Villa Nat. Bank v. Green

Full title: Villa Nat. Bank v. Green

Court: Court of Appeals of Colorado, Second Division

Date published: Dec 22, 1970

478 P.2d 681 (Colo. App. 1970)

Opinion

         Dec. 22, 1970.

         Editorial Note:

         This case has been marked 'not for publication' by the court.

Page 682

         Victor F. Crepeau, Denver, for plaintiff in error.

         Mellman, Mellman & Thorn, Isaac Mellman, Bernard Thorn, Denver, for defendants in error.

         SILVERSTEIN, Chief Judge.

         This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

         This action was brought by Villa National Bank (Villa) against Green to set aside a conveyance of real property on the grounds of fraud. The trial court ruled that the statute of limitations had run and dismissed the complaint. We do not agree.

         The undisputed facts of the case are these. On March 20, 1964, Villa loaned Green approximately $90,000. In his financial statement used to obtain the loan, Green listed certain real estate in which he held an undivided one-half interest. On August 29, 1964, Green deeded his interest to his wife who held the other one-half interest. This deed was recorded September 25, 1964. Green defaulted on the note; and Villa brought an action thereon on November 9, 1964, and obtained judgment against Green on January 13, 1967. One year later Villa caused execution to be issued on the property and discovered the transfer. This action was filed February 2, 1968, alleging that the conveyance was fraudulent as to Villa. In his answer Green alleged that the applicable statute of limitations, C.R.S. 87--1--10, had run and barred the action.

         The issue relative to the invalidity of the conveyance not having been considered by the trial court, the only question before this court is whether the statute of limitations had run.

         The controlling statute, C.R.S.1963, 87--1--10 provides:

'Bills for relief on the ground of fraud, shall be filed within three years after the discovery by the aggrieved party, of the facts constituting such fraud, and not afterwards.'

         Green maintains that Villa constructively discovered the transfer when it was recorded in September of 1964 and that the three years had run in September of 1967. Villa maintains that they were not on constructive notice until they had some type of interest in the property; I.e., until they had a final judgment against Green. The decisions of the Supreme Court support Villa's contention.

         The applicable rule of law was first stated in Gillett v. Gaffney, 3 Colo. 351, a factually similar case wherein the court said:

'That the record of a deed is constructive notice to all the world, is too broad an enunciation of the doctrine. Such record is constructive notice only to those who are bound to search for it as subsequent purchasers and mortgagees, and all others who deal with it on the credit of the title in the line of which the recorded deed belongs.'

This reasoning was reaffirmed in Greco v. Pullara, 166 Colo. 465, 444 P.2d 383, where the court said:

'In some jurisdictions a fraudulent conveyance of real estate is conclusively presumed to be discovered, therefore constituting notice, when the fraudulent conveyance is filed for record. (citing cases) However, in Colorado the record of a deed of trust or other instrument is notice only to those persons claiming under the same chain of title who are bound to search for it.'

         In Greco, the court held that there was no constructive notice until the general creditor became a judgment creditor; and that the statute ran from the date of the judgment.

         The defendant Green argues that the above case applies only to deeds of trust and not to deeds. This is a distinction without a difference. Even though Villa had extended credit in reliance on Green's financial statement, it had no claim against the real property until it became a judgment creditor. Therefore the statute of limitations did not begin to run until Villa obtained its final judgment on January 13, 1967, and thus it did not bar the action.

         The judgment is reversed and the cause remanded with direction that the complaint be reinstated.

         COYTE and ENOCH, JJ., concur.