— Appellant is the assignee of a judgment against Mollie Dunky and the Wright-Dalton-Bell-Anchor Store Company and instituted this suit to set aside a conveyance which the, petition alleges was made by Mrs. Dunky to her co-defendants for the purpose of hindering, delaying and defrauding creditors. A demurrer to the petition was filed and sustained. Appellant refused to plead further;. judgment was rendered accordingly, and the case is here by appeal.
_ The petition alleges, in substance, that respondent William N. Barron is a lawyer, abstractor and real estate dealer and is familiar with titles, records and values of real estate in Butler County and particularly with reference to the parcel in question, which is described; that June 10, 1901, Mollie Dunky, then Mollie Knight, represented to The Wright-Dalton-B ell-Anchor Store Company that she had good right to lease to it a lot in Poplar Bluff, and that, ‘ ‘ deceived thereby, the Store • Gompany accepted from her a lease of the property in question and other property for a term of over sixteen years at an agreed .rental of forty dollars per month;” that Mollie Knight, now Dunky, covenanted in the lease that she had good right, etc., and thereby became liable to the Store Company for any damages it might sustain in case of breach; that in reliance upon the warranties in the lease, the Store Company entered into possession and expended large sums in improving the lot, whereof respondents Barron had full knowledge; fhat in 1903 George Orchard commenced an action in ejectment against the Store Company for the lot in question, to recover possession and for damages and rents and pro
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fits; that in realization of her liability to the Store Company in case Orchard succeeded in his suit, Mrs. Dunky applied to be permitted to come in and defend in that suit on the ground that she was the landlord of the Store Company; that leave was given her and she answered; that the Orchard case was tried, judgment was rendered for defendants, and Orchard appealed; that in 1909 the judgment was reversed and the cause remanded for retrial; that William N. Barron had full knowledge of the facts and of the opinion (
The petition then proceeds as follows:
“Plaintiff further states that he is now, and was at all times hereinabove mentioned, president and one of the principal stockholders, and as such one of the principal owners of the aforementioned Wright-Dalton-Bell-Anchor Store Company, and that as owner of said judgment aforesaid and for the purpose of securing from the possession of said Bank of Poplar Bluff, the colla *46 teral notes given at the time for the purpose aforesaid, he did, on, to-wit, the 19th day of September, 1917, lawfully, legally and by proper legal and valid contract to that effect, attached to the margin of the record of said judgment aforesaid, release the sureties, and, among others, defendant William N. Barron, from liability on said fifteen thousand dollar appeal bond, given at the time, in the manner and for the purpose aforesaid, but plaintiff says that said Barron, notwithstanding such release, induced and procured said Bank of Poplar Bluff to refuse to deliver to plaintiff said collateral as aforesaid, and to retain the same in its possession until long after the institution of this suit, and plaintiff states that if he had attempted to collect his said judgment from the defendant William N. Barron as surety as aforesaid, and the other sureties on said appeal bond, and if he had succeeded, in said attempt, then and in that event that said sureties, William N. Barron and others, would thereupon have confiscated said collateral deposited as aforesaid with said Bank of Poplar Bluff, and which act on their part would have resulted in great and serious financial loss to plaintiff as president, principal stockholder and part owner of said Wright-Dalton-Bell-Anchor Store Company; plaintiff further - says that if he had caused execution to be levied upon the property of, and had collected said judgment from, the Wright-Dalton-B ell-Anchor Store Company, or if he in the future should collect said judgment from said Wright-Dalton-B ell-Anchor Store Company, such act on his part would have resulted, or in the future will result, in great financial loss to him as president, principal stockholder and part owner- of said Wright-DaltonrBell-Anchor Store Company; plaintiff further says that the collecting of said judgment from the Wright-Dalton-B ell-Anchor Store Company and permitting said Mollie Dunky to escape and avoid the paying of a debt solely and justly hers, by fraudulently stripping herself of all her property with defendant Barron’s aid, in the manner and by the means aforesaid, would be inequitable, unconscionable and unjust.
*47 “Plaintiff says that the defendants, James J. Barron and Mollie Dunky, are non-residents of the State of Missouri, and that the ordinary process of law cannot be served upon them.
“Wherefore, plaintiff prays that an order of publication be made notifying the defendants, James J. Barron 'and Mollie Dunky, of the pendency of this suit, as provided by statute, in such cases made and provided, and that the said conveyances be adjudged fraudulent and void against plaintiff; that the same be set aside and for naught held and that the property herein mentioned be sold for the satisfaction of the said judgment of plaintiff, and that the defendants be in the meantime enjoined and restrained from disposing of the said property or paying out any of the profits thereof and in anywise interfering therewith; and the. defendants Barron be required to account for all rents and profits of every kind which they have received from or by virtue of their dealings with the said property; and if the court thinks it equitable so to do, plaintiff hereby tenders to defendants and offers to repay to them as a consideration precedent to recovering judgment for plaintiff herein, such amount, if any, as they paid to the-said Mollie Dunky for the said land, together with legal interest from the date of said purchase, if any, and-for such other and further relief as to the court may seem just and proper, and as in duty bound your petitioner will ever pray.”
