OLSON v. SCOTT

27 P. 879

1 Colo.App. 94

OLSON
v.
SCOTT et al.

Court of Appeals of Colorado

October 12, 1891

Appeal
from district court, Arapahoe county; L.M. GODDARD, Judge.

Suit by
Peter Olson against G. Oskar Scott and others to set aside a
conveyance on the ground of fraud and other relief. Decree
for defendants. Plaintiff appeals. Affirmed.

STATEMENT
BY THE COURT. This suit originated in transactions between
the parties concerning a certain tract of land, appellant
being the owner [1 Colo.App. 95] of the farm. Scott, McCourt,
and Wiswall, appellees, considering it desirable for
subdivision as suburban property for residences, purchased it
for that purpose, paying no money. The property was conveyed
by appellant by warranty deed, a note made for the entire
purchase, $16,000, and a trustdeed given upon the property to
secure the payment. A written contract was made and executed
by the parties explanatory of the transaction, which is as
follows: "Witnesseth, that whereas, the said parties of
the first part have this day purchased from the said Peter
Olson certain real estate in the south 1/2 of the south-west
[27 P. 880]
1/4 of section 33, township 4 south, of range 68 west; and
the north 1/2 of the north-west 1/4 of section 4, in township
5 south, of range 68 west, more particularly described in the
warranty deed of even date herewith, given by said party of
the second part to said parties of the first part; and
whereas, said parties of the first part have platted said
land and laid the same out into lots, blocks, streets, and
alleys, as per a map of the same this day filed in the
recorder's office of said Arapahoe county; and whereas,
said parties of the first part have this day executed to said
party of the second part a trust-deed on said property for
the sum of sixteen thousand dollars, ($16,000;) and whereas,
said parties of the first part are desirous of paying said
$16,000 as soon and as rapidly as possible, and said parties
of the first part are desirous of selling said property so
platted as aforesaid, and putting the same on the market for
sale: Now, therefore, in consideration of the premises, it is
hereby agreed by and between the parties hereto that as
rapidly as any of said property shall be sold by the parties
of the first part said party of the second part shall cause
to be made and executed by his trustee a release deed of
trust for each and every parcel of said property so sold by
said parties [1 Colo.App. 96] of the first part, releasing
said property so sold as aforesaid from the effect of said
trust-deed of said parties of the first part, made and
executed as aforesaid, to said party of the second part,
bearing even date herewith; and immediately on the sale of
any of said property by said parties of the first part the
selling price of the same shall be deposited to the credit of
said party of the second part in the German National Bank of
the city of Denver, until the amount received and deposited
as aforesaid shall reach the sum of $16,000; and the sums so
deposited as aforesaid in said bank shall be applied to the
payment of the promissory note of even date herewith, for the
sum of $16,000, made and delivered by said parties of the
first part to said party of the second part, and secured as
aforesaid by said deed of trust; and when said sum of $16,000
shall have been deposited in said bank as aforesaid, said
said party of the second part shall cause to be made by his
trustee, and delivered to said parties of the first part, a
release deed of trust of said property from said deed of
trust given as aforesaid, and shall cancel and return to said
parties of the first part said promissory note for $16,000.
And it is further agreed by and between the parties hereto
that when said $16,000 shall have been paid in full as
aforesaid by said parties of the first part to said party of
the second part, and a release deed of trust shall have been
executed by said trustee of the party of the second part to
said parties of the first part, releasing said lands from
said trust-deed, and said party of the second part shall
return to said parties of the first part said promissory note
so canceled and returned as aforesaid, then said parties of
the first part shall make and execute to said party of the
second part a good and sufficient warranty deed for an
undivided 1/4 interest in and to all of said real estate so
platted as aforesaid remaining unsold at that time. And it is
further agreed by and between the parties hereto that no part
or parcel of said real estate shall be sold by said parties
of the first part except the proceeds of such sale be
deposited as aforesaid to the order and credit of the party
of the second part in said German National Bank of [1
Colo.App. 97] the city of Denver, state of Colorado, to be
applied as aforesaid to the payment of the said promissory
note."

