CORWINE et al. v. THOMPSON NAT. BANK OF PUTNAM et al., 105 F. 196

EVANS, District Judge, after stating the facts, delivered the opinion of the court. Upon the case as presented by the record, several questions of great importance to the parties arise, and each has received the very careful consideration of the court. 1. The evidence has failed to satisfy us that the consideration for the conveyances from John W. Corwine to his children was inadequate.

It seems to the court upon the testimony that, under the conditions then existing, the consideration paid for this undivided interest in the land was not inadequate at all, and certainly not so grossly so as thereby to taint any of. the conveyances with fraud. The children of the grantor probably paid more than could have been obtained for this undivided interest from any other purchaser at that time and under all the circumstances then surrounding the parties. Nor can we doubt that the consideration was in good faith paid to the full extent agreed upon.

It is equally certain that the entire sum thus paid was actually devoted to the satisfaction of debts upon which John W. Corwine was bound as surety for the National Cotton <Seed Oil & Huller Company. These facts make it obvious that though there was a manifest preference of certain creditors, which is permitted by the laws of Ohio, there was no actual fraud in the transaction, although it occurred between a father and his children, — a-fact which always calls for the careful scrutiny of the court. The close examination of the testimony which we have given in this case has led us to the conclusion just stated. 2.

It is also clear from the testimony that, whatever the cause of the delay, there was no agreement nor understanding between the grantor and any one of the grantees that the deeds should be withheld from record. There appears to he no evidence to show that John W. Corwine, in making these conveyances to his children, entertained any purpose to hinder, delay, or defraud his creditors, and certainly there is no testimony to show that any of his children knew of such intention if he had it, nor that any one of them intended to aid him in such purpose. So far as the evidence manifests (he intention of John W.

Corwine at all, it shows that he intended, not to defraud but to prefer some of Ms creditors, to the exclusion, of others, which, as we have seen, it was lawful for him to do under the laws of the state of Ohio. Cross v. Carstens, 49 Ohio St. 548, 31 N. E. 506. JTis children purchased and paid for his property, and thus enabled him to consummate this purpose.

Tire absence of knowledge upon the part of his children of a fraudulent purpose of the father, coupled with the fact that a valuable consideration was in good faith paid by them for the land, makes it quite clear, upon the authorities, that at least three of the appellants should not be required to surrender to Corwine’s creditors the lands they had purchased and paid for, and the value of which they had already seen fully devoted to the payment of his debts as far as ii. would go. Jones v. Simpson, 116 U. S. 609, 6 Sup. Ct. 538, 29 L. Ed. 742; Crawford v. Neal, 144 U. S. 585, 12 Sup. Ct. 759, 36 L.

Ed. 552; Bamberger v. Schoolfield, 160 U. S. 149, 16 Sup. Ct. 225, 40 L. Ed. 374. This being so, and especially in view of

section 4134 of the Ohio Statutes,, and the authorities presently to he noticed, the mere withholding from the records by W. B. Lee, at the instance of John W. Barger, of the several deeds to Mary W. Lee, Rachel M. Foster, and James I). Corwine, without their knowledge or direction, was not, in our opinion, a fraud upon any creditor of John W. Corwine. The title of Corwine to. the land passed to those grantees upon the delivery of the deeds. They did not authorize John. W.

Barger to represent them, and in fact: he did not represent them, nor act for them, when, for purposes of his own, and probably those of the corporation he represented, he induced W. B. Lee to withdraw from the recorder’s office of Ross county, before their registration, the deeds to Mrs. .Barger and Mrs. Lee, which had been sent there for record, nor when he induced Lee. for like reasons, to withhold from the records the deeds to the lands in Pike county. No ¡creditor was thereafter induced, either by Mrs. Lee, Mrs. Foster, or James D.

Corwine, or by any one acting for them, to loan money or to renew notes theretofore given or indorsed by their father.

