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HALLYBURTON v. SLAGLE.
connivance at fraud and dishonesty' to permit the grantor to take advantage of his own delinquency for the purpose of wresting from his grantees the property already conveyed to them."
In the case of Gibbs v. Thayer, 6 Cushing, 30, it appeared that a husband, having an estate for his own life in land of his wife, conveyed his interest therein, in trust for her benefit, by a deed fraudulent and void as against creditors, and which contained a warranty against all claims of the grantor or his heirs or of any other person claiming under him or them; and having subsequently taken advantage of the insolvent law, and himself become the purchaser and received a conveyance of the assignees interest in the land, it was held that he was estopped by his covenant to set up against his grantee the title so acquired. "If at the time of such conveyance and warranty, the estate conveyed was liable to be taken by the grantor's creditors to satisfy his debts, this liability was an incumbrance, by reason of a subsisting right of creditors to take and hold the estate under him, and was at that time therefore a paramount subsisting claim, within the qualified warranty, and the taking of the estate by the creditors would be a breach of that warranty." In that case the Court draws the distinction between a title acquired by the grantor under a sale made in behalf of creditors against whom the fraudulent deed is void and an independent title acquired by the grantor. Mr. Bigelow cites this case with approval and says: "It was immaterial whether or not the original conveyance was fraudulent against creditors. If it was not, then the property did not pass to the assignee, and the plaintiff took no title under it; if it was fraudulent, it was by reason of acts done by him, which had given rights to creditors to reclaim the land and hold it, and was an encumbrance against which he had warranted. In this case the purchase of the interest was only an extinguishment of the
HALLYBURTON v. SLAGLE.
encumbrance; and by the doctrine of estoppel this purchase of the outstanding right of creditors inured to the benefit of the plaintiff's grantee." Bigelow on Estoppel, (5 Ed.), p. 407.
The same doctrine is recognized in Bank v. Glenn, 68 N. C., 36, where it is said that, when the title proposed to be conveyed is defective and the grantor afterwards perfects the title by buying in the adverse claim and removing the cloud or defect from the title he undertook to convey, the subsequent acquired title will inure to his grantee by estoppel. And so in Taylor v. Shuford, 11 N. C., 131; 15 Am. Dec., 512, the Court, after stating that the estoppel effects the estate conveyed by the deed, proceeds as follows: "The breach is not that no estate passed, but that an estate did pass, but that the title to that estate was not good, and that he was disturbed in the enjoyment of that estate by one having title. In fact, the very idea of annexing a warranty or covenant presupposes an estate to pass; for without the estate passes there can be no warranty, which is a dependent covenant, as is a covenant for quiet enjoyment, although by the phraseology there may be an independent covenant, but it is not attached in law to the estate. This very clearly proves what is affirmed, and what estoppels arise out of a bargain and sale." In Cuthrell v. Hawkins, 98 N. C., 205, this Court, citing Moore v. Willis, 9 N. C., 559, says: "If A sell to B by indenture he thereby affirms that he has title when he makes his deed, and if he did not and afterwards acquire one, in an action by him against B the title of the latter prevails, not because A passes to him any title, because he had not any then to pass, but because he is precluded from showing the fact.” We have shown that it makes no difference in the application of the rule whether the vendor had no title at the time of his conveyance, or only a defective title. The principle of law,
HALLYBURTON v. SLAGLE.
therefore, which governs the two cases must be the same, as the reason is the same.
We do not think the case of Moore v. Willis, 9 N. C., 559, which was cited to us by the defendant's counsel, sustains his position. In that case, the property fraudulently conveyed had been transferred by the vendor and delivered to his creditors to pay their debts, and the Court simply held that the latter could retain the property as against the fraudulent vendee, because the original transfer was void as to them, and they had received only what the law gives them. The controversy was not between the vendee and the fraudulent vendor, as in our case, and no estoppel, therefore, could arise.
There is no force in the objection that the estoppel must be pleaded in order to avail the plaintiff. The same point was made in Bank v. Glenn, supra, and this Court held, that the estoppel being part of the title may be given in evidence without being pleaded. Besides, this objection comes too late.
While the other assignments of error were not pressed in the argument before us, we have carefully examined them. and think that they are without any merit.
The former decision of the Court is correct and cannot, therefore, be disturbed.
HALLYBURTON v. Slagle.
HALLYBURTON v. SLAGLE.
(Filed June 11, 1903.)
The finding of the jury, in an action for the recovery of land, that defendant acted with a fraudulent purpose in purchasing the same, could be considered on his application for the allowance of the value of the improvements made by him, though for various reasons the issue was immaterial in the action itself.
2. IMPR VEMENTS-Betterments-Petition for Betterments-The Code, Sec. 473.
The trial court must be satisfied of the probable truth of the allegations in a petition for betterments before it is required that the court empannel a jury to ascertain the value of the betterments. 3. IMPROVEMENTS-Betterments—Compensation-The Code, Sec. 473. One purchasing land at a sale by his own assignee in bankruptcy, with the fraudulent purpose of defeating the rights of his wife and children under a prior deed which he had made to them with intent to defraud his creditors, is not a bona fide holder of the premises under a color of title believed by him to be good, and is therefore not entitled to the value of improvements placed thereon by him.
ACTION by W. S. Hallyburton and wife against J. L. L. Slagle, heard by Judge W. B. Councill, at September Term, 1902, of the Superior Court of BUNCOMBE County. From a judgment for the plaintiffs the defendant appealed.
Chas. A. Moore, Locke Craig and Zeb Weaver, for the plaintiffs.
Merrimon & Merrimon and Shepherd & Shepherd, for the defendants.
WALKER, J. This is an application by the defendant to be allowed the value of certain improvements alleged to have been made by him on the property which the plaintiffs have recovered in the action. The jury have found and the court
HALLYBURTON v. SLAGLE.
has adjudged that the defendant conveyed the land to Woodfin in trust for his wife and children with intent to defraud his creditors, and that he was afterwards adjudged a bankrupt on his own petition, and the land was sold by his assignee in bankruptcy for the reason that being fraudulent, the deed of the defendant to Woodfin was void as to creditors. The defendant bought at the assignee's sale. The jury found in the principle case, under an issue submitted to them, that the defendant procured the sale to be made and purchased at the same for the fraudulent purpose of defeating the rights of his wife and children under his deed to them. It is true that the defendant objected to the submission of this issue to the jury, and while it was not material to inquire in the main suit as to the intent of the defendant in procuring title by purchase at the assignee's sale, as the defendant was estopped to take any benefit from the said purchase and the deed of the assignee, and the title thus acquired fed the estoppel created by his deed, without any regard to his intent, yet we think that the defendant has no legal ground to complain of the action of the court. It did him no harm in contemplation of law in the trial of the issues involving the title to the land. But the finding of the jury may be considered upon this application, as the defendant's right to the relief he seeks depends upon his good faith in claiming the land. We do not think he comes into this court of equity with very clean hands.
But apart from these considerations the court below, as the record shows, was not satisfied of the probable truth of the allegations of the defendant's petition, and this is a preliminary fact necessary to be found before the court is required. to impanel a jury to ascertain the value of the improvements. Clark's Code (3d Ed.), Sec. 473. The court found against the defendant as to this fact, and this is sufficient to defeat