The petition is necessarily long, but what is set out is sufficient for the decision of the questions which counsel discuss. The demurrer is sufficient, in form and substance to present those questions. Appellant discusses the points made by respondents on the trial Respondents confine themselves to the same questions, in substance. We shall assume counsel raise all the questions the record presents, and refrain from searching this long petition for defects other than those respondents’ counsel, in their able brief, present as covering the case. In epitomizing the petition in part this course was held in view.
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(1.) There is some apparent confusion .in the decisions, here and elsewhere, but an examination of them shows that the disharmony is not so great as at first blush might appear.
It may be said that the real position is that equity will refuse jurisdiction until the creditor has exhausted his rights against property other than that fraudulently conveyed. As already pointed out, the judgment lien makes no distinction of that kind. The officer who makes a
nulla bona
return when there is leviable property he might seize does so at his peril. And this applies when the judgment is a lien on property fraudulently conveyed. The matter comes to this: ■ Will courts of equity say to a creditor in a suit like this, you must resort to other property 'of the debtor if he has any; if- he has and it is sufficient you must make your money out of it; . if he has none or not enough, you need not levy upon the property fraudulently conveyed, but in such circumstances equity will take jurisdiction to remove the fraudulent obstacle interposed to a sale for a fair price? If this is the law, .then the rule permits admittedly fraudulent grantors and grantees to choose what property subject to execution shall be seized and sold by a judgment creditor. He may not, after all, enforce his lien, as he may choose. He must submit to the will of the debtor and his grantee with respect to the property to be sold, though that will secures its ends by fraud. If this is the law, the result
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will be that the creditor will levy and sell in the 'first place, and the earnest insistence of this court that the method pursued in this case is the preferable one will necessarily be brought to naught. The exhaustion of legal remedies, rule, does not apply in a case like this to the extent for which respondents contend. There is ample authority for this conclusion. This court expressly so held in Patton v. Bragg,
“And we are yet to learn that it is any defense, either in law or chancery, that there are other lands which might have been taken; and that the debtor is not in *53 solvent. All this may be very proper evidence to show that the conveyance was not fraudulent. But upon what principle it is that these facts can be set up, by a fraudulent grantee to protect a conveyance admitted to be fraudulent, we are at a loss to discover.”
In Spooner v. Ins. Co., 76 Minn. l. c. 316, 317, 77 Am. St. l. c. 651, 655, the same doctrine is announced and many decisions cited. In 23 L. R. A. (N. S.) l et seq. will be found a collection of the cases and an analysis of them. Mr. Bump in his work on Fraudulent Conveyances (4 Ed.) says:
“Sec. 532. Bill in Eqtñty. The remedy most frequently used is a bill in equity, because a court of equity sifts the consciences of the parties and removes the cloud from the title. Fraud constitutes the most ancient foundation of its jurisdiction, and is a sufficient ground for its interposition. It may grant relief although there is ample remedy at law, .for no relief is adequate except that which removes the fraudulent title. The relief in equity is different and may be more beneficial than that given by the law. But jurisdiction is not assumed upon the ground either that the subject is appropriate to a court of equity as a court of peculiar jurisdiction, or because that court proceeds upon an interpretation of the statute distinct and different from that given at law. On the contrary, it is entertained in equity notwithstanding it exists at law, and thus entertained because such deceitful practices, dishonest in their concoction, progress and consummation, are so abhorrent to every tribunal of justice, that every tribunal has authority and is bound to relieve against them according to its respective capacities and methods of proceeding, and because the relief peculiar to a court of equity is more nearly perfect than that afforded at law. ”
Numerous decisions are collected in a note. The same rule is laid down in 2 Moore on Fraudulent Conveyances, sec. 31, 1. c. 771. Respondents cite Missouri decisions which they contend decide the contrary. In Coleman v. Hagey,
The authorities cited, therefore, when examined, do not appear to support the proposition advanced. Further, in the Steele Case the question was not vital, and it was not, as the opinion shows, presented in such a way as to require an investigation of the basis of the rule. In that case it was seen the same holding was required whatever view was taken on this question. In this case the same thing would be true if Mo'llie Dunky were the only judgment debtor. She is not. Questions raised depend upon that fact and make this discussion relevant to the issues.
