What is the SOL for an Action to Cancel a Deed Procured by Fraud?
March 11, 2014 § 7 Comments
SOL is a vernacular phrase that means, essentially, that one has run out luck, or words to that effect. SOL is also an acronym for Statute of Limitations. Both mean the same thing.
Statutes of limitation (SOL) are, by definition, statutory creatures of the legislature. In our state, there is a general three-year SOL for most actions, including those based on fraud. And, there is a ten-year SOL to recover land.
So, which SOL applies to an action to cancel a deed procured by fraud?
That was the question before the MSSC in the case of Lott and Saulters v. Saulters, decided January 23, 2014, in which Ralph Saulters filed suit to cancel Brenda Lott’s deed from their mother, Frances, based on fraud, and Brenda and her mother sought a dismissal based on SOL. Here is how Justice Chandler addressed the issue for the majority:
¶7. Brenda and Frances argue that Ralph’s claim for cancellation of Brenda’s deed falls under the general, three-year statute of limitations because it alleges fraud. This requires us to address the question of whether an action to cancel a deed that was fraudulently conveyed falls under the three-year statute of limitations governing actions based on fraud, or if it falls under the ten-year statute of limitations governing actions to recover land. We hold that, where a plaintiff alleging a possessory interest in the land brings an action to clear title or to recover land obtained by fraudulent conveyance, that action is governed by the ten-year statute of limitations.
¶8. Actions to recover land are subject to the ten-year statute of limitations found in Mississippi Code Sections 15-1-7 and 15-1-9. In relevant part, Section 15-1-7 provides:
A person may not make an entry or commence an action to recover land except within ten years next after the time at which the right to make the entry or to bring the action shall have first accrued to some person through whom he claims, or, if the right shall not have accrued to any person through whom he claims, then except within ten years next after the time at which the right to make the entry or bring the action shall have first accrued to the person making or bringing the same.
Miss. Code Ann. § 15-1-7 (Rev. 2012) (emphasis added). Similarly, Section 15-1-9 provides:
A person claiming land in equity may not bring suit to recover the same except within the period during which, by virtue of Section 15-1-7, he might have made an entry or brought an action to recover the same, if he had been entitled at law to such an estate, interest, or right in or to the same as he shall claim therein in equity.
Miss. Code Ann. § 15-1-9 (Rev. 2012). A suit to remove a cloud on title is considered an action to recover land. O’Neal Steel, Inc. v. Millette, 797 So. 2d 869, 873 (Miss. 2001).
¶9. Unlike the legislatures of most states, our Legislature has not created a statute setting a shorter limitations period on actions to recover land obtained by fraud; in fact, Section 15-1-9 states that actions to recover land based on fraud will have a ten-year statute of limitations:
A person claiming land in equity may not bring suit to recover the same except within the period during which, by virtue of Section 15-1-7, he might have made an entry or brought an action to recover the same, if he had been entitled at law to such an estate, interest, or right in or to the same as he shall claim therein in equity. However, in every case of a concealed fraud, the right of any person to bring suit in equity for the recovery of land, of which he or any person through whom he claims may have been deprived by such fraud, shall be deemed to have first accrued at and not before the time at which the fraud shall, or, with reasonable diligence might, have been first known or discovered.
Miss. Code Ann. § 15-1-9 (Rev. 2012) (emphasis added).
¶10. We have twice applied the ten-year statute of limitations in cases where fraud was alleged in an action to recover possession of real estate. Jones v. Rogers, 85 Miss. 802, 38 So. 742, 748 (1905), overruled on other grounds by Kennedy v. Sanders, 90 Miss. 524, 539-40, 43 So. 913, 915 (1907); Aultman v. Kelly, 109 So. 2d 344, 349 (Miss. 1959). In Jones, we explained–in the context of an action to recover land–that to take advantage of the concealed-fraud provision of Section 15-1-9 quoted above, plaintiffs must allege “that complainants did not discover or know of this fraud over 10 years before instituting their suit.” Jones, 85 Miss. 802, 38 So. 742, 748 (1905) (emphasis added). Likewise, in Aultman, where heirs sought to cancel a mineral deed they alleged was procured from their father by fraud, we stated that the heirs “were required to institute a suit within ten years from the accrual of their right.” Aultman, 109 So. 2d 344, 349 (Miss. 1959).
