Stivens v. Summers (68 Ohio St. 421, 1903)

Shauck, J.

The record does not suggest that the circuit court was unmindful of the doctrine of Jamison v. McNally et al., 21 Ohio St., 295, since its conclusion of law concedes that under our statute a deed may, at the suit of a creditor of the grantor, be set aside for constructive as well as for actual fraud, and that these deeds were constructively fraudulent. Upon that point the briefs of counsel are in accord.

The proposition by which the judgment of the circuit court must be tested is stated by it in its conclusion of law: “That the plaintiff’s cause of action is barred by the statute of limitations.” The pertinent provision of the statute is in section 4982 which defines the actions which may be brought within four years, that lastly stated being “an action for relief on the ground of fraud, but the cause of action in such case shall not be deemed to have accrued until the discovery of the fraud.” Of the facts found the following are brought into prominence by the opposite views of counsel; the deeds were filed for record with the recorder of the county in which the lands are situated more than four years before the bringing of the action; the deeds were only constructively fraudulent; 'until within four years from the bringing of her action the plaintiff did not have actual notice of the execution of the deeds, nor did she prior to that time actually discover any of the facts which made the deeds fraudulent. The fraudulent deeds having been ^executed more than four years before the beginning of the action, the precise question is whether it is within the provision that “the eáuse of action in such case shall not be deemed to have accrued until the discovery of the fraud.” We are not favored with the opinion of the circuit court, but counsel urge that it properly concluded that the case is not within the saving clause of the statute because the deeds were only constructively fraudulent, and because they were filed for record more than four years before the action was brought. The numerous cases cited in support of this view-will be found in the Reporter’s abstract of the briefs. It is not necessary to analyze them separately. Most of them obviously depend upon provisions not found in our statute, or upon facts not found in the present case. A statute providing that in an action for relief on the ground of fraud the cause of action shall not he deemed to have accrued until the discovery of the fraud distinguishes itself from one which suspends the bar of the statute because of the fraudulent concealment of the cause of action; and this case involves no consideration arising out of the relation of trustee and beneficiary. When not influenced by peculiar provisions of recording acts the view generally taken is that the registration of a deed does not operate retrospectively so as to affect the holders of antecedent rights. Pomeroy Equity Jurisprudence, Secs. 656-8. This view has been consistently maintained in this state. Leiby v. Wolf, 10 Ohio, 83, and cases following it. Sharp v. Myers, 1 Circ. Dec., 374; 2 C. C. R., 82, approved by this court in affirming the judgment. If we felt at liberty to depart from this doctrine and to assume that the recording act affords a refuge to a fraudulent grantor or his fraudulent grantee another difficulty would be encountered. Assuming that the plaintiff was charged with knowledge of these deeds when they were left for record and of the fact that they were by way of gift, knowledge of essential elements of fraud would still be wanting. Such a deed by one who retains property fully sufficient to discharge his debts is not a fraud upon his creditors. Since the action could not be maintained but for the facts found respecting the financial condition of the grantor at the time of making the deeds, and since the record did not disclose those facts, it cannot be said that the fraud was discovered until the plantiff, from a different source, received notice of such facts. A deed fraudulent as to creditors may recite the payment of a full and valuable consideration by the grantee, and an examination of the record would not disclose to a creditor of the grantor that a cause of action has accrued in his favor. It would inform him that the land conveyed cannot be subjected to the payment of his claim because a valid title thereto has become vested in a purchaser for value. In such case it cannot be said that the fraud has been discovered until the creditor has notice of the falsity of the recitation as to the consideration. It seems, therefore, that the judgment of the circuit court is not justified by the fact that the deeds were filed for record more than four years before the action was brought. The opposite conclusion involves an erroneous view of the statute relating to the recording of deeds, as well as of that by which actions of this character are limited.

Nor is the conclusion of the circuit court justified by its finding that these deeds were only constructively fraudulent. Usually, and in these cases always, the consequences of fraud are not determined by its character. In order that an act be constructively fraudulent it is essential that it would, either in the particular case or in common experience, lead to consequences equivalent to those following actual fraud. By the act of the debtor these lands had been placed beyond the reach of an execution at law. The creditor’s resort to equity being thus made necessary, neither the principles nor the statutory provisions involved suggest that his rights may be affected by considering whether the act of the debtor proceeded from evil design or from an innocent mistake respecting his financial condition when the deed of gift was made. The language of the limiting section of the statute and of the saving clause obviously comprehends constructive as well as actual fraud. It being admitted that constructive fraud is included in the provisions of the statute by which the right of action is defined and in that by which it is limited, an exception should not by interpretation be imported into that by which it is saved. The controlling fact found by the circuit court is that the action was brought within four years after the actual discovery of the fraud. It is gratifying to believe that long and. uniform practice has prepared the bar of the state for these conclusions.

Judgment reversed and judgment for plaintiff.

Burket, O. J., Spear, Davis, Price and Crew, JJ., concur.