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SUPREME COURT OF OREGON.
(12 Or. 447)
CRAWFORD and others v. BEARD and others.
Filed November 9, 1885.
1. CONSTITUTIONAL LAW-JUDICIAL POWER-ENTRY OF JUDGMENT BY CONFESSION BY CLERK OF COURT.
The act of the legislature authorizing clerks of the circuit courts to enter up judgments by confession is not unconstitutional. WALDO, C. J., dissenting.
2. FRAUDULENT CONVEYANCE - SUBSEQUENTLY CONTRACTED DEBT-MANUFACT URE OF MACHINERY.
Where property has been transferred in bad faith, a creditor with whom the grantor had contracted for certain machinery may attack the conveyance, although the machinery was not actually delivered until after the transfer. 3. SAME-INTENT TO DEFRAUD.
Where a grantor by the execution of a deed intended to defraud his cred itors and the grantee has knowledge of such intention, the deed will be void as to existing creditors, and as to subsequent creditors if the grantor contemplated the contraction of the subsequent debts and did not intend to pay them, or had reasonable grounds to believe that he would not be able to pay them. 4. SAME-PRESUMPTION AS TO INTENT.
Where the necessary result of the act of a debtor is to place his property beyond the reach of legal process so as to delay creditors, it will be presumed that it was done with a fraudulent intent; but when the act is apparently regular and fair upon its face, the intent must be gathered from the surroundings.
5. SAME-CONSIDERATION IN DEED.
The consideration recited in the deed is open to inquiry, and if shown to be only a pretense, the inference would necessarily follow that the transaction was merely colorable.
6. SAME-DEED, THOUGH VOID, MAY STAND AS SECURITY.
A deed obtained under suspicious circumstances may be permitted to stand as security for the purpose of reimbursing or indemnifying the grantee. H. H. Hewett and L. Flinn, for respondents, John Beard and others.
J. K. Weatherford and D. P. N. Blackburn, for appellants, J. A. Crawford and others.
THAYER, J. This is an appeal from a decree rendered by the cir cuit court for the county of Linn, in a suit brought by the said respondents against the said appellants, to subject certain real property to the payment of three several judgments obtained by the said respondents severally against the appellant John Beard in actions at law in said circuit court. Said Crawford's judgment was recovered on the twenty-fifth day of September, 1883, for the sum of $1,291.51, with costs of action; said Brenner's was recovered October 18, 1883, for the sum of $722.83, with costs of action; and said Flinn's, on the same day, for the sum of $321.03, with costs of action. Flinn's judgment was also against one J. J. Beard, who was jointly liable with said John Beard. Executions were duly issued upon each of said judg ments and returned unsatisfied prior to the commencement of the suit. It appears that Crawford's judgment was upon three promissory notes,
one of which bore date in 1875, and is for $596; the other two, August 4, 1881, and are for the aggregate sum of $300. The latter notes were executed to Frank Bros., and transferred by them to Crawford. Brenner's judgment was upon a promissory note which bore date December 13, 1878; and Flinn's judgment was upon a promissory note, executed to him by said John and J. J. Beard, jointly, on the fifteenth day of August, 1881. The said real property is situated in said county of Linn, and is a part of the said donation landclaim of said John Beard and wife. Said Beard settled upon said land-claim, under the donation act, and obtained a patent to it from the United States. The land in suit is the husband's half, consisting of about 180 acres. Said John Beard, on the eleventh day of February, 1881, executed a deed of conveyance to his son, the said Ambrose Beard, which purported to convey the said land to him. The respondents alleged in their complaint that said deed was so executed by the said John Beard to the said Ambrose Beard to delay and defraud the creditors of the former, which is the main question to be determined upon the appeal. Two of the said judgments were obtained by default, and entered by the clerk of said circuit court in vacation, without any order of the court, and the third was entered by the said clerk upon confession. The appellant's counsel deny the validity of said judgments, and claim that the statute authorizing a judgment to be entered in such a case is unconstitutional. Said counsel also claim that only part of the debt upon which the said Crawford's judgment was recovered, existed at the time the said deed from John to Ambrose Beard was executed, and none of the debt upon which the said Flinn judgment was recovered, existed at said time. And it is further claimed upon the part of the said appellants that said deed was given in good faith and for a valuable consideration.
