U.S. Supreme Court McCoy v. Rhodes, 52 U.S. 11 How. 131 131 (1850)
McCoy v. Rhodes
52 U.S. (11 How.) 131
APPEAL FROM THE CIRCUIT COURT OF THE
UNITED STATES FOR THE DISTRICT OF LOUISIANA
Where a bill in chancery alleges that certain lands were entered in the name of a third person with a view to cover them from the creditors of the person who had entered them, and this allegation is denied in the answer and not sustained by proof, the bill pro tanto must be dismissed.
But where the party entered the lands in his own name, and afterwards conveyed them to this third person, but the deed to the third person was not recorded until after a judgment had been obtained by a creditor and recorded in the parish where the land lies against the party who made the entry, it will not be sufficient merely to set up in the answer that this third person furnished the money with which to purchase the lands. The equity must be proved.
By the law of Louisiana, no notarial act concerning immovable property has effect against third persons until it shall have been recorded in the office of the judge of the parish where such property is situated. Therefore, where there was a judgment against the holder of the legal title rendered in the intermediate time between the execution of a deed and its being recorded, and the judgment was first recorded, the subsequent recording of the deed could not abrogate the lien of the judgment.
The forty-seventh and forty-eighth rules of chancery practice explained.
This was a bill filed by McCoy against Rhodes and wife under the following circumstances.
On 6 December, 1839, Rhodes purchased in his own name from the United States, under the preemption law of 1838, and entered at the land office at Ouachita, Louisiana, the following parcel of land: N.W. quarter of section 29, township 10 north, range 10 east, containing 160 20/100 acres, and paid for the same $1.25 per acre, making in the whole $200.25.
On the next day, viz., 7 December, 1839, Rhodes executed a deed for the above property to Eli Montgomery, a resident of the City of Natchez, in the State of Mississippi. The consideration stated in the deed was $1,500 cash. It was executed before Lewis F. Lanney, parish judge and ex officio notary public of the Parish of Concordia, in Louisiana. This deed, however, was not recorded in the office of the judge of the parish until 10 December, 1841.
On 10 December, 1839, Rhodes entered at the land office, in the name of Montgomery, the following pieces of land, viz.: S.W. quarter and west half of N.E. quarter of section 29, = 240 31/100 acres; S.E. quarter of section 30, = 161 60/100 acres; N.W. quarter of section 32, = 160 acres.
These three parcels were entered, as has just been remarked, in the name of Montgomery.
On 24 February, 1840, James H. McCoy obtained a judgment against Zachariah Rhodes in the Ninth District Court in the Parish of Concordia for $1,546.27, with interest thereon
at the rate of eight percent from 26 March, 1839, till paid, and costs.
On 7 March, 1840, this judgment was duly recorded in the office of the parish judge and ex officio recorder of mortgages in and for the Parish of Concordia.
On 10 December, 1841, Montgomery recorded the deed which had been executed to him by Rhodes on 7 December, 1839, and on the same day executed a deed of the three parcels of land which had been entered in his name to Thomas J. Ford of Adams County and State of Mississippi. The consideration is stated in the deed to have been the following, viz.:
"The sum of three thousand dollars cash, which the said Eli Montgomery doth hereby acknowledge to have received, and the eight promissory notes of the said Thomas J. Ford, of even date herewith, and payable to the order of the said Eli Montgomery, for the amount and for the time as follows, viz., first, a note for the sum of eight hundred dollars; second, a note for the sum of one thousand dollars; another note for the same sum of one thousand dollars, and a note for the sum of five hundred and thirty-three dollars thirty-three and one-third cents, all payable on 1 January, 1843; next, the two notes of the said Ford for the sum of one thousand dollars each, and also a note for the sum of thirteen hundred and thirty-three dollars thirty-three and one-third cents, payable on 1 January, 1844; and lastly, the note of the said Ford for the sum of three thousand three hundred and thirty three dollars thirty-three and one-third cents, payable on 1 January, 1845, all paraphed by me, the said notary, 'Ne varietur,' to identify them herewith, and payable at the office of the judge of the Parish of Concordia."
