i'EDEBALRlWOnTER,v:ol. 70. DOBSON et a1. v. SNIDER et al. (Circuit Court, D. 'Minnesota, Fourth Division. October FRAUDuLEN'r CONVEYANCES-,EvlDI<;NCE.
1895.)
In a suit to set aside certain conveyances of land as made in fraud of creditors, it appeared that S., the grantor, had been for some years a large borrower of money frolll theU. Bank, of which he was a director, as well as from other parties; that in November, lS90, his indebtedness to the bank amounted to $44,000, and in that month he executed to one K., a director of the bank, a deed of certain valuable lands, absolute Oil its face, but:intended as a mortgage, in which a consideration of $85,0(iO was named; that the deed was not recorded until more than a year later, at a time when notes, discounted for S. by complainants, in the belief that he owned the land, had been protested, and shortly before S. was obliged to i.'eSign his position as directol'of thll U. Bank, on account 'll financial embarrassment. Held, that circumstances showed a desire and intent on the part of the ball\{ andS. to sl;lie,ld and benefit S. at the,expense, of some one and that the deed should be declared void as against complainants.
'l'his suit by John and James ,Dobson against Samuel 1'. Snider, the, Union Bank of Minneapolis, and others, to set aside certain deeds as fraudulent The bill seti:i forth that on April 6, 1892, complainants obtained a judgment agaiIist <defendant. snWer in the SlUll of 1$10,295.82, on two notes, of $5,000 each, executed by M:. L. :ij.alloiVell, Jr., &. Co., a partnership consistillg atM. J. Hallowell and S. P. Snider, to the order of and indorilcd bytbe'lntter, on which execution issued, and was returned wholly unsatisfied; 'lU1d 'on: September 8, 1892,' a transcript of the judgment was filed in tbe oflice<if tlleclerk of the,district court in Rubbard county, where certain landlil,ill contJ,'oversy in. this suit l!.re situated. .It is, further alleged that, in Snider, being largely engaged in real-estate and other transactions in 'Minnes'ota was a laxge bOl;rowerof money, and in order to obtil1n a high rating, ahd thus raise his' credit, he made .false statements of his assets to' a mercantile agency; '(tMt the noteS, iJl, question were offered tor" ,to complainantljl" who, ,applying to Agency, were informed by it that on ,Tanuary 1, 1889, Snider had over his own signature stated to the agency his net assets to be $1,183,000, with $92,000 liabilities; that in said statement Snider represented himseif as the owner of pine lands in Minnesota, valued at $125,000,. and, at the time of the purchase of t,be notes III question, deeds in his name tQ large and valuable tracts of pine lands ll.ppeared on record in the counties of Cass and, Hubbard, Minn.; that complaina:nts, relying upon the statementI'! received from the agency, and on thefacttnaf Sniderwas'the owner Of the pine landS aforesaid, purchased the notes 'in question before maturity; that Snider was a large borrower fro:m ,tJ;lEj Union Bank of Minneapolis, of ,Which Itewas a director, and the bank,on November 21, 1890, Iq order to,secure took two deeds absolute on their face, from, Snider and Wife, of, pine lands in Cass and HUbbl(i-d counties, to one Austin F; Kelley, a iUi-ector <lithe bank; that the deeds !Were not recorded until November 23 and ,December 5, 1891, shortly before tbe maturity of the notes ill question, and, before complainants could. obtain judgment and levy on, sald lands; that they were withheld fromrecOl:d by agreement between tliebank and Snider, in order that tbe latter might not be and he be prevelited from borrowing otber: sUms of money; and that defendants now admit that these deeds were' :not absolute cOllveyances, but were the nature, of mortgages. Complai,nl1ntsask that tbese conveyances be de,clared nUIr'and void, and for other relief. The answers admit the execution of the deeds to secure Snider's indebtedness to tbe bank and for future advances; deny any agreement to withhold the same from record; and allege that they were intended to be recorded, but, through oversight on the part of the president of the
DOBsoN V. SNrDER.
11
bank, were not placed on record when given; deny that Snider ever made false representations to any meJ;'cantile agency; allege that the deeds were confederacy, gIven and receIved in goodtaith; and deny any or agreement as in the bill charged.