A large amount of testimony was taken in the case, a great portion of which was immaterial. The proof of statements and admissions made by said John Beard long after he executed the said deed of the eleventh day of February, 1881, unconnected with possession of the property or other circumstances, had no weight; nor was the proof that Ambrose Beard was not known to have had property at the time he is claimed to have purchased and paid for the land of any consequence, as it is not pretended that he paid for it with money and property he then had. He claims, however, that at the age of 20 years his father gave him his time, and that for four years or more prior to the date of the said deed he had occupied the said donation claim, including his mother's portion thereof, as a renter; that he worked it upon shares; that his father had sold his portion of the crop, and that at the time the land was deeded to him his father owed him for 1,000 bushels of wheat and about $300 besides; that there was a mortgage upon the land in suit of $1,500 principal, and about $480 accrued interest; that he was to pay for the land by assuming
the said mortgage, was to give his father said 1,000 bushels of wheat, and deliver to him 4,000 bushels the following season. With this kind of arrangement it was unimportant whether his neighbors knew whether he had any property or not, or whether he had, prior to 1881, been assessed for taxes upon any property or not. The more important question was whether his father did owe him 1,000 bushels of wheat and $300 at the time referred to, or any wheat or money; whether he delivered to his father the said 4,000 bushels of wheat, or any wheat, as he claimed to have done. The proofs as to what his neighbors thought about his general financial condition, and that he had not been assessed upon property for the purposes of taxation, or as to how much farmers are accustomed to make off of farms in that vicinity, had no tendency to disprove what Ambrose claimed were the facts of the case. Said proof, in my judgment, was almost or quite valueless.
The respondent's counsel claims that the whole of the debt due to Crawford existed when the deed was executed; that the notes to Frank Bros. were for farming machinery which John Beard ordered in 1880, but did not receive until 1881, at about the time the said notes were executed; but they admit that none of the debt due to Flinn existed at said time.
The view I am inclined to adopt in adjusting the rights of the parties to the controversy renders it necessary to consider first the question as to the validity of the alleged judgment against John Beard. It is contended upon the part of the appellants that the entry of judgment by default or upon confession involves the exercise of judicial power, and that, as all judicial power in this state is required to be vested in certain courts, the legislature had no authority to confer any such power upon the clerk. The decisions of other courts under similar provisions of statute and organic restrictions are conflicting. The point of difference between them is a disagreement as to whether such entry is a judicial or ministerial act. If I were required to decide the abstract question, I should be very much inclined to hold that the rendition of judgment in all cases was a judicial act. The mere entry of judgment, no doubt, is a ministerial act; but it seems to me that before such entry can be made there must be an adjudication, either that the facts committed, or the confession and statement in the particular case, entitle the party to a judgment. Our statute upon the subject has been in force for nearly 20 years. It may be said to have been acquiesced in by the bar, and it has. tacitly been upheld by the courts. It has become a rule of practice, and, if pronounced invalid now, would cause disturbance in property rights and occasion great mischief. When an act of the legislature has been so long recognized as binding, and important affairs of the community, affecting individual rights, been transacted in accordance with its provisions, it should not be disturbed unless it plainly and unequivocally conflicts with the organic law. An act which has been
sanctioned by the community ought not to be declared unconstitutional by the courts when the question is in any degree doubtful. Whatever, therefore, my own private notions upon the subject are, so long as I am not positively certain of their correctness, I feel constrained to hold that such judgments are valid.