¶11. We disagree with the Fifth Circuit’s interpretation of Mississippi law on this issue in Suthoff v. Yazoo County Industrial Development Corporation, 722 F. 2d 133 (5th Cir. 1983). [Footnote omitted] In it, the Fifth Circuit applied a three-year statute of limitations to an action where the plaintiffs alleged that they were fraudulently induced to sell land under the auspices that their property would be condemned. Suthoff, 722 F. 2d 134-35 (5th Cir. 1983). The court acknowledged that “the ten-year period for the recovery of land has been applied in two actions in Mississippi to set aside conveyances allegedly procured by fraud,” but noted that no Mississippi court had decided “the precise issue [of] whether such an action is governed by the statute relating to actions for fraud or the statute relating to actions to recover land.” Id. at 137.
¶12. In applying the shorter statute of limitations, the Fifth Circuit followed the rule used by the majority of states. We decline to follow this majority rule, because, as mentioned above, the Mississippi Legislature, unlike the majority of states, has not created a statute setting a shorter period of limitation on actions to recover land on the grounds of fraudulent conveyance. A case from Utah, cited in Suthoff as support for this majority rule, explains the majority rule and illustrates why it should not be the rule in Mississippi given our current statutory scheme:
The legislature of this state, as in nearly all other states, has seen fit to fix a shorter period of limitation upon actions for relief upon the ground of fraud or mistake than for recovery of possession of real estate. This is for the very cogent reason that a person claiming to have been defrauded or to have been induced to enter into a contract by mistake should not be permitted to allow a great length of time to elapse after discovery of the fraud or mistake before instituting his suit . . . .
Davidsen v. Salt Lake City, 95 Utah 347, 81 P.2d 374, 376-77 (1938) (emphasis added).
¶13. Because our Legislature has not created a law shortening the time to bring an action to recover a fraudulent conveyance, and because our current statutory law imposes a ten-year statute of limitations for actions to recover land based on fraud, we decline to adopt the majority rule. We hold that, where a plaintiff alleging a possessory interest is seeking to regain title to land lost by a fraudulent conveyance, or to clarify his own title clouded by fraudulent conveyance, the action still falls under the ten-year statutes applying to actions to recover land, despite the presence of allegations of fraud. [Fn 3]
[Fn 3] We note that an action to cancel a fraudulent conveyance can fall under the three-year statute of limitations where the plaintiff does not allege a possessory interest in the land. See O’Neal Steel, Inc. v. Millette, 797 So. 2d 869 (Miss. 2001), holding that the three-year statute applied where a plaintiff-creditor sought to cancel a deed the defendant-debtor conveyed to a third party in order to avoid a judgment lien. We further note that today’s decision overrules McWilliams v. McWilliams, 970 So. 2d 200 (Miss. Ct. App. 2007), in which the Court of Appeals erroneously applied the reasoning of Millette, incorrectly applying the three-year statute where a plaintiff sought to recover land he allegedly was fraudulently induced to convey.
All of the language quoted above is important, but Footnote 3 is extremely important to understanding how the two SOL’s apply in different situations involving cancellation of a deed. I also found it interesting that a COA decision was overruled in a footnote. Just goes to show that if you don’t read every word, you might miss something crucial.
Not Under the Influence
November 14, 2013 § Leave a comment
Two recent cases, both decided by the COA on October 22, 2013, upheld chancellors’ rulings that decedents’ actions were not the product of undue influence.
