Applegate v. Applegate

Deemer, J.

1 Stated-as shortly as may be, the facts are as follows: In 1886 one S. J. Applegate was the owner of the property in controversy, consisting of eighty acres of land and two toAvn lots in the city of Atlantic. In December of that year he conveyed the same to his son, W. J. Applegate, the deed expressing a consideration of nine thousand five hundred dollars. W. J. Applegate held title to the property until 1890', when he conveyed it to George M. Barber, who held the title until- April 7, 1891, when he re-conveyed the same to W. J. Applegate. A few days prior to this last conveyance, Applegate deeded the land to H. M. Wyckoff, but the deed to Wyckoff and re-conveyance from Barber to Applegate were not recorded until September of the year 1891. On the fourth day of April, 1891, the Corn Exchange Bank of Chicago, 111., commenced an action against W. J. Applegate ei al., upon certain promissory notes of the said Applegate, and caused an attachment to be issued and levied upon the property in controversy. At the same time it commenced an equitable action to subject the property, claiming that it had been conveyed in fraud of creditors. W. J. Applegate and George 1VI. Barber were both made parties to this suit. Barber made no appearance, but Applegate appeared and filed an answer setting up the re-conveyance from Barber, and stating that he had sold the property to Wyckoff, who was alleged to . be the owner, and denying the issuance and levy of the attachment in the action on the notes.' Wyckoff intervened ■ and claimed title under his conveyance from Applegate. No appearance was made to the law action, and judgment was rendered for the amount of the notes, and the attachment established as a lien against the attached property. A supplemental petition was then filed in the equity suit, reciting the recovery of judgment and the confirmation of the attachment, and asking that the judgment be made a lien upon the property, and that the conveyances from Applegate to Barber and to Wyckoff be set aside as fraudulent. On these issues that suit was tried to the court, resulting in a decree as prayed, from which an appeal was taken to this court, where the decree was affirmed. See 91 Iowa, All. After the decree was rendered, an execution issued, and the land was sold to the bank for something over seven thousand dollars. No redemption having been made, a deed issued to defendant Ernest A. Hamill on March 8, 1894, and Hamill went into possession of the property. Appellant is a judgment creditor of S. J. Applegate, who obtained his judgments in this manner: Prior to the year 1886, J. O. Yetzer, S, J. Applegate, and this plaintiff, W. H. Applegate, were associated together as partners in the pork-paclring business in the city of Atlantic, under the name of W. H. Applegate & Co. Dissensions arose between the members of this co-partnership, resulting in' a great deal of litigation. In an action wherein J. O. Yetzer was plaintiff and W. Iff. Apple-gate & Co., et al. were defendants, S. J. Applegate was appointed receiver of the property of the co-partnership, pending an action between the firm and the individual members thereof, and J. O. Yetzer was a surety on his bond as such receiver. In that accounting preceding, judgment was rendered in favor of J. O. Yetzer and against S. J. Apple-gate for the sum of five thousand six hundred and twenty-one dollars and eighty-four cents, and in favor of this plaintiff, and against S. J. Applegate for the sum of one thousand two hundred and sixty-three dollars; and it was further provided that the receiver should make report, and that the money in his hands should be used for the payment of these judgments. The judgments were rendered in November of the year 1888, and it was provided in the decree that certain of the partners should further account for certain property used by them. Execution was also ordered for the collection of .the judgments. On March 7, 1893, one day prior to the sale of the property in controversy to the Corn Exchange Bank, Yetzer commenced an action against W. J. Applegate and the Corn Exchange Bank to set aside the conveyance of the property from S. J. to W. J. Applegate; but in December, 1893, he voluntarily dismissed that action at his cost. At the same time he commenced an action against W. J. Applegate and Buth Applegate to set aside a deed to a forty-acre tract of land lying just north of the land in controversy, but neither the bank nor Hamill were made parties to this litigation. In March, 1894, a final accounting was had between the members of the firm of W. H. Applegate & Co.f in the district court, in the main accounting suit; and the amount in the hands of the receiver was determined, the receiver’s compensation wa¿ also fixed, and a division of the costs made. The receiver failed to turn over the money in his hands, which consisted largely of payments mad© by certain insurance companies in settlement of their liability for certain property of the firm which had been destroyed by fixe. And in April, 1894, plaintiff commenced suit against C. O. Applegate, executor of the estate of S. J. Applegate, deceased (S. J. Applegate having died in March, 1891), and Yetzer as surety on the receiver’s bond; and in December, 1894, recovered a personal judgment against the executor and Yetzer for the sum of about two thousand dollars. The executor had in the meantime made his final report, and received his discharge in April of the year 1893. It appears that the receiver turned over nearly all the funds in his hands to W. J. Applegate, and that the plaintiff, W. II. Applegate, knew of this misappropriation as early as November of the year 1886. In March of 1895, W. II. Applegate caused an execution to issue on his judgment against the executor and Yetzer, which was levied upon the judgment obtained by Yetzer against S. J. Applegate, and the said judgment was sold to plaintiff herein fox the sum of sixty dollars. In November of the year 1894, plaintiff commenced this action upon the original judgment recovered by him against S. J. Applegate in the accounting proceedings; asking that the conveyance from S. J. to W. J. Applegate be set aside, and that his lien be made prior to that of the Corn Exchange Bank and Ilamill. By supplemental petition the plaintiff also included the judgment obtained by Yetzer against S. J. Applegate, which he purchased at execution sale, as before stated, and the judgment obtained by him against C. C. Applegate, executor. The issue is between plaintiff, the Corn Exchange Bank, and Ilamill.