They had purchased and paid for their father’s interest in the lands, the deeds therefor had been executed and delivered to them, and unless they withheld them from the records, and actively concealed them for the purpose of giving to their father a fictitious credit, and unless that purpose was so carried into effect as thereby to induce some of the complainants or cross-complainants to loan money or disadvantageously to change their condition respecting some debt or right against Corwine, then no party to this suit has any reason to complain because their deeds were not put to record.

There is no proof of any such purpose, or of any such conduct upon the part of either of these three appellees, nor of any one'authorized to act for them. It therefore results that the. judgment of the circuit court against the appellants Mary W.'Lee, Rachel M. Foster, and James D.

Corwine, and adjudging the Conveyances to them, respectively, to be fraudulent and void, was 'erroneous', and that instead of such judgment being rendered the bill Of. complaint and the cross bills against them should have been disunited. ,' 3: We' have been constrained, however, to reach a different con- . elusion respecting the appeal of Mrs. Barger, not b.ecause of any .'wrongful conduct or acts of her own, but for the reason that she .'must be considered to have delegated to her husband, John W.

Barger, power and authority to act for her respecting the deed and all ^ that pertained to it, and he so exercised that authority as to give to . the complainant and the cross complainants, as creditors of her father, an equitable claim to the interest in the land which the latter ' conveyed' to her, which must be treated as superior to her own rights .therein.

Section 4134 of the Ohio Statutes is in the following language: ,< “All other deeds and instruments of writing for the conveyance or incumbrance of any lands, tenements or hereditaments, executed agreeable to the , provisions of this chapter, shall be recorded in the office of the 'recorder of '!the county in which the premises are situated,'and until so recorded or filed 'ftwr record the same shall be deemed fraudulent, so far as relates to a subsequent- bona fide purchaser having, at the time of purchase, no knowledge of ...the existence of such former deed or instrument.” It; cannot be doubted that it is the purpose of this statute to require ' that deeds to land shall be recorded, but no time is fixed by the sec.'tipil within which it must be done.

It is expressly provided, however, ! that' until the deed is so recorded it shall be deemed fraudulent, so ; far as it relates to a subsequent bona fide purchaser who has no 'knowledge of the former deed. But not only upon its face, but upon 't^e'familiar maxim, “Expressio unius est exclusio alterius,” this pro'tecfive' purpose of the statute is limited to subsequent bona fide pur- ' chasers only.' It is not in terms extended to creditors. And the supreme court of Ohio, in its decisions construing this statute, have ’ left1 ho doubt upon the subject. Stewart v. Hopkins, 30 Ohio St. 502; Irvin’s Lessees v.

Smith, 17 Ohio, 226. As none of the complainants or cross complainants are subsequent bona fide purchasers, they 'would be entitled to no relief in this case were it not fbr certain ' eqqitable principles which operate upon the ground of estoppel, and ' which have found ah authoritative expression in the opinion of the 'supreme court of the United States in the case of Blennerhasset v. Sherman, 105 U. S. 100, 26 L. Ed. 1080.

It was there held that a 'mortgagee who knows of the insolvency of the mortgagor, and who, fof the; purpose of giving the former a fictitious credit, actively con'ceáls. the'mortgage, does not put it upon the records, and who repre;:seiitS'the mortgagor as having a large estate and unlimited credit, ''doe's'such acts as render the mortgage void as against ¿he creditors !of: the mortgagor to whom the representations were made.

We 'think'this1 principle undoubtedly applies to a sale as well as to a mort'■gágé,' -ail'd' particularly where the representations operate as an inducement i.o lend money or to suspend legal remedies by the renewal. of notes which cover previous loans. We entertain no doubt that; the principles then announced by the supreme court must control oar, judgment upon the appeal of Mrs.

Barger, if the facts are such ás to, bring this ease within their operation, and we proceed to inquire' whether that is so. ,.4‘ The testimony leaves no doubt in the minds of the court; lijioii. the following propositions of fact, namely, that Mrs. Barger, then; in great distress by the bedside of her mother, who was soon to die,' delegated authority to her husband, John W. Barger, to act for' her in all matters pertaining to the entire transaction; that hb did act for her, and that by his urgent solicitation W. B.

