Benjamin Grumbles, Jr. v. Sebron G. Sneed; Same v. W. S. Oldham, 22 Tex. 565

Bell, J. These two causes are brought to this court, by appeals from the District Court for Travis county. There is a single question in each of the cases. Both cases are precisely alike, in their facts, and we shall therefore treat them, for the purposes of this opinion, as one cause. The question presented to our consideration, and argued with great ability by counsel, arises upon the proper construction of the clause of our statute, concerning frauds and fraudulent conveyances, passed on the 18th of January, 1840, which relates to loans.

The appellees purchased the slaves involved in these suits, from Benjamin Grumbles, Sr., the, father of the appellant. The appellant argues that Benjamin Grumbles, Sr., held the slaves as a loan from him; that the appellees had full notice of his claim to be the true owner of the property, before they purchased; that such notice affects the appellees, as purchasers ; and that he can enforce his claim upon the property in their hands, in the same manner that he could have done, if the property remained in the hands of Benjamin Grumbles, Sr., the loanee.

The appellees admit that they had notice, before they purchased, that the appellant claimed to be the true owner of the slaves in question, and to have loaned them to their vendor; but they assert, that their vendor denied the fact of the loan; and they say that the appellant cannot enforce his claim upon the property, because Benjamin Grumbles, Sr. had been in possession of the slaves in controversy, for more than three years previous to the sale by him to appellees, without any demand made and pursued by due process of law, by the pretended lendor, the appellant; and because the pretended loan was not declared by will, or by deed in writing, proved and recorded, as is required by the latter clause of the second

section of the Act to prevent frauds and fraudulent conveyances, of the 18th of January, 1840. That clause of the statute.of the 18th of January, 1840, relating to loans of goods and chattels, or slaves, has never received a construction by this court. The 40th

section of the “Act organizing inferior courts, and defining the power and “jurisdiction of the same,” approved 20th December, 1836, was considered by this court, in the case of Crosby v. Huston, 1 Tex. Rep. 203. And in the case of Fowler v. Stoneum, 11 Id. 478, the first clause of the 2d

section of the Act of the 18th January, 1840, was construed by this court. It is contended, on the part of the appellant, that the principle enunciated by this court, in the cases of Crosby v. Huston and Fowler v. Stoneum, applies equally to the clause of the statute of the 18th January, 1840, which relates to loans; and that notice of a loan, will affect the title of the purchaser from the loanee, in the same manner that notice of an unregistered deed will affect the title of the second purchaser, who takes another deed from the same party that made the first conveyance, as was decided in Crosby v.

Huston,—or in the same manner, that notice of a former fraudulent conveyance, will affect the title of a subsequent purchaser from the fraudulent vendor, as was decided in the case of Fowler v. Stoneum. It is contended by the appellant, that the affirmance of the judgments of the District Court, in the cases now before us, will virtually overthrow the cases of Crosby v. Huston and Fowler v. Stoneum, and that those cases will no longer be authoritative precedents. Upon the maturest reflection that we have been able to give to this subject, we have come to a different conclusion. The 40th

section of the Act of December 20th, 1836, which received a construction in the case of Crosby v. Huston, is in the following terms: “No deed, conveyance, lien, or other instru“ment of writing, shall take effect as regards the rights of third “parties, until the same shall have been duly proven and presented to the court, as required by the Act for the recording “of land titles,” &c. The decision in the ease of Crosby v. Huston, was upon the well established principle of courts of equity, that fraud shall not be permitted to prevail.

It is upon this principle, that courts of equity will not permit a subsequent purchaser, who has notice, at the time of his purchase, of a prior unregistered conveyance, to avail himself of his title against the prior Conveyance. The authorities cited by Chief Justice Hemphill, in the case of Crosby v. Huston, are the leading cases in which this rule of the equity courts is declared. He also cites Judge Story’s Commentaries on Equity Jurisprudence, where the authorities are reviewed. And the rule is laid down in Crosby v.

