Dunham v. Cox

10 N.J. Eq. 437 | New York Court of Chancery | 1855

The Chancellor furnished the court with the following opinion, as containing the reasons for his decree:

Halsted, C.

The bill shows sufficiently that the personal property levied on is claimed by others, under transfers from Asa C. Dunham, and that the lands levied on are claimed by others, under a deed from Asa C. Dunham; and the transfers and deed are sufficiently charged to be fraudulent. In such cases, it is within the province of this court to remove out of the way of the judgment creditor the hinderance or impediment so interposed, on the ground, that by a sale while such impediment exists the creditor would not realize the value of the property. And the judgment creditor is not obliged, before coming into this court, to go to a trial at law of the right of property in the personalty levied on, with the view of having the transfer of it declared void, so that it may be sold before the lands. Such transfer is good against the debtor, and the creditor may let it stand as good, if he pleases, and attack the conveyance of the land.

If any of the personal property levied on under the second/. fa. is not included in the transfer, such part should be sold first. The bill is not, perhaps, as clear as to this as it might have been. An answer may show how this is. Demurrer overruled.

The opinion of the Court of Appeals was delivered, at November term, 1855, by

Williamson, C.

This is an appeal from a decree overruling a demurrer filed to the bill. The question is whether, admitting all the facts stated by the bill to be true, the bill can be sustained. It is a bill filed by a judgment and execution creditor, for the purpose of setting aside certain conveyances of real and personal property made by the debtor, as is alleged, to defeat his creditors.

That a judgment and execution creditor may maintain a bill in a court of equity to remove out of the way fraudulent encumbrances placed by a debtor upon his property, in order that the property may be appropriated free from such fraudulent encumbrances to the satisfaction of the creditor’s judgment, is so well established, that it is needless to refer to any of the numerous authorities to sustain the position. As there appears some doubt as to the extent to which such creditor must proceed at law before he can invoke the aid of a court of equity, it may be well for this court to express an opinion upon this point.

When a creditor has by a judgment established his debt, by the statute he acquires a lien upon all the real estate of his debtor to satisfy his debt. If the debtor has fraudulently conveyed away or encumbered his real estate, so as to interpose an obstacle which embarrasses the debtor in appropriating it by legal process in satisfaction of his debt, then the creditor may file his bill to remove out of the way such fraudulent conveyance or encumbrance. It is not necessary for him to take out execution upon his judgment. The judgment constitutes a lien upon the land, and there is no necessity of compelling the creditor, as a mere matter of form, to incur the further expense at law of issuing an execution. It is, perhaps, most advisable for him to do so. It may avoid a contest with the subsequent execution creditor; for although the judgment is a lien upon the land, an execution upon a subsequent judgment acquires, upon its delivery to the officer by virtue of the statute, a prior lien upon the property. As between the debtor and creditor, however, the issuing of an execution is not necessary in order that the creditor may acquire a right to exhibit his bill for relief.

But if it is the personal property of the debtor which the creditor wishes to reach and appropriate to the payment of his judgment, he must take out an execution upon his judgment before he can exhibit his bill; for it is by the execution, and not by his judgment, that he acquires a lien upon the personal property.

In the case before us, the bill complains of a fraudulent transfer by the debtor, of both his real and personal estate. The complainant has obtained judgment, and issued execution.

The defect of the bill is, that it does not show that the aid of a court of equity is needed to remove any hinderance or impediment interposed by the debtor, in order that the judgment and execution at law may be satisfied.

It is not enough for the bill to show that the debtor has made a fraudulent disposition of any particular portion of his property to entitle the creditor to the aid of a court of equity. lie must show that such disposition embarrasses him in obtaining satisfaction of his debt; for if the debtor has other property subject to the judgment and execution sufficient to satisfy the debt, there is no necessity for the creditor to resort to equity. If his debt can be satisfied out of property upon which his judgment is a lien, it is only inviting useless litigation for him to question conveyances made by the debtor, which, however they may have been intended, do not operate as a fraud upon him. A court of equity interposes because its aid is necessary to assist the creditor in obtaining his legal rights. If there is property which the law places within his reach free from embarrassment to satisfy his debt, the aid of a court of equity is not required.

No particular form of the bill or formal specific allegagations are necessary to constitute the bill a good one. But facts must be stated from which, at least, the inference may be drawn, that the aid of a court of equity is required to give the judgment its legal and full effect.

But this bill, so far from stating facts to justify such an inference, the contrary legitimately flows from such facts as are stated. The bill, it is true, alleges that the defendant has conveyed away certain real and personal property for the purpose of defrauding the complainant. It does not specify the personal property any further “ than as sundry goods and chattels.” It describes particularly the real estate so alleged to have been disposed of. If the bill had stopped here, even without alleging that the defendants had no other property out of which the judgment might be satisfied, the complainant might be entitled to the aid of the court from the allegation, that this property had been disposed of, by the defendant for the purpose of defrauding his creditor.

But the bill further shows that, by an execution taken out upon the judgment, certain other personal property, in the possession of the defendant, was levied upon by the sheriff. It is true the value of the property is not given ; but the very character of this personal estate is such as shows its value to exceed the amount due upon the judgment. The bill does not pretend that this property was ever disposed of by the defendant, or that any legal hinderance or impediment has been placed in the way of the sheriff’s appropriating it to the payment of the execution in his hands.

The bill does not stop here. It shows that the sheriff, by his execution, levied upon nine distinct tracts of land as the property of the defendant. It does not show that there is any encumbrance upon this land, nor give any reason why the sheriff has not sold it to satisfy the judgment and execution.

Suppose, then, the allegations of the bill to be true with regard to the other personal and real estate of the judgment debtor, that he has fraudulently conveyed it for the purpose of defeating this judgment, if he is still in possession and is the owner of property enough to satisfy the judgment, and which has been levied upon, and is at the legal disposal of the sheriff1 for the purpose, the assistance of a court of equity is not necessary to aid the complainant in his legal remedy to obtain satisfaction of his judgment. This is the only ground upon which the jurisdiction of a court of equity can he invoked; and as the complainant does not show that he stands upon this ground, he cannot maintain his hill. The hill is radically defective. Admitting all its facts to he true, it cannot he maintained. The demurrer is therefore well taken, and the decree of the Chancellor overruling the demurrer must be reversed with costs.

Decision reversed by the following vote:

For affirmance—None.

For reversal—Chiee Justice, Judges Arrowsmith, Cornelison, Haines, Huyler, Potts, Risley, Valentine, Vre-DENBURGrH, WlLLIAMSON, WlLLS.