Opinion
No. 35477.
December 20, 1943.
1. MINES AND MINERALS.
Evidence sustained chancellor's finding that conveyance of interest in oil, gas and other minerals in land was procured from landowners, who sought cancellation of the conveyance, by fraud of grantee.
2. VENDOR AND PURCHASER.
Where conveyance of mineral interest was procured, by fraud of grantee, from landowners, who sought cancellation of conveyance, evidence was insufficient to sustain chancellor's finding that grantee's transferee was affected with notice of fraud at time he purchased the mineral interest.
3. VENDOR AND PURCHASER.
Relief of cancellation of conveyance of mineral interest procured by fraud will not be granted against bona fide purchaser for value without notice.
4. VENDOR AND PURCHASER.
Where landowners conveyed mineral interest in consideration of $10 and other good and valuable consideration and grantee transferred his interest for a consideration of approximately $1.00 per acre, and there was no other evidence regarding value of mineral interest, the grantee's transferee was not affected with constructive notice of fraud perpetrated by grantee on landowners on ground that consideration passing between grantee and landowners was grossly inadequate.
APPEAL from the chancery court of Walthall county. HON. R.W. CUTRER, Chancellor.
Conner Nobles, of Jackson, for appellants.
The prima facie presumption is that all persons act honestly. Fraud is never presumed. He who alleges fraud must prove it by clear and convincing evidence. This is true, both in courts of law and courts of equity.
Metropolitan Life Ins. Co. v. Hall, 152 Miss. 413, 118 So. 826; Parkhurst v. McGraw, 24 Miss. 134; Dunlap v. Fox (Miss.), 2 So. 169; Carter v. Eastman Gardner Co., 95 Miss. 651, 48 So. 615; Willoughby v. Pope, 101 Miss. 808, 58 So. 705; McCain et al. v. Cochran et al., 153 Miss. 237, 120 So. 823; Christian v. Green (Miss.), 45 So. 425; Locke v. Keiler, 90 Miss. 3, 43 So. 673; Mohr Sons v. Tate, 117 Miss. 606, 78 So. 544; Martin v. Gill, 182 Miss. 810, 181 So. 849; New York Life Ins. Co. v. Gill, 182 Miss. 815, 182 So. 109; Grenada Auto Co. v. Waldrop, 188 Miss. 468, 195 So. 491.
If the court should hold with the chancellor that the evidence in this record is sufficient to sustain the charge of fraud on the part of Homer P. Lee, Jr., and that the finding of the chancellor was correct as to that proposition, still this case cannot be affirmed as to the appellant, George H. Coates. No charge of fraud is made in the bill of complaint as to George H. Coates. Such a charge is not even hinted at in the bill of complaint. No allegation is made that would put him on notice or require him to inquire or investigate the title to the land. No collusion between him and Lee is charged, but the bill only charges that Lee perpetrated the fraud and thereafter sold to Coates. There is no charge that the consideration paid by Coates was inadequate, or that Coates acted other than in good faith. Coates pleads that he is a purchaser for value without notice, paid a fair consideration and acted in good faith; that he bought on the strength of the recorded deed from the Boyds to Lee. The evidence offered by the complainants does not touch on this question. No evidence was offered by the complainants remotely suggesting any fraud on Coates' part, or that he had any notice or knowledge that any had been perpetrated by Lee, or that he did not pay a fair consideration and did not buy in good faith. On the other hand, all the evidence in this record on the question of purchaser for value without notice shows affirmatively and positively that Coates was such a purchaser. He bought on the strength of the recorded deed from the Boyds to Lee, which was regular in form, had been timely recorded, and on which he had a perfect right to rely. This was certainly true until some defect or notice was brought to his attention sufficient to impose on him the duty of inquiring or making some investigation. Search this record for any such defect or notice and it cannot be found. If it be said that Coates should have inquired as to the title beyond the recorded conveyance of the mineral deed, then in every case where a man takes a deed apparently good on the record, he would be required to make an investigation as to whether or not somewhere in the chain of title fraud had been practiced. It is obvious that such is not required. Coates, in so far as his record discloses, did everything required of him to acquire a good title. He found Lee's deed properly executed and recorded, regular on its face, had no notice of fraud or misrepresentation, paid a valuable consideration and in good faith. What more could be required to bring him under the salutary provisions of the doctrine of purchaser for value without notice? Counsel for the complainants apparently proceeded on the theory that it was only necessary to show fraud on the part of Lee, and this would make the deed from Lee to Coates void as well. The chancellor seems to have taken the same view of the case. But in this the lower court was in error as this is not the rule and not the law in such a case.