2 It is clearly shown that the conveyance from S. J. to W. »T. Applegate, executed in December, 1886, of the land in controversy, was fraudulent and void, because made with intent to hinder, delay, and defraud the creditors of S. J. Applegate. And it must also be accepted as a fact that the conveyances from W. J. Applegate to Barber and to WyckofE were also fraudulent, because made to defeat the creditors of W. J. Applegate. And the first question which arises is as to the right of plaintiff to maintain his suit upon his judgments. If the judgments in the accounting’ case were final, then plaintiff’s action upon the Yetzesr judgment, and upon the judgment in his favor rendered in that case, had sufficient basis; and, on the face of the records, in so far as it is based upon these two judgments, is barred, for the reason that the conveyance was made in 1886, and this action was not commenced until November, 1894. Hawley v. Page, 77 Iowa, 239; Laird v. Kilbourne, 70 Iowa, 83; Mickle v. Walraven, 92 Iowa, 423; Sims v. Gray, 93 Iowa, 38.

3 4 5 Appellant insists first, however, that the judgments rendered in the accounting case were not final, and did not become so until the year 1894. We do not so regard^them. An unconditional judgment was rendered in the accounting case November 14, 1888, in favor of W. II, Applegate and against S. J. Applegate, for something over one thousand two hundred dollars, and a like judgment was rendered in favor of I. C. Yetzer and against S. J. Applegate for more than five thousand dollars, each of which judgments drew six per cent, interest from date. It was further ordered, however, that the receiver should immediately report the amount of money held by him, which was directed to be applied pro rata in the payment of the judgments and costs. And it was further ordered that Yetzer and Applegate should each make an accounting of the property and money in their hands belonging to the firm, which, when so accounted for, should be applied in the same proportion as tbe money held by tbe receiver. Tbe judgments in favor of Yetzer and W. H. Applegate against S. J\ Apple-gate were final; tbat is, tbe amount due was fixed, execution was ordered, and application of tbe funds in the hands of tbe receiver and tbe individual partners was provided for. In April of 1894 tbe court made further findings as to the amounts to be applied on these judgments, tbe compensation of tbe receiver, and as to tbe state of tbe account between Yetzer and W. II. Applegate. Another order was entered in tbe case December 22, 1894, which recognized, however, tbe validity of tbe original judgments. We are of opinion that the original judgments against S. J. Applegate were final, and tbat all tbat was done thereafter was to determine what amounts should be applied thereon from the money and property in tbe bands of tbe receiver and some of tbe members of tbe firm. If they were final, then plaintiffs therein bad tbe right to bring actions thereon to set aside a fraudulent conveyance as soon as tbe said judgments were rendered. But it is said tbat as W. J. Apple-gate, tbe fraudulent grantee, was at all times a non-resident of this state, tbe statute did not begin to run until tbe title was acquired by some one who resided in this jurisdiction, against whom action might be brought. It appears from tbe record tbat W. J. Applegate was a non-resident of tbe state, as claimed; and it follows tbat tbe statute did not begin to run until tbe conveyance to Barber, in tbe year 1891. See Code 1813, section 2533. And, as plaintiff commenced bis action within five years from tbat date, it is not barred by tbe statute. Appellees contend tbat appellant is guilty of such laches as tbat be is not entitled to recover. Suffice it to say, in answer to this claim, tbat tbe facts are sucb tbat we do not believe tbe doctrine of laches should apply. While bis judgment was final, yet tbe exact amount tbat would remain unpaid could not be determined until tbe receiver mad© bis report, and all tbe property of tbe co-partnership was disposed of and accounted for. Shortly after this was clone, plaintiff commenced his suit in equity to subject the real estate. We think his delay is not such as to defeat his action.