Lee was in-, duced to telegraph to the recorder of Ross county for the return of the deeds sent there to be recorded, and before it was done; that he did this as soon as he was-informed that Lee had sent them', for that purpose, and shortly after the deeds were executed; that,s by equally urgent and timely solicitation, he induced Lee' to, keep* from the records the deeds to the lands in Pike county; that previous1 to the making of the deeds he, as representative of Oorwine nnd! of the corporation the failing fortunes of which he was trying, to; sustain, was fully aware of the extent and nature of the liabilities5 of John Mr.

Oorwine as surety of the National Cotton -Beed Oil & Muller Company, and of the utter inability of both that concern5 and of Corwine to discharge them; that after he had induced.

Lee to keep the deeds from the records he knowingly left in the loan agent Lindley's hands the authority to represent, and the means of represen ting; to the then existing (auditors of Corwine, and to others who soon afterwards became such, tha t Convine was solvent, supporting and fortifying it by the previous written statement of Corwine as to his property; that in this way Barger obtained, or assisted in obtaining, new loans for the company, upon which Oorwine was accepted as surety, and the renewal of certain outstanding notes, upon which he was likewise hound, all after the deeds were, to Barger’s knowledge, delivered to the grantees; that Barger did not in any way make known the fact of these conveyances either to Bindley or to the parties with whom he was dealing, but, on the contrary, that Barger, after the deeds were made, assured the agent of appellees, Roekhold, Brown & Co., that the notes they were expecting- to buy were perfectly good, although lie knew that they largely relied upon the financial ability of John W.

Corwine to make them so. Tt also seems to be certain that Barger did these things for the sole purpose of enabling- his corporation, principally upon the credit of Corwine, to continue to obtain new loans or renewals of the character mentioned, and that these influences operated until the chance to get such favors was destroyed by the burning of the plant of the corporation on November 7, 1894. He then very promptly advised the recording of all the deeds, and it was done at once.

Upon the evidence it seems manifest that Barger availed himself of the authority delegated to him by Ms wife to obtain a fictitious credit for John W. Corwine by representing him to he perfectly good, and by actively concealing the deed to her, and by procuring the withholding from the records, not only of that deed, but of the others. For this,'however innocent she may in fact be (and there is no proof that she knew anything about it), Mrs.

Barger is so far responsible for the acts of her husband, acting as her agent, as to be prevented and estopped from claiming the interest in the land conveyed to her by her father as against the complainants and cross complainants, whatever may, as between the latter, be hereafter determined to be their respective priorities in right. The deed to Mrs. Barger must, upon the grounds stated,.be held to be void as to Corwine’s creditors, and we think the facts upon which this result depends have been established by the proof with all the clearness demanded by the rules laid down in the case of Brant v.

Iron Co., 93 U. S. 336, 23 L. Ed. 927. The creditors of John W. Corwine, having been induced to do what they did by means of the conduct of the agent of Mrs. Barger, have a better right to the protection of the court than she has, not only upon grounds of estoppel, but also upon the familiar principle that where one of two innocent persons must suffer that one shall suffer who furnished the opportunity for inflicting the injury. Other questions have been raised and argued, but, while we have examined them, we do not deem it needful to discuss them in this opinion.

We conclude that the judgment of the circuit court against Keziah D. Barger was proper, with this exception: Inasmuch as the deed to her was void as to appellees, the judgment should have directed the ascertainment of the enhancement of the value of the interest of John W. Corwine in the land by reason of the lasting improvements put thereon by her, and should have directed that any sale under4'the judgment of the interest in the land conveyed to her by him should be subject to a charge in her favor of one-fourth of the enhancement of the value of said interest as thus ascertained.

As to her, the judgment should be and is modified to that extent, but it is otherwise affirmed. Except to the extent indicated as to appellant Keziah D. Barger, the judgment of the circuit court is reversed, with costs, and remanded, with directions to dismiss the bill and cross bills as against the appellants Mary W. Lee, Bachel M. Foster, and James D. Corwine, and otherwise to proceed pursuant to this opinion. As between appellant Keziah D. Barger and the appellees, no costs are adjudged.