In Wheeler v. Wheeler, the court upheld a chancellors’ decision that, although the decedent and his brother had a confidential relationship, the will and deeds in favor of the brother were not the product of undue influence so that they should be set aside.
And in Estate of Mace: Colbert v. Gardner, the court affirmed the chancellor’s refusal to set aside a will based on undue influence. The court also rejected the plaintiff’s claim that the decedent lacked testamentary capacity.
We’ve talked here before about the onerous burden that the plaintiff bears to convince the trial court that a will, deed, or other instrument should be set aside for undue influence. We also talked about the proof necessary to prove lack of testamentary capacity.
The law sets a high bar for those who are seeking to set aside instruments. If you are approached by a prospective client, even one with a fistful of dollars to finance litigation, you should make sure that the proof rises to the level that would justify the relief you are seeking.
You can read these recent cases and draw your own conclusions.
Maxims: What Use Are They Today?
October 23, 2013 § 3 Comments
As we’ve seen over the past several weeks, the jurisprudence of equity developed radically apart from the law. It looked past forms to substance, beyond rigid concepts to a more fluid approach to affording relief. It sought to make whole those who were wronged.
Mississippi long adhered to the principle that the lines of demarcation between law and equity jurisdiction should be preserved. See, e.g., Cotton States Life Ins. Co. v. Cunningham, 141 Miss. 474, 482, 106 So. 766 (1926).
Those lines were kept clear and distinct from the earliest days of statehood through two, separate sets of procedures, one for chancery court and another for circuit court. Each set of procedures addressed the unique needs and approaches of the different courts.
Since the MRCP, however, our procedures have become more alike. In fact, except notice of R81 matters, practice is procedurally the same in both courts.
With the advent of the MRCP, in my opinion, the line of demarcation between the courts has become increasingly blurred. It seems that the concept that equity follows the law has been elevated to a principle that somehow equity is inferior to the law, or that it should be constrained by the same strict forms and conventions that limit the law courts.
That’s unfortunate because there is a need for flexibility and ability to do substantial justice in our court system, as equity has been doing for many centuries.
So the point I’m getting at is this: when you are pressing a point in chancery, don’t overlook using the maxims themselves as persuasive authority. They are a part of our law of equity just as is every MSSC and COA ruling arising from chancery appeals. They are good law.
Maybe if more lawyers would throw the maxims into their trial arguments and appellate briefs, it would reawaken an awareness of the great equity principles in our jurisprudence. And by doing so, perhaps we will return to the core idea of the great difference in approach between the two courts, and the validity of preserving the difference.
As Judge Griffith said:
… there is not to be forgotten the obligation of equity judges to firmly retain the jurisdiction which the court of chancery definitely possesses, not only because a vast experience has justified the propriety and better efficiency of it, but because of a reason already elsewhere touched upon; that two courts, one more largely of the people and the other solely of a judge, existing and in operation side by side, each within its own sphere, tend to keep the course of justice directed the more upon an even keel and better along a middle, a deeper and a truer channel. Griffith, § 26, p. 28.
What is the future of equity and chancery courts as we plunge deeper into the 21st century and move toward the second 100-years of our statehood? That’s a matter we’ll explore at a later date.
Maxims: The Legal Chance to be Heard
October 22, 2013 § 1 Comment
“No one should be condemned without a legal chance to be heard.”
This concept is so fundamental to our notions of due process that it almost goes without saying. Judge griffith expounded on it this way:
This maxim is so clearly founded in natural justice that even savages would understand it, and every decent modern government observes it as an indispensible principle of constitutional right. A decree rendered in its absence is utterly void, as it ought to be. A decree in personam cannot be rendered without a personal appearance or without personal notice sereved within the territorial limits of the state, and a decree bearing upon personal property situated within the state but owned by a non-resident is not valid unless by some reasonable method to be prescribed by law the defendant is given notice by constructive process, such as notice by publication. Griffith, § 48, p. 50.