The wife of Montgomery renounced all her rights of dower and rights of every kind in and to the property, which stood mortgaged for the payment of the notes.
On 2 November, 1842, Ford conveyed the property to Mrs. Luminda Rhodes, for the consideration of ten thousand dollars. Zachariah, the husband of Luminda, being present, declared that he accepted this act for his said wife, and "duly authorizes and assists her herein."
On 28 January, 1845, James H. McCoy, a citizen of the State of Mississippi, filed his bill in the Circuit Court of the United States for the District of Louisiana against Zachariah Rhodes and Luminda Montgomery his wife. It averred that Rhodes conspired with Montgomery to cheat and defraud the complainant; that the conveyance of 7 December, 1839, from Rhodes to Montgomery, was fraudulent
and void; that the entry of the lands on 10 December in the name of Montgomery was fictitious and fraudulent, and that the whole transaction was intended to benefit Rhodes and defraud his creditors; that Luminda, the wife of Rhodes, was the niece of Montgomery; that the recording of the judgment on 7 March, 1840, operated as a judicial mortgage upon all the lands, and prayed for a sale of the lands in order to discharge the judgment.
On 3 December, 1845, Rhodes and wife answered the bill. They admitted the entry of the lands, but averred that they were paid for with money actually furnished by Montgomery, and were intended to be his property; that Montgomery afterwards sold the lands to Ford, and that the respondents had no interest or participation therein; that after said sale was made, the notes of the said Ford were paid to this respondent, Luminda Montgomery, by the said Eli Montgomery, for moneys due to her from the estate of her deceased father, Joseph Montgomery, of whom the said Eli Montgomery was executor or administrator of his estate, and that the said notes being secured by mortgage on all the said lands, and the said Ford having become embarrassed and unable to pay the same, the lands were taken by this respondent, Luminda, in satisfaction of said notes, by agreement between these respondents and said Ford, and the conveyance made accordingly, for the sole use of this respondent, Luminda.
They then denied all fraud, combinations, deceptions, or cheating &c.;
A general replication was put in and depositions were taken.
On 24 January, 1848, the cause came on to be heard on the bill, answers, exhibits, and proofs, when the circuit court decreed that the complainant's bill should be dismissed, with costs.
A petition for a rehearing was afterwards filed, alleging that the decree was erroneous in this, amongst other things, that the recording of McCoy's judgment was prior in date to the recording of the deed from Rhodes to Montgomery, by which deed the land entered on 6 December was conveyed to Montgomery, the judgment being recorded on 7 March, 1840, and the deed on 10 December, 1841.
But the court overruled the application for a rehearing, upon which the complainant appealed to this Court.
MR. JUSTICE CATRON delivered the opinion of the Court.
McCoy recovered a judgment against Rhodes in a state court of Louisiana for the sum of $1,546 on 24 February, 1840, and on 7 March following this judgment was recorded in the mortgage office of Concordia Parish. The bill seeks to subject certain lands in possession of Rhodes to satisfy the judgment. Three of the tracts were entered as United States lands in the name of Eli Montgomery, but which the bill alleges were the property of Rhodes and covered by Montgomery's title to prevent Rhodes' creditors from reaching
them. This is directly denied by the answer, and, there being no proof to the contrary, complainant must fail as respects these three parcels. The bill also seeks to subject a fourth tract, entered by Rhodes December 6, 1839, in his own name and conveyed to Montgomery next day, December 7, 1839. This deed was first recorded in the proper office of Concordia December 10, 1841, and is for the northwest quarter of section No. 29, T. 10, R. 10 east, containing 160 20/100 acres.