Huston, with its proper and well established limitation, and that is, “that the letter of the statutes (on the subject of registry) will “be departed from, only where the notice (on the part of the “subsequent purchaser,) is so clearly proved, as to make it “ fraudulent in him to take a conveyance in prejudice to the “known title of the other party.” We are accustomed to say a great deal about the policy of the registry laws. What is the policy of the registry laws ? Certainly it is mainly to prevent and suppress frauds.

The registry laws are but an extension of the principle of the statute of frauds, which requires contracts for the sale of land to be in writing.. One statute requires the contract to be in writing; the other declares that it shall not take effect, as against the lights of third parties, unless it be also registered. The object of both laws is to prevent and suppress fraud. But statutory enactments, which seek to control the actions of men, can never perfectly attain their object; and so frauds will be perpetrated, notwithstanding the efforts of the law makers to suppress fraud.

And for this reason, the courts have engrafted an exception upon the statute—an exception in the very spirit of the statute itself, and having directly in view the object which the statute seeks to accomplish. The registry Acts require certain instruments to be recorded. Why ? To prevent frauds. But how will registration prevent frauds ? By giving notice to all the world of what has been done. Shall one, then, who has notice of what has been done, where there is no registration, be permitted to practice a fraud, because another has not used a means, pointed out by the law, to prevent the perpetration of fraud ?

The courts say that he shall not. And this is what the case of Crosby v. Huston says. We think the authority of the case can never be overthrown, while it is the policy of the law to prevent frauds, and while the courts of the country have a proper sense of their high vocation. In the case of Fowler v. Stoneum, 11 Tex. Rep. 478, the first clause of the second

section of the Act of 18th of January, 1840, was under consideration. This clause, as was stated in the opinion of the court, in the case referred to, embraces the substance of the second

section of the statute of 13 Elizabeth, ch. 5, and of the 27 Elizabeth, ch. 4. The English and American decisions on the question involved, were very carefully examined by the court.

It was shown that, even in England, there had been, in the language of Judge Story, “no inconsiderable “diversity of judicial opinion, in reference to the true construction of the statutes of Elizabeth.” It was shown, also, by the present chief justice of this court, that the doctrine finally adopted by the English courts, is admitted, by the ablest jurists, to be full of difficulty; and according to Judge Story, “has “been confirmed, rather upon the pressure of authorities, and “the vast extent to which titles have been acquired and held “under it, than upon any notion that it has a firm foundation “in reason, and a just construction of the statute.” It was also shown, that the American courts had found much difficulty in yielding their assent to the doctrine of the English courts; and that, in fact, the ablest judges of this country, Chief Justice Marshall, Chief Justice Spencer of New York, and Chancellor Kent, have not been willing to go to the full extent of the English doctrine.

It was shown to be announced by Chancellor Kent, as “the settled American doctrine,” that “a bond fide “purchaser, for a valuable consideration, is protected under “the statutes of 13 and 27 Elizabeth, as adopted in this country, “whether he purchases from a fraudulent grantor, or a fraudulent grantee.” It was shown also, that the Supreme Court of Pennsylvania, in the case of Lancaster v. Dolan, 1 Rawle’s Rep. 231, and in the case of Foster v.

Walton, 5 Watts’s Rep. 378, wholly rejected the doctrine of the English courts, and held, that a voluntary conveyance in Pennsylvania, is not void against a subsequent purchaser, by force of the statute 27 Elizabeth, ch. 4. Amidst such a diversity of judicial opinion, and because the question was an original one in the courts of this State, this court, in the case of Fowler v.

Stoneum, felt at liberty to think for itself, and to adopt such a construction of the statute, as seemed to be most strongly supported by reason, and most in accordance with its true intent and meaning, keeping in view the fact, that the great object of the statute is, to prevent frauds upon creditors and innocent purchasers. In what we have to say in reference to the construction of that clause of the statute to prevent frauds and fraudulent conveyances, which is involved in the cases now before us, we think it proper to premise, by noticing the peculiar structure of our statute of frauds.

