conveyed. When a deed is made for the purpose of securing an existing debt, there is always an interest in the property remaining in the grantor,— what is called an "equity of redemption"; his right to pay the amount of the debt and have the property reconveyed. No matter what a deed may say on its face, a court of equity will look at the real facts. The evidence here given shows that Kemble had a claim against McClong, and the property in question was conveyed to Kemble to secure that debt. If to-day McClong should pay that claim, he has a right to have that property reconveyed. That is his equity of redemption. When the complainant secured his judgment against McClong, he had a right to have the value of this equity of redemption, which resides in McClong, applied in payment of the debt which McClong owed to him; that is, whenever what is secured to be paid to Kemble by the deed made to him shall be paid to Kemble, the complainant has a right to have the rest of the property applied to the payment of his judgment The testimony, as well as the answer of Kemble, refute the idea that the deed to him was an absolute conveyance.
It appears that the items of McClong's indebtedness to Kemble, to secure which the deed was made, are included in an account of several thousand dollars in items of from five to twenty dollars each. In the present crowded condition of my trial list I have not time to hear such testimony. It may be taken before a master much more conveniently. The complainant has a right to a statement of an account of the amount due to the defendant Kemble, to secure which the deed in question was made. I willtherefore advise an order of reference to a master to state an account as between the defendant Kemble and the defendant McClong of the amount to secure which the deed from McClong to Kemble was made.
Mr. Kraft: If your honor will permit me, I will state that in a similar case—a creditors' bill filed by the New Jersey Trust Company against the defendants, where a similar situation arose—the court refused to make a reference, unless it appears that the value of the property was of a value sufficient to cover what the defendant testifies is due him, and allow the complainant some equity in the property.
THE VICE CHANCELLOR: The condition of the evidence submitted justifies the ordering of an account as stated. There has been no such showing of the value of the premises as to warrant a refusal of an accounting as to the amount secured by Kemble's mortgage. The allegation in complainant's bill states that the defendant debtor, McClong, has, since the deed made by him to Kemble, remained in the possession and enjoyment of the premises conveyed to Kemble. That is denied by the answers of McClong and of Kemble, and no proof whatever has been offered sustaining the charge, and it must, therefore, so far as the showing of fraudulent intent is dependent upon that allegation, fail. I will advise an order of reference to a master to take the account mentioned.