McDonald v. Belding - 145 U.S. 492 (1892)
U.S. Supreme Court
McDonald v. Belding, 145 U.S. 492 (1892)
McDonald v. Belding
Submitted April 26, 1892
Decided May 16, 1892
145 U.S. 492
In Arkansas, although the rule obtains that a person holding under a quitclaim deed may be ordinarily presumed to have had knowledge of imperfections in the vendor's title, yet that rule is not universal, and one may become entitled to protection as a bona fide purchaser for value although holding under a deed of that kind. and in this case it is held that the plaintiff in error, although taking a quitclaim deed, was not chargeable with notice of any existing claim to the property upon the part of either of the defendants in error.
In Arkansas, when the payment of the consideration and the acceptance of a deed by the purchaser occur at different times, the denial of notice of fraud, in order to support a claim to protection as a bona fide purchaser, must relate both to the time when the deed is delivered and to that when the consideration was paid; but where it appears upon the face of the answer that the purchase for a certain price and the delivery of the deed were made at the same time and were parts of one transaction, the denial of notice until the defendant had made the purchase is equivalent to a denial of notice at the delivery of the deed.
Rector v. Gibbon, 111 U. S. 276, distinguished from this case.
The Court stated the case as follows:
The appellees, Belding and wife, being in possession of a tract of land within the Hot Springs reservation, now known as lot 9, block 68, in the City of Hot Springs, Arkansas, leased the same, April 24, 1874, to Frank Flynn for the term of five years at an annual rent of $200, the rent to cease whenever the lessors were unable to protect him in the possession and enjoyment of the lot, and the lessee to have the right at any time within thirty days after the expiration of the term to remove all buildings and improvements put upon the land, first paying any rent in arrears.
The lessee covenanted for himself and legal representatives to waive all benefit that might accrue to him or them in the
way of title to the demised premises by virtue of occupancy or settlement, and to hold the same only as the tenant or tenants of the lessors, and fully subject to the covenants contained in the lease.
Flynn presented his petition to the Hot Springs Commission organized under the Act of Congress of March 3, 1877, 19 Stat. 377, c. 108, claiming to be entitled, by right of occupancy and improvements made before April 24, 1876, to purchase the above lot. The petition referred to Belding as claiming the land prior to his occupancy, and stated that he (Flynn) had not "recognized Belding as landlord since the Supreme Court of the United States decided the title to be in the United States." The plaintiffs also presented their petition to the Commission, and claimed the right to purchase this lot from the government.
The Commission adjudged December 8, 1877, that Flynn was entitled to purchase the lot, and subsequently, May 21, 1881, the United States issued a patent to him based upon the judgment rendered by the Commission.
By deed of July 21, 1884, Flynn (his wife uniting with him) made a quitclaim deed of the premises to the appellant, McDonald, the recited consideration being $8,500 cash in hand paid to the grantors. This deed was duly acknowledged by Flynn August 2, 1884, and by Mrs. Flynn, July 28, 1884, and was filed for record in the proper office, August 2, 1884.
The present suit was brought by Belding and wife, December 19, 1884, more than seven years after the adjudication by the Hot Springs Commission in favor of Flynn, and more than three years after Flynn received the patent from the United States. It proceeds upon the ground that the Commission committed an error of law in awarding the right to purchase this lot to Flynn, rather than to then. The bill charged that Flynn
"has recently executed to the defendant Michael McDonald, without consideration, and for the purpose of defrauding plaintiffs, a fraudulent deed of conveyance, purporting to convey said lot to him for eight thousand five hundred dollars, when in fact nothing was paid by him for it; that defendant knew at the time of the making of said deed, and of the said
pretended purchase, of the tenancy of the said Flynn as aforesaid, and of the rights of the plaintiffs."
The relief asked was an accounting with reference to rents and a decree adjudging the deed to McDonald to be fraudulent and void, and declaring the lot to be held in trust for plaintiff or for plaintiff George Belding.
Flynn, in his answer, met all the material allegations of the bill. He alleges that the plaintiffs never sought to disturb the award of the Commission until the bringing of this suit,
"up to which time plaintiffs, and especially plaintiff George Belding, had asserted and insisted that the said award and all other awards of the Commission were right, and ought not to be disturbed; that on the 21st day of July, 1884, this defendant, believing he had a clear title to said lot, sold it to the defendant, McDonald, as aforesaid, and executed to him a quitclaim deed therefor."
McDonald, in his answer, said:
"He knows nothing of the lease alleged to have been executed between plaintiffs and his codefendant, Frank Flynn, nor of the alleged relation of landlord and tenant between them, nor of the alleged proceedings before said Commissioners, but that if said relation ever did exist, it was dissolved in June, 1876, by the United States, through their receiver taking possession of said land under paramount title; that defendant Flynn had then valuable improvements upon said lot, which he could not lawfully remove, and to avoid losing them filed a petition before said Commissioners setting forth that fact, and praying them to award the preference right to purchase it from the United States; that he supported said petition by evidence, and that said Commissioners awarded said right to him, and that he afterwards purchased said lot from the United States, and on the 21st day of May, 1881, obtained a patent for it, a copy of which is annexed hereto and made part of this answer as Exhibit A; that on the 21st day of July, 1884, this defendant, finding the title to said lot to be in said defendant Flynn, and knowing nothing whatever of plaintiffs' alleged claim to it, bought it from him for the sum of eighty-five hundred dollars ($8,500) in cash, and obtained from him a quitclaim deed thereto; that he
never heard of any claim of plaintiffs until he made said purchase and paid said money; that plaintiffs never until since said purchase sued for said lot or put any claim of record; that said deed and sale to this defendant were not made without consideration nor to defraud plaintiffs, but are made in good faith."
The defendant annexed to and made part of his answer a copy of the deed to him from Flynn.
By an interlocutory decree, it was declared that the Commission, by error and mistake of law, awarded to Flynn the right to purchase the lot in question, and that the title, interest, and estate of the several defendants should be transferred to and vested in the plaintiffs. The cause was thereupon referred to a special master for report as to rents, taxes, and improvements. By the final decree the relief asked by the bill was given.