Raub v. General Income Sponsors of Iowa, Inc.
Supreme Court of Iowa
176 N.W.2d 216 (1970)
Jessie Raub (plaintiff) was fraudulently induced to transfer her property to General Income Sponsors of Iowa (General Income) (defendant), remaining as a tenant on the property and not discovering the fraud until nearly a year later; before she discovered it, General Income obtained two mortgages on the property from First National Bank and Manson State Bank (defendants). The trial court declared the deed void for fraud (unappealed by General Income) but also invalidated both mortgages, and the two banks appealed, arguing they were bona fide purchasers not on notice of the fraud, while Raub argued her continued occupancy should have put the banks on notice to investigate.
Whether a bona fide purchaser is entitled to have its purchase upheld if it is not on reasonable notice to make inquiry into whether the grantor obtained the property fraudulently.