6 7 8 9 II. One of plaintiff’s judgments is against the executor of S. J. Applegate, deceased, and J. C. Yetzer. The action in which it was obtained was commenced after the death of S. J. Applegate, deceased. If this judgment amounts to anything, it is a personal judgment against C. O. Applegate. As S. J. Applegate was dead, no judgment could be obtained against him; and a judgment against an executor who has been discharged from his trust is of no validity, except, possibly, as against the executor personally. In any event, this judgment never became a lien upon the lands of S. J. Applegate; and, as plaintiff did not exhaust his remedies at law against the estate of S. T. Applegate, he is in no position to complain of the conveyances of the property, in virtue of -his judgment against C. O. Applegate, executor. Unless it be, then, for some of the other defenses pleaded by appellees, appellant is entitled to subject the land to the payment of his original judgment, and to the judgment in favor of Yetzer which was purchased by him at execution sale. It appears, however, on the face of the records, that ITamill hat< a sheriff’s deed to the land, obtained through an execution sale upon a judgment which on its face seems to be regular and valid. This - judgment was obtained in the attachment proceedings and the equitable suit brought by the Exchange Bank, to which we have already referred. Appellees contend that W. J". Applegate, the defendant in the attachment proceedings, was a non-resident of the state, and had no notice of the action, that the notice was served upon another party, and that he had no knowledge of the action until long after the judgment, which was in rem, was entered. It must be conceded that the evidence taken upon this trial shows that W. J. Applegate was not served with notice of the attachment suit. He made an appearance to the creditor’s bill founded thereon, however, and filed an answer in ■which, he pleaded the re-conveyance of the property from: Barber to himself, and further stated that he had sold the property to Wyckoff. He also -admitted that the bank had commenced an action against him, and that a writ of attachment was asked for. See 91 Iowa, dll. That action went to decree^ as we have stated, *and it lies at the foundation of the Hamill claim. It further appears that, after the sale on execution was made, Applegate appeared in the attachment suit, and filed a motion to set aside the sale, based on the ground that the court had no jurisdiction, because of want of notice of the proceedings. The trial court denied his. motion, and he appealed to this court, where the order wasi affirmed. , See 97 Iowa, 67. Appellant contends that he is. not bound by the findings in that case, and insists that he has a right to attack the proceedings because of want of jurisdiction of the court over W. J. Applegate; and this brings us to the principal point of difference in the case. There can be no doubt that the court had jurisdiction of the creditors’ bill brought by the bank to subject the property to the payment of the judgment it held against W. J. Applegate, for the reason that he appeared to that proceeding and filed an answer. In answer he did not, as we understand it, question the validity of the attachment proceedings. But, whether he did or not, it appears to us that it was his duty to do so-, if he had any defense thereto. Had he done so-, and had the court found against him on such an issue, there is no doubt that his only remedy for an erroneous decree would have been by appeal. Neither he nor a stranger could collaterally attack the decree subjecting the property to the plaintiff’s claim. An illustration will make this point more clear. Suppose that the bank had obtained no judgment, but had sought to subject the property which it claimed belonged to; Applegate to the payment of a simple note claim,- or to the payment of an account suppose, also, that Applegate appeared, and pleaded that such a claim would not sustain the action, but was defeated ; could a stranger take advantage of this erroneous decision? Aye,. could Applegate himself attack the judgment collaterally for want of jurisdiction ? Manifestly not, we think. The court -had jurisdiction of the subject-matter, — the setting aside of 'conveyances in fraud of creditors, — and it had jurisdiction of the person, because of his appearance. Having this [jurisdiction, the decree was final,'unless reversed or attacked by direct proceedings. But this case is even stronger than the one we have supposed. / Here Applegate not only appeared to the equitable suit to subject the property, and was thus bound by the decree, but he also appeared in the attachment case, and there filed a motion based on the same grounds now relied upon by appellant for setting aside the sale and deed to Hamill. In that case he was defeated. See 97 Iowa, 67 That judgment and all proceedings are final and conclusive as to W. J. Applegate. He is absolutely bound thereby, and the deed to Hamill divests him of all title to or claim in the property. It is said, however, that appellant, W. II. Applegate, was not a party to these proceedings, and was not bound thereby, and that he can attack the judgment and sale for want Of jurisdiction. .This, no doubt, is the general rale. But a judgment which is without jurisdiction is not a judgment. It has been said to be as so much waste paper. It is absolutely void and of no validity as to any one. We have, then this inquiry: Can a judgment be valid as between the parties, and invalid as to third parties, because of want of jurisdiction ? If one so acts as to' estop himself from questioning a judgment rendered against him, can a third person- take advantage of the defect, and have the judgment decreed a nullity ? The books furnish no uncertain answer to these questions. Indeed, it is quite generally held that if a court has jurisdiction over a general class of subjects, — as, for instance, the rendition of a judgment in rem against real estate situated in this state, the defendant being a non-resident, — and the court is required to ascertain and decide whether the facts essential to jurisdiction in the particular case exist, its decision cannot be collaterally impeached. This rule does not mean that any judicial tribunal can create jurisdiction for itself. That no court can do. But it does mean that the court may ascertain and conclusively decide against a collateral attack, whether jurisdictional facts exist, in a particular instance, authorizing it to proceed. See Evansville, I & C. S. L. R. Co. v. City of Evansville, 15 Ind. 395; Betts v. Bagley, 12 Pick. 572; Vanderheyden v. Young, 11 Johns. 150; Bonsall v. Isett, 14 Iowa, 309; Commissioners v. Aspinwall, 21 How. 539; McNitt v. Turner, 16 Wall. 352; Thompson v. Tolmie, 2 Pet. 157; Ryan v. Varga, 37 Iowa, 78; Koehler v. Hill, 60 Iowa, 543; Cooper v. Sunderland, 3 Iowa, 114; Morrow v. Weed, 4 Iowa, 77. It must be remembered that W. J. Applegate not only had the opportunity to defeat the equitable suit brought against him by the Exchange Bank by pleading no judgment in the attachment proceedings, but that he also appeared in the attachment proceedings and moved to set aside the judgment and sale because he was not served with notice of the proceedings. Having appeared in the attachment case, and submitted to the jurisdiction of the court, he gave the court full power and authority to determine the question as to whether or not he had been served with notice in the original attachment suit. The court determined that he had been, or that he was in no position to complain of want of service, and that ruling was affirmed by this court, j Surely the court had jurisdiction of the parties and of the subject-matter in that proceeding, and its judgment cannot be collaterally attacked. If it may be, then a-judgment as to jurisdictional facts is never conclusive, but may be collaterally attacked at any time and by any person. When it is conceded that W. J. Applegate is concluded by the orders made in the attachment case, the whole matter is determined; for, if the judgment is void for want of jurisdiction, it is void as to every one, and, if not void as to the original defendant, it is not void as to any other person. Ereexnan Judgments, section 523, and cases cited; Dwight v. St. John, 25 N. Y. 203; Hawk v. Evans, 76 Iowa, 593. Certain, it is that both the bank and W. I. Applegate are concluded by the ruling on the motion to set aside the judgment and sale. And, if they are concluded, this plaintiff must be, for a judgment which is good between the parties cannot be adjudged void as to strangers, in the absence of fraud or collusion. We are firmly of opinion that the judgment in the attachment case is not subject to the attack made upon it.

