98 Ala. 546 | Ala. | 1893
Section 3544 of the Code, reads as follows : “A creditor without a lien may file a bill in Chancery to discover or to subject to the payment of his debt any property which has been fraudulently transferred or conveyed by his_debtor,”
The question is raised by demurrer whether the statute above copied should be so interpreted as that the remedy therein provided can be made to reach the proceeds of property fraudulently conveyed by the debtor, in the hands of the purchaser, who, after the sale, converted it; or whether the remedy is confined to a subjection of the property itself, to the payment of the creditor’s demand.
Prior to this statute, a creditor by simple contract had no remedy, by bill in equity, to reach and subject property fraudulently transferred by his debtor. Only, creditors who had reduced their demands to judgment and exhausted their legal remedies against the debtor, could obtain such relief in the Chancery Court. The statute was enacted to cure that disability. It is remedial in its nature, and must receive that liberal construction and enforcement which will give full effect to the beneficial objects the legislature intended to be accomplished. It will not be expounded by any narrow-or strict rules of interpretation tending to impair the efficiency of the remedy given. 2 Br. Dig. 461, §§ 16, 17. Jones v. Smith, 92 Ala. 455. Thus construed, it is manifest the purpose was to confer upon simple contract creditors the same rights and remedies which judgment creditors, who had exhausted their legal remedies, then had to reach, through the Chancery Court, property of the debt- or, liable to satisfy debts, which had been fraudulently conveyed, or attempted to be fraudulently conveyed by the debtor. Weiss v. Goetter, Weil & Co., 72 Ala. 259; Bromberg Bros. v. Heyer Bros. 69 Ala. 22; Reynolds v. Welsh, 47 Ala. 200; Evans v. Welsh, 63 Ala. 250. In determining
In Ferguson v. Hullman, 55 Wis. 190, the court, in a case in principle like the present, used this language : “If the fraudulent grantee in possession of the property of the debtor can not be protected for the money or other consideration he may have given for the transfer, as against the creditors of such debtor, it would seem to follow as a necessary consequence that such grantee can not be protected in the possession of the proceeds of such property received by him on a sale thereof. The property in the hands of the fraudulent purchaser is held by him in trust for the creditors of his fraudulent vendor, and when the property is converted into money, the money is impressed with the same trust. The original conveyance being void as to creditors, no title as them ever passed to the grantee; and if he sells it and receives the money, he must hold the money for the benefit of creditors. In equity, such money in the hands of the fraudulent grantee is held for the benefit of the creditors; and, although they may not be able to maintain an action at law for money had and received for their use, because they were never the owners of, or had the title to the property which has been converted into such money, yet a court of equity, having all the parties interested before it, may make such order as to the application thereof as would be just. If the court, in a proper case, would have the power to order the fraudulent grantee to pay money received by him in satisfaction of the debt of a creditor, then the fact that it directed a personal judgment to be rendered against him for the money so received, and that the amount be collected on execution, would be a mere matter of form, which does not prejudice his rights, and of which he can not complain.”
This doctrine is fully sustained by the following authorities: Fullerton v. Viall, 42 How. Pr. 294; Gillett v. Bate, 86 N. Y. 87; Quinby v. Strauss, Ib. 664; Murtha v. Gurley, 90 N. Y. 372; Post v. Stiger, 29 N. J. Eq. 558; Solinsky v. Lincoln Sav. Bank, 85 Tenn. 372; Waite Fraud. Conv. § 177, et seq. Bump on Fraud. Con., citing many authorities, states it as follows : “The grantee is construed to be a trustee for the creditors, and as such is responsible for all his acts in disposing of the property fraudulently conveyed to him, If he
We are entirely satisfied with tbe correctness of tbe principles here stated, and bold that, under our statute, they apply in behalf of a simple contract creditor, proceeding by bill in equity, to tbe same extent that they are applicable in behalf of judgment creditors who have exhausted their legal remedies. Tbe proceeds of tbe property fraudulently conveyed, in tbe bands of tbe fraudulent vendee, may be condemned and ordered paid to tbe creditor, or tbe right enforced against tbe vendee by personal decree and execution. So, also, if tbe goods have been otherwise converted or appropriated by tbe fraudulent vendee, be is liable, upon an accounting, by personal decree and execution, to pay tbe value thereof, in discharge of the. claim of tbe creditor.
Tbe bill contains equity, and tbe demurrer was properly overruled.
Affirmed.