Opinion
6 Div. 113.
June 30, 1928.
Appeal from Circuit Court, Jefferson County; William M. Walker, Judge.
Crampton Harris, of Birmingham, and W. C. Woodall, of Tallassee, for appellant.
Where equities are equal, the legal title will prevail. Dean v. Roberts, 182 Ala. 221, 62 So. 44; Strauss v. Woefel, 75 Ind. App. 543, 131 N.E. 64; Benson v. Saffert-Gugisberg Co., 159 Minn. 54, 198 N.W. 297; Overton v. M. L. R. Co. (C. C.) 10 F. 866. Equity aids the diligent and not those who sleep on their rights. Dell School v. Peirce, 163 N.C. 424, 79 S.E. 687; Akins v. Hill, 7 Ga. 573; Briggs v. Smith, 5 R.I. 213; Clay Co. v. Sav. Soc., 104 U.S. 579, 26 L.Ed. 856; McNary v. Southworth, 58 Ill. 473; Preston v. Turner, 36 Iowa, 671. A party seeking to rescind for fraud must do so within a reasonable time. Young v. Arntze, 86 Ala. 116, 5 So. 253; Gayle v. Pennington, 185 Ala. 53, 64 So. 572. He who comes into equity must come with clean hands. Harton v. Little, 188 Ala. 640, 65 So. 951; Busch v. Baker, 79 Fla. 113, 83 So. 704; Manhattan Med. Co. v. Wood, 108 U.S. 218, 2 S.Ct. 436, 27 L.Ed. 706; Edw. Thompson Co. v. Amer. L. B. Co. (C.C.A.) 122 F. 922, 62 L.R.A. 607. A bona fide purchaser, for a valuable consideration, and without notice, will be protected. Choteau v. Jones, 11 Ill. 304, 50 Am. Dec. 460; Anderson v. Roberts, 18 Johns. (N.Y.) 515, 9 Am. Dec. 235; Oriental Bank v. Haskins, 3 Metc. (Mass.) 332, 37 Am. Dec. 140.
Harsh Harsh, of Birmingham, for appellee.
Fraud or material misrepresentation authorizes rescission in equity of the sale of land, and a party may rely upon statements without investigation, in absence of knowledge of his own. Shahan v. Brown, 167 Ala. 534, 52 So. 737; Tillis v. Smith Sons L. Co., 188 Ala. 132, 65 So. 1015. Unless injury or damage to Roscoe was done by any act or conduct of Inman, whatever the nature of that act or conduct, it would not prevent Inman from rescinding the trade induced by the fraud of Toohey. 26 C. J. 1167. Purchaser of legal title subject to an outstanding equity must take subject to the equity, unless he is bona fide purchaser for value without notice. 27 R. C. L. 686. One claiming protection as bona fide purchaser has burden of proving payment of consideration, and cannot rely on consideration recited in deed. 27 R. C. L. 700, 701. Roscoe's knowledge that Toohey was working a fraudulent scheme put him on notice. 27 R. C. L. 710.
That the defendant Toohey procured the execution of the deed of February 23, 1925, by the complainant Inman to him, through fraud, is not controverted. The contentions of the appellant are: (1) That he is a purchaser of the property for value and without notice of the complainant's equity; (2) that the complainant was a party to and participated in the fraudulent scheme through which Toohey obtained the deed; and (3) is guilty of laches in seeking to uncover the fraud after its discovery.
The two last contentions present questions of fact, and after full and careful consideration of the evidence, we are of opinion that these contentions are without merit, and concur in the conclusion of the chancellor that the complainant's participation in the scheme was without guilty knowledge, and in no way influenced the conduct of the appellant in dealing with Toohey.
We are further of opinion that the complainant did not in fact discover the fraud until Toohey was arrested and put in jail on the complaint of Roscoe, and cannot be held guilty of laches.
We think it equally clear that appellant is not in a position to claim title to the property as an innocent purchaser. Before he accepted the deed from Toohey, he had knowledge that Toohey was engaged in the promotion of a fraudulent scheme, and was preying on the unwary to obtain money and property through this stupendous fraud; that he had recently come to Birmingham from another state — facts sufficient to put him on inquiry. And in acquiring the deed Roscoe parted with nothing of value. Gewin v. Shields, 167 Ala. 593, 52 So. 887; Banks v. Long, 79 Ala. 319; Randolph v. Webb, 116 Ala. 135, 22 So. 550; Gafford v. Stearns, 51 Ala. 434; Short v. Battle, 52 Ala. 456; Alexander v. Caldwell, 55 Ala. 517; Pom. Eq. Juris. (4th Ed.) § 749. He had no equity in the property against Inman; he only had the legal title, and, not being situated so as to stand as an innocent purchaser, the deed he obtained from Toohey was properly canceled.
Affirmed.
ANDERSON, C. J., and SOMERVILLE and THOMAS, JJ., concur.