On 10 December, 1841, Montgomery conveyed the four tracts to Thomas J. Ford, who afterwards, November 2, 1842, rescinded the contract of purchase, and conveyed to Luminda Montgomery Rhodes, wife of Zachariah Rhodes. Rhodes and wife are the only defendants. In regard to the northwest quarter of section No. 29, they jointly answer and say:
"True it is that this respondent, Zachariah Rhodes, did, on 6 December, 1839, enter at the land office at Ouachita, Louisiana, the northwest quarter of section No. 29, in township No. 10 of range 10 east, and that he took a receipt for two hundred dollars and twenty-five cents, the price thereof under the laws of the United States, but these respondents aver that the entry aforesaid was made by this respondent Rhodes for Eli Montgomery, of the State of Mississippi; that the said Eli Montgomery did furnish the money to pay for the same, and the same was actually paid for out of the moneys so furnished by the said Montgomery, and that the conveyance of the same to the said Montgomery by this respondent, Rhodes, as set forth in the said complainant's bill, was made to complete the legal title in his, said Montgomery's, name according to the original intent of all parties and as equity and justice required, this respondent, Z. Rhodes, having only acted as the agent of the said Montgomery and for his use in making said entry and paying the said money, and not with any view to cheat, defraud, or wrong the said plaintiff as is falsely charged in said plaintiff's bill."
Respondents admit that the entry was made in Rhodes' own name, and was, when made, prima facie liable to be seized on execution as his property; but then, in avoidance of this admitted liability, they allege that Montgomery's money was paid into the land office, and that this was done in fulfillment of some previous agreement between Rhodes and Montgomery, by which an equity existed in the latter to have the benefit of Rhodes' preemption right of entry, as an actual settler.
There is no proof in the cause of the facts above set forth by the answer. That Montgomery furnished the money paid and that the land was entered for his use under a previous
agreement are facts within the peculiar knowledge of respondents; they are not responsive to charges made by the bill, but set up as an independent defense. In such case, the rule is "that a discharge set up in avoidance, coupled with an admitted liability, if the answer be replied to, as here it is, must be proved by the defendant."
This is the settled rule. Hart v. Ten Eyck, 2 Johns.Ch. 88; Napier v. Elam, 6 Yerger 112.
As the respondents cannot make evidence for themselves and thereby establish an equity in Montgomery, it follows that the defense must fail so far as the equity set forth is relied on. Having disposed of this part of the controversy on the pleadings and want of proof, it becomes unnecessary to examine what bearing the Act of July 22, 1838, c. 119, 5 Stat. 251, has on the foregoing facts.
The next ground of defense relied on is the conveyance made by Rhodes to Montgomery of 7 December, 1839. It was recorded December 10, 1841. According to the statute law of Louisiana, no notarial act concerning immovable property has effect against third persons until the same shall have been recorded in the office of the judge of the parish where such property is situated. In relation to third persons, the act of sale not recorded is considered as void.
For an exposition of the Louisiana statute, we refer to the case of Gravier v. Baron, 4 La. 239, and which has been since followed by the Supreme Court of Louisiana. The deed from Rhodes to Montgomery being a notarial act, it took effect on 10 December, 1841, against McCoy, the judgment creditor, and as the lien of the judgment, or judicial mortgage, attached 24 February, 1840, when the title was in Rhodes the debtor, this deed is of no force as against the judgment, nor are the subsequent deeds founded on it, and therefore McCoy has a right to have the northwest quarter of section No. 29 sold.
Some supposed difficulty exists on the head of jurisdiction for want of parties, Eli Montgomery not being before the court. We do not deem him a necessary party to this suit; he has no interest in the land, and no right to contest the validity of the judgment against Rhodes. And in the next place, we are of opinion that all necessary parties were before the circuit court according to the forty-seventh and forty-eighth rules of chancery practice published by us in 1842, as the bill alleges that Eli Montgomery permanently resided beyond the jurisdiction of the court, which was not contested by plea, nor was any objection made below against proceeding to a final decree for want of parties.
For the reasons stated, it is ordered that
The decree dismissing the bill be reversed, and that the cause be remanded to the circuit court, there to be proceeded in according to this opinion.
This cause came on to be heard on the transcript of the record from the Circuit Court of the United States for the District of Louisiana and was argued by counsel. On consideration whereof it is now here ordered, adjudged, and decreed by this Court that the decree of the said circuit court in this cause be and the same is hereby reversed with costs, and that this cause be and the same is hereby remanded to the said circuit court for further proceedings to be had therein in conformity to the opinion of this Court.