“Defendant in error had a right to proceed against-the property of either one or both of the judgment debtors, but neither of said judgment debtors had the right to require it'to proceed against the property of the other. The conveyance by Dawson to his wife of all the property he owned, without any valuable consideration, was a fraud upon defendant in error, and for that reason did not devest Dawson of the equitable title to the land. It was still subject to the payment of defendant in error’s judgment, and under the authorities above cited, and many more to be found in our reports, defendant in error was not obliged to proceed against Boatmen before it was authorized to file its bill for the relief prayed in this case. ’ ’
Davelaar v. Blue Mound Inv. Co., 110 Wis. l. c. 474, was a creditor’s bill to reach assets of one of two judgment debtors not subject to execution. It, was conceded, in accordance with the general rule, that as against the debtor sued a bill of that kind cbuld not be maintained' until his property subject to execution had been exhausted. To the argument that the plaintiff must fail because lie did not show that the other judgment debtor had no property subject to execution, the court responded:
“The proposition that'the creditor must exhaust his legal remedies before he can institute proceedings to sequester the property of a corporation and secure the appointment of a receiver is admitted.. [Hinchley v. Pfister,83 Wis. 64 .] But, as between the judgment debtors and the plaintiff, each is bound to pay the whole debt; and it is no ground of complaint that the creditor *58 may see fit to collect, the debt out of the property of 'one, and not out of that of the other. [Hyde v. Rogers,59 Wis. 154 .]”
The same principle was applied in Hodge v. Gray, 110 Mich. l. c. 655 and eases there cited. In Strong v. Lawrence, 58 Iowa, l. c. 61, it is said:
“Section 2550 of the Code abolishes all distinction between joint and several liabilities, and authorizes an action to be brought against anyone of several parties to a joint obligation. . . . The plaintiff might, therefore, have sued Alexander Lawrence, without making John Lawrence a party, and if he could have proceeded in that manner, it follows, we think, that he may uncover the property of Alexander Lawrence without proving the insolvency of John Lawrence.”
A helpful discussion of the matter and a like conclusion are found in Vasser v. Henderson, 40 Miss. l. c. 520, 521. In Tuthill v. Goss,
The cases relied on by respondents usually involve judgments rendered against debtors bound by joint obligation. [Eller v. Lacy, 137 Ind. l. c. 437, 439; Baker v. Potts, 73 App. Div. l. c. 32.] In others property of other debtors amply .sufficient to pay the whole debt had been ' already levied upon and seized under execution. [Wales v. Lawrence, 36 N. J. Eq. l. c. 208, 209.] In others the effort was to reach property not subject to execution except after equitable relief. [Kyle v. Frost,
From this it follows that under the law in this State and most of the others it was not necessary to show the insolvency of the Store Company or proceed against its property before suing to disencumber the lien upon the property fraudulently conveyed.
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“While it is true that defendant could have satisfied his judgment by resort to that fund, we cannot hold that he was required to do so. His judgment was valid, and, not having been paid, he had the undoubted option for its collection by any method permitted'by law.”
It is also held that a judgment creditor who has acquired a legal lien on property and sues to remove a fraudulent conveyance which obstructs the fair enforcement o.f the lien, has the right to maintain such a suit without regard to whether there is other property out of which he might realize his debt. “He has the right to be placed in the same position as he would have occupied if the fraudulent transfer had never been made,” and he cannot be denied such relief because he has taken collateral security, and may enforce his judgment out of any unexempt property unless it is shown it would be inequitable to permit this course. [Spooner v. Ins. Co., supra, l. c. 317, 318.]
The situation in this case, in so far as the appeal bond and collateral are concerned, is peculiar. The Store Company and Mrs. Dunky were both liable under appellant’s judgment. He had the right to make his money out of the property of either or both of them. As against him neither could, under ordinary circumstances, set up any equity possessed against the other. As between themselves the case was different. Mrs. Dunky was the landlord and was liable to the Store Company for damages for the breach of the covenants of her lease, as the petition charges and the demurrer admits. In a sense she was primarily liable. In such circumstances payment
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of the Orchard judgment by the Store Company would have entitled it to judgment against her in a proper action. The appeal bond was made by the Store Company; and the collateral put up to secure the sureties on that bond, among them one of respondents, was its property. In this situation respondents fraudulently aided Mrs. Dunky to rid herself of all her property, with knowledge that she was about to leave the country for residence elsewhere. The property fraudulently conveyed would have furnished a fund out of which the Store Company could have recouped itself in the usual way by ordinary legal process if the conveyance had not been made. If appellant is to be compelled to resort to the appeal bond or the collateral put up with it, then he is compelled to collect from the Store Company, and it' must pay and either lose its damages or resort to the same property which appellant seeks to Subject to his judgment by this proceeding. There is respectable authority for the proposition that the general doctrine of marshaling, to the effect that both funds must belong to the same debtor, is subject to the exception that where independent equities "exist which call for payment by one debtor to the exoneration of the other, the fund of the principal debtor will first be subjected. The cases are collected in 26 Cyc. pp. 932, 933, and in a note to Carter v. Leather Co.,
If it be said tbe Store Company could pay and then attach and set aside tbe conveyance, what reason can be assigned in equity for denying tbe right of appellant to proceed, as be is doing, to accomplish tbe same thing on bis own right? Tbe demurrer admits too much to permit this contention of respondents to withstand examination. [Baker v. Potts, 73 App. Div. l. c. 32.]
As tbe case is now presented we think tbe evidence should be beard. Tbe judgment is reversed and tbe cause remanded.