Hafter v. Strange, 65 Miss. 323, 3 So. 190; Baldwin v. Anderson, 103 Miss. 462, 60 So. 578; Atkinson v. Greaves et al., 70 Miss. 42, 11 So. 688; Hiller et al. v. Jones, 66 Miss. 636, 6 So. 465; Code of 1930, Secs. 2146, 2147; 45 Am. Jur., Records and Recording Laws, Sec. 82; 27 R.C.L., Vendor and Purchaser, Sec. 457; 9 C.J. 1222, Sec. 123; Pomeroy's Equity Jurisprudence, Secs. 776, 777; Bispham's Principles of Equity, par. 259.
Hall Hall, of Columbia, for appellees.
The evidence was sufficient to justify the chancellor's decree of fraud in the procurement of the mineral deed.
23 Am. Jur. 874, Sec. 96.
The decree of the chancellor on conflicting evidence will not be disturbed on appeal.
Griffith's Mississippi Chancery Practice, Sec. 674.
The burden was on Coates to show that he paid something of value for his conveyance from Homer P. Lee, Jr., and he failed to meet this burden.
27 R.C.L. 700, Sec. 464.
There were sufficient circumstances to put Coates on notice or inquiry as to the defects in Lee's title.
Baldwin v. Anderson, 103 Miss. 462, 60 So. 578.
The appellees are not estopped, because Lee had transferred to Coates before they learned of the fraud.
Because of the fraud committed in its procurement, the deed to Lee was void; it conveyed no title to Lee, and he, therefore, could not convey any title to his grantee, Coates. An alleged innocent purchaser for value does not obtain any title through a void conveyance to his grantor.
Harkreader v. Clayton, 56 Miss. 383; 16 Am. Jur. 454, Sec. 30.
Appellees, Boyd and wife, owned three hundred and forty acres of land in Walthall County. In March, 1936, "in consideration of $10 and other good and valuable considerations, cash in hand paid, by Homer P. Lee, Jr.," they conveyed to Lee by deed 15/16ths interest in and to all oil, gas and other minerals in said land. In March, 1937, Lee conveyed all of his said interest in the land to appellant, George H. Coates, for a consideration of approximately $1 per acre. The bill in this case by the Boyds charges that the conveyance to Lee was procured by false and fraudulent representations, of which Coates was affected with notice when he purchased. On these grounds, it is sought to have both conveyances cancelled and set aside.
The cause was heard on bill, answers and proofs, resulting in the decree prayed for. Lee and Coates both appealed. Perhaps the evidence was sufficient to sustain the charge that the conveyance from the Boyds to Lee was procured by the fraud of the latter. That of course was a question of fact. We are not sufficiently convinced that the finding of the chancellor was wrong, and therefore yield to his judgment. To set out the evidence on this issue would be of no benefit to the bench and bar. We therefore refrain from doing so.
The evidence was insufficient to affect Coates with such fraud at the time he purchased from Lee. The bill does not charge that Coates either participated in the fraud or had notice of it at the time of his purchase, and the evidence shows without substantial conflict to the contrary. "The relief of cancellation will not be granted against a bona fide purchaser for value and without notice for the fraud or other ground for cancellation. This rule applies irrespective of the grounds on which the rescission or cancellation is sought. From a purchaser for value without notice, a court of equity takes nothing away which the purchaser has honestly acquired." 9 C.J. 1222, Sec. 123; 12 C.J.S. Cancellation of Instruments, Sec. 45. Pomeroy's Equity Jurisprudence, Sec. 777; Hafter v. Strange, 65 Miss. 323, 3 So. 190, 7 Am. St. Rep. 659.
It is argued that the consideration passing between Lee and the Boyds ($10 and other valuable considerations) was so grossly inadequate as to suggest to Coates that he should look into the matter before purchasing. In other words, that he was affected thereby with constructive notice of the fraud perpetrated by Lee. There is no evidence whatever that the consideration between the Boyds and Lee was grossly inadequate. The only evidence as to value is what Lee paid for the mineral lease and what Coates paid Lee for 15/16ths interest in the minerals. The result is the decree is affirmed as to Lee, who has nothing to lose in this litigation except perhaps the costs, and reversed and decree here for Coates.
Affirmed as to Lee, but reversed and bill dismissed as to Coates.