The MRCP modified process to allow personal service outside the boundaries of the state.
The principle is found consistently in our jurisprudence. If there is no personal jurisdiction, if there is no notice, the court may not act.
The one exception is MRCP 65 pertaining to temporary restraining orders (TRO) without notice. These are not favored, however, unless the circumstances are of such an emergency and exigent nature that relief must be granted immediately. Even in such cases, however, the TRO may be dissolved upon motion of the enjoined party on only two days’ notice, and in no event may extend by the initial order for more than ten days.
Maxims: No Interference with Court Orders
October 15, 2013 § Leave a comment
“Courts of equity will not tolerate interference with their orders, nor with their officers in the enforcement thereof.”
This maxim was born in the earliest days of equity courts, when dissatisfied litigants sought to evade duties imposed by the chancellors through contrary orders from law courts. Those days are long past, and the Constitution and statutes determine jurisdiction in the modern era.
Here is what Judge Griffith said about it (with paragraphing added):
… it became in time the established rule that while the chancellors would of their own accord refrain absolutely from interfering with the orders of the law courts and their enforcement thereof, except upon an established equitable ground, yet when a dominant equity so required, all persons, other than the law judges themselves, would be enjoined to give obedience to the decrees in equity as to all the matter comprised therein. For instance, when a receiver is appointed in chancery and all the property has been taken in charge by the receiver, as the officer of the court it is punishable as a contempt for any person to attempt to interfere, although he may have a writ from some other court.
The rule is that if any person suffer by reason of any order in chancery, whatever it may be, he must apply to chancery for a revocation or modification of that order: a resort to some other court will not avail, save only in those cases wherein the order in chancery was absolutely void. Griffith, § 46, p. 48-49.
To put it in more succinct terms: When chancery court enters an order, you can obey it, or you can appeal it.
Today, the maxim underscores the chancery court’s considerable power to enforce its orders and to punish those who thwart them or the officers charged with carrying them out.
Maxims: To Protect Property Rights
October 8, 2013 § Leave a comment
From the earliest days of equity, property disputes were matters for chancery. The concept of property, however, is much broader than the dirt upon which we stand and live.
Judge Griffith explains:
Property and property rights only are within the domain of equitable interference, there being included however not only all those interests in real and personal property which are, or can be, the subject of individual ownership, but also those other interests of quasi-ownership which are the equitable equivalents of property in some form, such, for instance, as the right to labor and engage in a lawful business, the right to health and reputation, the right to the physical senses of sight, hearing and the like, which will make labor, business or property profitable or enjoyable; the right to free speech, free movement and thr right to all the civil privileges which make all those other rights real and preserve them unimpaired — all these are not only in a party’s own right but in behalf as well of all those of his family who are legally dependent upon him. Griffith, § 44, pp. 47-48.
He distinguishes the mentioned matters from “Questions of partisan politics, religious or fraternal controversies, crimes and the like, except when property is directly involved …” as issues that are reserved for jury courts.
The common thread running through the list of equitable matters is that to effect a remedy in each the court must take coercive measures or look past the parties’ current situation and legal forms, and put the parties in a proper relationship to one another. Money damages alone will not cure the problems arising in those matters.
Maxims: If You Seek Equity, You Must Do Equity
October 7, 2013 § 1 Comment
“He who seeks equity must do equity.”
Judge Griffith characterizes this maxim as “one of the oldest of equity principles.” He says (paragraphing added):
… the court in extending its aid will require as a condition thereof that the complaining party shall accord and render to the adversary party all the equitable rights to which the latter is entitled in respect directly to the subject matter of that suit, and this is true even as to many of those things which the defendant could not compel by an independent suit.