The appellants' counsel contend that neither the said Crawford nor the said Flinn has any standing to question the bona fides of the said deed, as a portion of the claim of the former, they allege, accrued after the execution of the deed, and that the whole of the latter's accrued after its execution. It is not so evident that any part of Crawford's claim accrued after the deed was made. The notes for the portion alleged to have so accrued were given after said time; but the evidence shows that the order for the machinery was given by John Beard to Frank Bros. in 1880. The debt may not have legally been contracted until the machinery was delivered; but if the sale of the land was mala fide, a creditor to whom an order had been given for an article prior to the sale, and out of which the indebtedness arose, had a right to question the transaction, although the article was not delivered until afterwards. The debt was in process of contraction at the time, and I think the creditor could claim, in case the debtor fraudulently sold his property during the interval, that it was done with intent to defraud him. The statute upon the subject is not confined to creditors. It says: "made with the intent to delay, hinder, or defraud creditors or other persons," etc. Section 51, c. 6, Miscellaneous Laws. If said John Beard made said deed to Ambrose Beard to defraud his creditors, it would certainly have included the Frank Bros.' claim that was transferred to Crawford.
The Flinn claim stood upon a different basis. That debt was not contracted until long after the deed was executed and upon record. It arose out of the renting of a warehouse let to John and J. J. Beard, and the deed would not be questioned by the holder of that debt, unless it were shown that when the said John Beard executed the deed he had in view the creation of the said debt, and intended to defraud the creditor thereof. In the language of Bump on Fraudulent Conveyances: "The conveyance must be made with an intent to put the property out of the reach of debts which the grantor at the time of the conveyance intended to contract, and which he does not intend to pay, or has reasonable grounds to believe that he may not be able to pay." The decision in Page v. Grant, 9 Or. 120, was not intended to establish any different doctrine than this, though the language employed in the opinion is very general. The purpose and intent for which the deed was given must be ascertained by an examination of all the facts and circumstances of the case; and if the legitimate inference drawn therefrom is that John Beard intended by the execution of said deed to delay, hinder, or defraud his creditors, and that Ambrose Beard knew, when he received it, that such was the intent, then it is void as to existing creditors, or subsequent, if the grantor
contemplated the contraction of the debts, and did not intend to pay them, or had reasonable grounds to believe that he would not be able to pay them.
The respondents' counsel contend that the conveyance from John Beard of the property in question included all his property; that the appellants' account of the affair was vague, uncertain, and contradictory, and that it should be inferred therefrom, in view of the relations of the parties and the manner in which they had conducted their business before and after the deed was executed, that it was intended to defraud the creditors of said John Beard. Fraud is established in such a case by inference or presumption. It may be. inferred or presumed from the nature and character of the transaction itself, or from facts and circumstances connected with it. If the necessary result of the act is to place the debtor's property beyond the reach of legal process, so as to delay creditors, it will be presumed that it was done with a fraudulent intent; but when the act is apparently regular and fair upon its face, the intent must be gathered from the surroundings. In such a case the tests which reason and experience have shown were indicative of a fraudulent design and purpose must be resorted to in order to ascertain the probable motive which actuated the parties in the affair. In this case, there is nothing upon the face of the transaction indicating bad faith. John Beard was in debt, it is true, but that did not preclude him from selling his farm. The deed is in the ordinary form. It recites a valuable consideration as having been received, and was placed upon record immediately after its execution. The conveyance was from a father to a son, but the latter was of full age and had an undoubted right to purchase his father's estate. The evidence, therefore, that the sale was made with intent to hinder, delay, or defraud creditors must be sought for outside of the apparent facts in the case. The consideration recited in the deed is open to inquiry; and if shown to be only a pretense, the inference would necessarily follow that the transaction was merely colorable. The respondents have attempted to show that there was no consideration in fact for the conveyance, and if they have succeeded in showing that, they have established their cause of suit. That is the vital question in the case.
The testimony tends to show that Ambrose Beard and his father had some negotiations in regard to the sale and purchase of the said land in 1880; that a bond for a deed was drawn up and some notes written out, but the matter was not consummated; that about the time the said deed was executed they concluded to make a different arrangement, whereby Ambrose was to buy the land, turn in a claim for a thousand bushels of wheat his father owed him, assume the mortgage upon said land that had been executed by John Beard to John Thomas, and the interest accrued thereon, amounting to $480, and deliver to his father in the following fall 4,000 bushels of wheat in full payment of the land. The deed was made and executed and recorded, and I am satisfied