10 III. In oral argument, appellant’s counsel insisted that as his client was a judgment creditor of S. J. Applegate, the original fraudulent grantor’, and as the Exchange Bank was a creditor of W. J. Applegate, a fraudulent grantee, and also a fraudulent grantor of the property, he (appellant) is entitled to priority over the bank, and to have his lien first established. The evidence shows that the bank extended credit to W. J. Applegate upon the strength of his ownership of the land. It had ím knowledge at the time it gave this credit that any one was claiming the conveyance from S. J. Applegate h> him was in fraud of creditors. True, an action had been brought by Yetzer in March of 1893 against S. I. Applegate and the bank to subject the property to the payment of his judgment in the accounting case; but this action was dismissed in December of that year, and was not renewed or attempted to be renewed until appellant filed a supplemental petition in March of 1895, based upon the same judgment, which he had purchased on execution, as before stated. When defendants extended credit, and took title to the lands under the sheriff’s sale, there was no claim that the deed from S. J. to W. J. Applegate was fraudulent. The judgment against S. J. Applegate upon which appellant predicates his action were not such liens upon the property as to give third persons notice thereof; and the com veyance between S. J. and W. J. Applegate was good as to all the world, save and except the creditors of Applegate. Wright v. Howell, 35 Iowa, 288. Under such a state of facts as is here presented, it seems to be held by all courts that have had 'occasion to examine the matter that the creditors of the fraudulent grantee, who have subjected the land to the payment of their claims before any steps are taken by the creditors of the fraudulent grantor, are entitled to priority. See Robinson v. Monjoy, 7 N. J. Law, 173; Gibbs v. Chase, 10 Mass. 125; Parker v. Freeman, 2 Tenn. Ch. 612; Susong v. Williams, 1 Heisk. 625; Budd v. Atkinson, 30 N. J. Eq. 530; Powell v. Ivey, 88 N. C. 256; Chapin v. Pease, 10 Conn. 69. What the rule might be under a different state of facts, we have no occasion to determine.

Many other questions are presented in argument, but as they are not regarded as controlling, we do not consider them. The decree of the district court is right, and it is affirmed.

Case Details

Case Name: Applegate v. Applegate

Court Name: Supreme Court of Iowa

Date Published: Jan 25, 1899

Citation: 107 Iowa 312

Court Abbreviation: Iowa