It is through the peration of this maxim that tender or the equitable equivalent thereof is required; the restoring of benefits received and the placing of the opposite party in statu quo, and the like; and that without the necessity of cross demand [note: counterclaim in modern parlance], the decree [read judgment] may often be so drawn and rendered that each party may be given, in respect to the identical transaction, what in equity and in good conscience he ought to have and in the approximate manner in which he ought to have it — settling the whole matter by making any decree at all in complainant’s [read plaintiff’s] behalf conditional upon the allowance of the cognate rights of the defendant: provided, these latter rights are so intimately connected with the transaction as to be equitably inseparable therefrom, and provided that no express principle of the law stands in the way. Griffith, §43, pp. 45-46.
When a litigant invokes jurisdiction of the chancery court, that litigant is thereby bound by all equitable principles. Hooks v. Burns, 168 Miss. 723, 152 So. 469 (1934). It applies only to one seeking affirmative relief. Burton v. Mutual Life Ins. Co., 171 Miss. 596, 625, 158 So. 474 (1935). It protects the substantive rights of a defendant, and may not be extended to impose moral duties. Gaston v. King, 63 Miss. 326, 332 (1885).
I used to tell clients that we wanted to be the ones “wearing the white hats” in court. In part that was a nod to the wisdom behind this maxim. And, it was a recognition of the fact that the judge is always ready to aid the one in the right, and to set right the one in the wrong.
Maxims: Clean Hands
October 2, 2013 § Leave a comment
“He who comes into equity must come with clean hands.”
This maxim is the source of the so-called “Clean Hands” doctrine that every chancery practitioner has encountered at one time or another.
Judge Griffith’s description is apt today. Here’s what the judge said (paragraphs added):
” … [N]o person as a complaining party can have the aid of a court of equity when his conduct with respect to the transaction in question has been characterized by wilful inequity, or illegality.
“It does not exclude a party because in some other matter his conduct may have been reprehensible; it refers only to the subject matter of the particular suit in hand.
“The wrongful conduct which will bar the complainant need not be so gross as to be a crime punishable as such, nor so positive as within itself to form the basis of a legal action. It may be described as such wilful misconduct, inequity or fraud with respect to the immediate transaction as would be condemned and pronounced wrongful by homest and fair-minded men.” Griffith § 42, p. 44.
As Judge Griffith goes on to say, the doctrine of clean hands is purely defensive in nature, and can not be used by a party to acquire rights to which he or she would otherwise not be entitled. It is not required that it be pled, and the court may apply it, even on its own motion, at any time that it becomes evident in the course of litigation that it has come into play.
The doctrine acts as a form of estoppel. A former wife was estopped from obtaining a judgemnt of contempt against her ex-husband when it was established that she had failed to comply with the judgment herself. Brennan v. Brennan, 605 So.2d 749, 752 (Miss. 1992). See also, Banks v. Banks, 648 So.2d 1116, 1126 (Miss. 1994).
Laches
October 1, 2013 § Leave a comment
We discussed yesterday the maxim that “Equity aids the vigilant and not those who slumber on their rights.” Equity will not act where one party gains an advantage by delaying taking action.
The maxim is embodied in the equity doctrine of laches. Although it resembles the effect of statutes of limitation, laches is not based on, limited to, or bound by any statute of limitations. Judge Griffith explained it this way (broken into paragraphs):
“It is a rule peculiar to and inherent in courts of equity; and it applies where it would be practically unjust to give a remedy, either because the applicant has by his conduct done that which might be fairly regarded as a waiver of his remedy, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were to be afterward asserted.
“A long or protracted delay in the prosecution of rights is presumed to have produced the situation last mentioned and equity looks with so little favor upon such prosecutions that it will not entertain them, although no express statute of limitations is available, — unless facts are shown which will rebut the preseumption of injustice arising out of the apparently undue delay, or which will excuse the same.” Griffith, § 33, pp. 35-36.
Laches is independent of any statute, and gives rise to a rebuttable presumption of unfairness. It is within the discretion of the chancellor. Griffith, § 33, p. 36, fn. 24a.
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