Our statute has more than one object. Its first

section is a re-enactment, in substance, of some of the most important provisions of the statute of 29 Charles II. ch. 3, which was entitled “An Act for the prevention of frauds and perjuries.” The first clause of its second section, as we have already seen, embraces the substance of the statutes 18 and 27 Elizabeth. Its last clause, in reference to loans of goods and chattels, or slaves, has no counterpart in either the statute 29 Charles II, or the statutes of 13 and 27 Elizabeth; but in its spirit and intent, it has a much closer relationship to the statute of Charles, than to the statutes of Elizabeth.

The statutes of Elizabeth have for their object, the prevention of fraud merely. The statute of Charles has an additional object. It not only seeks to prevent frauds, but it seeks to prevent perjuries also; and in construing the first

section of our statute, and the last clause of the second section, it should be borne in mind, that the prevention of perjuries was no less the object of the law makers, than the prevention of frauds. To prevent frauds, and at the same time to prevent perjuries, the statute prescribed the kind of evidence by which certain things shall be proved.

It provides that, “where any “loan of goods and chattels, or slaves, shall be pretended to “have been made to any person with whom, or those claiming “under him, possession shall have remained by the space of “ three years, without demand made and pursued by due pro“cess of law, on the part of the pretended lender,” ***** “the same shall be taken, as to creditors and purchasers of the “persons aforesaid, so remaining in possession, to be fraudulent “within this Act, and that the absolute property is with the “possession, unless such loan is declared by will, or deed in “writing, proved and recorded as aforesaid.” We are of opinion that this provision is in the nature of

an Act of limitation, as well as

an Act having for its object the prevention of frauds and perjuries. We think it intended to compel persons, who make loans of goods and chattels, or slaves, to have the loan declared in such manner, that all the world may know what title the possessor has. We do not think that it was the intention of the framers of the statute, to leave the question of notice to be adjudicated by the courts, in any case.

We do not think that, in contemplation of the law, one who purchases from a party who has been in possession of goods and chattels, or slaves, for more than three years, can commit a fraud, by his purchase, against another, who asserts that he has loaned the property to the party in possession, without exhibiting any written contract of loan. This clause of our statute was first enacted in Virginia, in the year 1785. It has since been adopted generally in the southern States. There are decisions upon it in the States of Virginia, Kentucky, Tennessee and Alabama, and probably in other States.

These decisions have uniformly held, that, as to purchasers from the loanee, and as to creditors, the absolute property in the thing pretended to have been loaned, is with the possessor, and that the question of notice will not be considered by the courts. (See the cases of Gay v. Mosely, 2 Mumf. Rep. 543; Meaux v. Caldwell, 2 Bibb’s Rep. 244; Withers v. Smith, 4 Id. 170; Craig v. Payne, Id. 337; Ferguson v. White, 1 A. K. Marsh. Rep. 6; Taylor v. Morton, 5 Dana’s Rep. 365; Gaines v. Wiggs, 9 B. Mon. Rep. 282; Kenner v. Smith, 8 Yerg. Rep. 206; Gilliam v. Spence, 6 Humph. Rep. 160; Oden v. Stubblefield, 4 Ala.

Rep. 40.) We are disposed to follow this long line of authorities, believing that the decisions of the enlightened courts of the States above named, declare the true sense and meaning of the statute; and not feeling ourselves at liberty to engraft upon the statute another exception, not clearly demanded by its leading objects. We do not think there is any force in the argument of the counsel for the appellants, as to the effect of the 21st

section of the statute of 5th February, 1841. That statute, even if it could be made to apply to the question of a loan of goods and chattels, or slaves, only dispenses with registration, in a case where there is a written instrument that may be recorded. In this case, there was no written instrument, declaring the loan.

And we think the statute intended, so far as creditors and purchasers are concerned, to cut off the proof of such loans, by any other means than those pointed out by the statute itself; or, to say the least, that mere verbal declarations of a loan, should not be held to affect a creditor, or purchaser from the party who has held the possession for the time pointed out by the law; and that no one can perpetrate a fraud, by purchasing in the face of a mere claim not evidenced by will, or deed in writing.

We think, therefore, that the judgments of the District Court ought to be affirmed, and it is ordered accordingly. Judgments affirmed.