Lewin W. Barringer (Keith, Evans, Thompson & Fairchild, of counsel), for complainants. Cross, Carleton & Cross and F. B. Hart, for defendants. NELSON, District Judge. The main issue js the bona fides in the execution and recording of the deeds, so that the right of complainants to the relief sought in their bill must depend upon whether they have proved the fraud set forth therein. While there is little or no conflict in the testimony, there is a sharp contention between counsel as to the credit to be given to the same. Snider, and Neiler the president of the bank, with whom the, negotiations were had, testify that there was no agreement or understanding not to record the deeds, and that the failure so to do was due entirely to an oversight on the part of Mr. Neiler. Oounsel for complainants insist that the surrounding facts and circumstances negative this testimony, and that the failure to record was due to a desire and intent on the part of the bank not to injure the credit of Snider, and to give him an opportunity to continue borrowing money elsewhere, which he could not have done had the deeds been placed on record. The facts are as follows: Snider had been for some years a large borrower of money from the bank on his individual paper. In De· cember, 1889, March and June, 1890, this indebtedness amounted to $39,000, and in October and November, 1890, it. increased to $44,000. On November· 21, 3,890, Snider and wife executed two deeds absolute on their face, of these pine lands in Cass and Hub· bard counties to one Kelley, a director of the bank, to whom, however, they were never delivered, with a stated consideration of $85,000. These deeds were nQt filed for record until more than a year after their execution, but were recorded a short time before Snider was compelled to resign his positionasa director of the bank on account of financial embarrassments, and after these notes of complainants had been protested. It is admitted that these deeds were in reality only mortgages given as security for the debt due the bank; but they state nowhere that they were given to Kelley as trustee, or that he was connected with the bank, and, when recorded, gave no notice save of an absolute sale ·for·an ample consideration. The question now is, will a court of equity declare this to be an honest and proper transaction, adopt it, and stamp it with its approval? It is true that the mere nonrecording of these deeds until some time after their execution is not necessarily a badge of fraud, and that forgetfulness may be accepted as an excuse for failure to record; but the giving of the deeds with a consideration larger than the actual one, and the failure to place them o'D record for more than a year by the bank for whose use and benefit they were given, are matters to be taken into consideration, in the light of the surrounding facts and circumstances, in determining whether'or not this was a valid and bona
12;
70.
fide transaction.·· .If a grantee fails to record an instrument, he does so at bis peril, and accepting the testimony of Mt.'Neiler that the failure to record the deeds, the consideration for which exceeded one-tenth of the capital stock of the evidenced by notes fre· quently renewed, was due to an oversight on his part; no complaint can be made. if such results in loss. While there may have been no agreement that the deeds should not 'be recorded, it is impossible to resist the conclusion that there was a desire and intent on the part of the bank and Snider to shield or benefit the latter at the expense of some one else.' Had the intent of the bank been merely to protect Of secure itself, as it had a perfect right to do, a mortgage or a deed for the amount of the indebtedness would have sufficed. In my opinion, the action of Mr. Neiler, the president of the bank, enabled Snider to keep up a credit to which he was not entitled, and, on the strength 'thereof, to obtain money from complainants, whereby a fraud in law was perpetrated upon them. A decree will be entered declaring the. deeds of conveyance from Samuel P. Snider to Austin'F. Kelley null and void' as against the rights of complainants herein.
FOLSOM v.
et al. September 23, 1895.)
(Circuit Court of Appeals, Eighth Oircuit. No. 601. NEW TRIAL
When a motion for a new trial of an action at law has been made in the trial court, under a statute authorizing it, and has been heard on the merits, and denied, equity will not entertain a bill for a new trial of the action, based upon the same grounds.
OF
ACTION AT LAW.
Appeal from the United States Court in the Indian Territory. F. G. Barry, C. L. Herbert, and Yancey Lewis filed brief for appellant. W. O. Davis filed brief for appellees. Before CALDWELL, SANBORN, and THAYER, Circuit Judges. CALDWELL, Circuit Judge. On the 9th day of January, 1893,: the appellees, J. S. Ballard and W. T. Billingsley, brought an actioil of ejectment in the United States court in the Indian Territory against J. A. Mays, G. M. Stewart, and the appellant, L W. Folsom, to recover the possession of the W. ! of lot, 1 in block 66 in Adkin's addition to the towJ;l of Ardmore, in the ,Indian Territory. The process in the action was du,ly served on all tl:le defendants, none of ,whom answered at. the, return . At the October term, 1893, Mays and Stewart ,. filed a disclaimer; and, the defendant FoJsom not answering... judgment by default; was rendered against him. In apt time, and during the term at which judgment against the defendant Folsom was rendered, he appeared, and filed a motion to v:ac:;l;te and set aside the ; for . new.triaJ" f()):, grounds, whi'Chmotion the