Opinion
(September Term, 1895.)
Fraudulent Conveyance — Estoppel.
1. A purchaser of land, knowing that another claimed title thereto under a mortgage which was obtained by fraudulent representations, cannot attack the mortgage on the ground that it was so obtained.
2. A purchaser of land under a mortgage having knowledge at the time of purchase that a prior mortgage was made with intent to defraud mortgagor's creditors, cannot attack such prior mortgage upon such ground, he not being a creditor of the mortgagor.
(454) PETITION for partition, filed before the Clerk of the Superior Court of SURRY, and, upon issues joined, transferred for trial to the civil issue docket at term and tried before Brown, J., at Fall Term, 1895, of said Court.
The facts appear in the opinion of Associate Justice Montgomery. The jury under instructions from his Honor answered the issue in favor of the plaintiffs, and from the judgment thereon the defendant Hattie L. Pass appealed.
Glenn Manly for plaintiffs.
A. E. Holton for H. L. Pass.
This was a proceeding before the Clerk for the partition of real estate. The plaintiff alleges a tenancy in common with the defendants Hattie L. Pass and Nellie Lynch, and claims her interest by deed of purchase from E. H. Pass, mortgagee of John W. Pass and his wife, Hattie L. The defendants deny the plaintiff's right and aver that her alleged interest belongs to the defendant Hattie, who holds the same by deed from Phillips and other subsequent mortgagees of John W. Pass and his wife, Hattie L. The priority of the mortgage to E. H. Pass is admitted, and also the deed from E. H. Pass, the mortgagee, to the plaintiff; but the defendants aver that the mortgage to E. H. Pass was void because it was made to defraud the creditors of John W. Pass, and that the plaintiff knew it. These issues of fact were sent up to the Superior Court, where upon the trial the defendant Hattie L. Pass introduced her husband, John W. Pass, as a witness to prove that the mortgage executed by him and his wife to E. H. Pass "was made by reason of false and fraudulent representations of E. H. Pass." Objection to this testimony by the plaintiff was sustained by his Honor, and the defendant Hattie L. excepted. It is evident that the defendant intended by this question to prove by the witness that (455) there was fraud between him (the witness) and E. H. Pass in the execution of the mortgage other than to defraud the witness' creditors, as was averred in the answer, for the very next thing the defendant Hattie offered to prove was that she had no knowledge of the fraudulent purpose of John W. Pass and E. H. Pass in executing the mortgage to E. H. Pass at the time when she signed the same. Fraud there was, she admits, in the minds of her husband, the mortgagor, and his brother, the mortgagee. If John W. Pass executed the mortgage to E. H. Pass for the purpose of defrauding purchasers, and this must have been the kind of fraud which the defendant Hattie intended to prove, for later on in the trial she undertook to prove the fraud set up in the answer, to-wit: that the mortgage was executed to defraud the creditors of John W. Pass, the court below committed no error. The defendant is bound by the prior mortgage and purchase under it by the plaintiff, because she had knowledge of it before she purchased under the subsequent mortgage to Phillips. The 27 Elizabeth, amended by our act of 1840, does not protect her against the prior mortgage and the purchase under it by the plaintiff, because of the knowledge on her part. Hiatt v. Wade, 30 N.C. 340; Triplett v. Witherspoon, 70 N.C. 589. The defendant Hattie L. Pass also offered to prove by the same witness that the mortgage from him to E. H. Pass was made as averred in the answer for the purpose of defrauding the creditors of the witness; that E. H. Pass was a party to such a purpose, and that the plaintiff knew of it. The plaintiff objected. The court sustained the objection, and the defendant Hattie excepted. There is no error in this ruling. If it be admitted that the mortgage was executed to defraud creditors, as alleged in the answer, yet the defendant is bound by the sale and purchase by the plaintiff under prior mortgage, because the defendant is not a creditor, nor are there any creditors of John W. Pass parties to this proceeding. (456) Triplett v. Witherspoon, supra; Helms v. Green, 105 N.C. 251.
Affirmed.