It is
alleged in the complaint that soon after the date of the
conveyance the land was subdivided into 880 lots, a park,
called "Olson Park," of 40 acres, streets, alleys,
etc.; that the town or subdivision was called
"Sheridan," and a plat of the same recorded; that
between the date of the contract and the 27th day of February
appellees sold 115 lots for $4,558.75, leaving unsold 665
lots and the park; that the lots remaining unsold were of
equal average value with those sold, and of the aggregate
value of $28,535, and that the park was worth $9,000; that
the 115 lots sold were at the time of their respective sales
released by the trustee by an agreement with appellant from
the operation of the trust-deed; that the consideration for
the lots sold (cash, and notes secured by trust-deed) was
turned over to and accepted by appellant to be applied upon
the note of appellees, that on the 27th day of February,
1889, there was a balance due appellant of $11,441, and that
on that date Scott, McCourt, and Wiswall fraudulently
conveyed all the property remaining unsold to appellee,
Leves, for the sum of $12,000, ($3,000 cash and two notes of
$4,500 each,) due, respectively, in one and two years,
secured by a deed of trust upon the property; that the cash,
notes, and trust-deed were turned over to Hon. J.A. Cooper,
trustee, and accepted by him in full payment of the balance
due appellant, and the deed of trust released; that such
release was obtained from the trustee by fraud, without
compensation, and without the knowledge or consent of
appellant; that on the 30th day of March, 1889, Leves
conveyed the entire property by him purchased to a
corporation called the "Denver Suburban Improvement
Company," of which the appellees, Wiswall, Scott, and
Leves were the only incorporators, and that the conveyance
was made to cheat and defraud appellant out of his interest
in the property as reserved to him in the written contract,
praying that the release executed by Cooper as trustee be
canceled; that the deed from Wiswall, Scott, McCourt, and [1
Colo.App. 98] Leves be canceled; that appellees and the
Denver Suburban Improvement Company be enjoined from
disposing of or conveying any of the property; and for a
judgment of $12,000 for the balance remaining unpaid from
appellees, etc. Defendants answered, denying all the material
allegations of fraud, conspiracy, etc., and aver that prior
to the 27th day of February, 1889, they spent large sums of
money in laying out, improving, and advertising the property,
and in efforts to sell the same. That the 115 lots were all
they succeeded in selling; admit that there was still due and
owing to the appellant $11,441.25, which would
[27 P. 881.]
be due and payable March 1st; aver that the sale to Leves was
made in good faith, and for the largest amount obtainable,
and that they were obliged to sell to protect themselves
against sale under the trust-deed; aver that the appellant
had full knowledge of the sale to Leves, and that the trustee
was authorized to accept the notes and security and release
the trust-deed. That by an agreement made between the parties
the following order was executed to the trustee:
"Denver, Colo., Feb. 18, 1889. Hon. J.A. Cooper--Dear
Sir: You will please continue to release land in Sheridan
subdivision as fast as the lots are sold, and receive cash
and notes in payment for same, in accordance with agreements
on deposit in German Bank. PETER OLSON. Please release S.E.
Browne. February 27, 1889." That through such sale to
Leves appellees' note was fully paid, and the further sum
of $558.75. A replication was filed, putting in issue the
averments in the answer. On March 1, 1890, a decree was
entered, the court finding all the issues in favor of the
appellees, but requiring them to pay to appellant the sum of
$8,441.25, being the balance due him on the note for the
purchase of the property, within 10 days, such payment to
take the place of the Leves note, and requiring the trustee
to release the property from the Leves trust-deed. [1
Colo.App. 99] The only errors assigned are the following:
"First. The court erred in excluding pertinent and legal
testimony in behalf of the appellant; second, the court erred
in admitting incompetent and irrelevant testimony in behalf
of the appellees; third, the finding and judgment and decree
of the said court is contrary to law; fourth, the evidence
clearly shows that the last release made by the said trustee
was void because beyond his power to make, in this: that the
time of payment on the note of the appellees to the
appellant, to the extent of $9,000, was extended for one and
two years, without the knowledge or consent of the appellant,
and without any consideration to him."

Alvin
Marsh and Browne & Putnam, for appellant.

Stevens
& Ward, for appellees.

REED,
J.

The
first and second of the supposed errors assigned may be
disregarded. No serious error was committed by the court in
omitting or rejecting evidence. It is true, the evidence was
allowed a wide range, but it seemed necessary for a full and
proper understanding of the case. There was considerable
conflict in the testimony, but the preponderance appears to
have been clearly with appellees, and is corroborated by
circumstances and former course of dealing. It is
affirmatively alleged in the complaint that the sale to Leves
was collusive, fraudulent, and made with the intention to
defraud and injure appellant, but the evidence signally fails
to sustain the allegation. "It is equally a rule in
courts of law and courts of equity that fraud is not to be
presumed, but it must be established by proofs."
University of Oxford Case, 10 Coke, 56; Story, Eq.Jur. § 190.
Circumstances of mere suspicion, leading to certain results,
will not in either of these courts be deemed sufficient
ground to establish fraud. Trenchard [1 Colo.App. 100] v.
Wanley, 2 P.Wms. 166; Townsend v. Lowfield, 1 Ves.Sr. 35;
Walker v. Symonds, 3 Swanst. 61. Courts of equity do not
require positive proof of fraud. It may be inferred from or
established by inferences from facts and circumstances. In
this case the conveyance to Leves and by him to a
corporation, of which he and others of appellees were the
sole incorporators and stockholders, might upon its face be
looked upon as colorable, collusive, and suspicious; but this
was in sufficient. Had the fact been shown that the property
was conveyed for an inadequate price, far below its value,
that fact, in connection with the colorable transfers, would
have gone far to establish fraud. Appellant failed to make
such proof, while the evidence of appellees shows it was the
utmost they could secure by strenuous efforts. Whether or not
appellant was cognizant of and fully informed in regard to
the substitution of the Leves notes having one and two years
to run after the maturity of the other note in place of the
balance remaining due on that, is a question upon which there
is quite a conflict of testimony, but the testimony of
appellees appears to be sustained not only by the former
course of dealing, but by the written order of February 18,
1889, under which was written: "Please release S.E.
Browne. February 27, 1889." Gen. Browne having been at
that time the attorney of appellant, and the date being that
on which the substitution and release was made, the
conviction is very strong that the matter was fully
understood, and the allegation that the release was obtained
from the trustee by the fraud of appellees is not sustained
by the evidence, which would go far towards showing that if
there was an error the trustee was misled by the request of
counsel written under the order of appellant. If the
substitution was unwarranted, and worked a wrong by
postponing the time of payment one and two years, it was
cured by the judgment and decree of the court, requiring the
balance due to be paid in 10 days. We think the findings and
decree of the court were warranted by the evidence, and that
the judgment should be affirmed.