50 W. Va. 158 | W. Va. | 1901
The appellant, B. W. Foley, having obtained two judgments against F. J. Ruley and D. C. -Ruley partners, doing business as F. J. Ruley & Bro., brought a chancery suit in the circuit court of Doddridge County to subject their real estate to the payment and satisfaction of said judgments, one of which was after-wards found by the commissioner to amount to three hundred and eighteen dollars and fifteen cents as of the 6th day of September, 1894, and the other to amount to seven hundred and eleven dollars and thirty-two cents, as of the same date. F. J. Ruley & Bro. wyre the owners of a tract of land containing one hundred and twenty-five acres and another containing twenty-six acres. F. J. Ruley and D. C. Ruley were the joint owners of other tracts of land containing respectively, two hundred and one and one-lialf acres, two hundred acres, one hundred and three and one-fourth acres, three hundred and fifty-six and one-half acres, one hundred and eighty-four and one-half acres, one hundred and nine acres and one hundred and twenty-nine acres. F. J. Ruley owned tracts containing respectively fifteen acres, one hundred and eight and one-half acres and one hundred and ninety-seven and three-fourths acres. The Ruleys as partners and as individuals were largely indebted to numerous persons, some .of whom were lien holders by deeds of trust, and others by judgment, while still others were simply contract creditors who afterwards acquired judgments and came in by petition. After this suit was instituted, W. S. Stuart brought another suit against the same parties and some additional persons, alleging in his bill the recovery of a judgment against F. J. & D. C. Ruley, A. C. Holmes, and J. W. Hammond for the sum of one thousand and twelve dollars, to be discharged by the payment of five hundred and fifty-six dollars and forty-seven cents and fifteen dollars and eighty cents cost, but subject to a credit of forty-five dollars.
The record as it appears here now ismot clear as to whether all the debts decreed to be paid out of the proceeds of the one hundred and seventy-four acres of land are partnership liabilities. The report of the commissioner is not in the record. The debts decreed to Stuart, the Merchants National Bank, Blair, Stinespring and Foley are all partnership debts. By reference to the record as it appears in the case, of Foley v. Ruley, reported in 43 W. Va. 513, it is found that the debts decreed in favor of J. B. Markey and W. S. Stuart, Adm’r, were originally liabilities of F. J. Euley & Bro., the firm. Hence, all the claims to which preference was given over the appellant in the two decrees of which he complains are of that class of liabilities to which his own belongs. It having been shown that the land was purchased with money belonging to the firm and was conveyed to Anne E. Euley with intent to hinder, delay and defraud the creditors of the firm, the money thus diverted from the partnership assets, the firm being insolvent, was not thereby converted into individual property. It remained a part of the assets of the firm. Darby & Co. v. Gilligan, 33 W. Va. 246; Baer’s Sons v. Wilkinson, 35 W. Va. 422. In the latter of these cases it is held that where one of two partners undertakes to convey the whole firm property by a deed in which his individual debts, or debts other than those of the firm, are given preference, without consulting the other partner, though present or within easy reach, and without ratifying or concurring in such assignment, is ineffectual to deprive the creditors of the firm of their right to have the social assets applied to pay the social debts. Syllabus 2. The court below was right, therefore, in applying the proceeds of this land to the payment of the firm liabilities.
Did it err in changing the order of preference or priority, fixed by the decree of September 6, 1894, which was affirmed by this Court upon appeal ? That decree determined the liens and the order of priority upon all the lands except the .two hundred and twenty-seven acre tract. As to that the decree recites that all action is deferred or postponed. It did not fix the status
It is contended by counsel for appellant that the court erred in not compelling Stuart, Adm’r, Markey, and the Merchants National Bank to resort to the real estate of A. C. Holmes and J. W. Hammond for the payment of their debts, because they had liens upon two funds, while Foley, Blair and Stinespring had liens only upon the real estate of the Ruleys, and, first, upon the social property of the firm, it appears that the liability of Holmes was that of surety for F. J. Ruley & Bro. This Court held in McClaskey v. O'Brien and Hart v. O’Brien, 16 W. Va. 791, tliat “Marshalling should not be enforced to the prejudice of a third party. As subrogation is in equity, it will not be enforced when the effect will be to prejudice or impair the rights of third persons, it being well settled that where both parties have an equal claim to the consideration of a chancellor, the law will be suffered to take its course.” The right of a creditor who has the power to resort to one of two funds to compel another creditor who has a lien upon both to resort to the other fund is a mere equity. The right of a surety to be subrogated to the lien of the creditor against his principal is also an equity and one of at least equal dignity with the other. The court did not err in exempting from sale the property of Holmes, if it was right in giving preference over tile claim of Foley to the debts for which
From the statement of the case hereinbefore given, it will be seen that Stuart, in his original bill, filed in February, 1894,' made the first attack upon the deed from Douglas to Anne E. Euley. The next attack, was made upon it in the answer of A. G. Holmes, filed at March rules, 1894. The next was in the petitions filed by Farr, Stuart, Adm’r, Markey and the Merchants National Bank, all filed at the same time, on the first Monday in December, 1807. The next was by Stuart in his amended and supplemental bill and bill of revivor, filed at June rules, 1898. Following this arc the petitions of Stinespring and Foley filed on the 25th day of July, 1898. How the claim óf J. V. Blair became classed with these does not appear. The decree recites that-the cause was heard on his petition and answer but they are hot found in the record, and when they were filed does not appear. Except as to the small claim of Farr, the order of priority established in the decree corresponds with the order in time of the filing of these papers, assailing the validity of the deed. The Farr claim was postponed because it was not a firm liability and he had no right to participate in the proceeds of the social property until after the payment of the firm debts. The decree so states and provides.
Coming now to the real question in the case, namely, whether the creditors are entitled to priority as to the land fraudulently conveyed, according to the dates of their respective attacks upon the fraudulent conveyance, or whether, they being all judgment creditors, they shall have priority according to the dates of their judgment, it is found that the decisions do not present the matter very clearly. This is probably because the question does not very often arise and the courts have not had occasion to pass upon it as a matter of serious contention between litigants. It has frequently been held that the creditor who first files his bill obtains thereby a priority and is entitled to be first paid from the proceeds of the sale of the property, the fraudulent conveyance of which is set aside, if there are no valid prior liens. Clark v. Figgins, 31 W. Va. 156. A deed may be assailed as fraudulent by bill, answer or petition, and preferences thereby acquired, each creditor obtaining a lien from the time he makes his attack ixpon the deed. Sweeny v. Sugar Co., 20 W. Va. 443. Now, if by prior lien, is meant the lien of a judgment recovered before
While the courts of different states are not agreed upon the question, we have a decision of the court of appeals of Virginia, in Wallace v. Treakle, 27 Grat. 479, which is directly in point. That decision ought to have peculiar force with us for the reason that our statutes, relating to judgment liens .and fraudulent conveyances, are practically the same as those of Virginia. They had their origin in Virginia. In addition to section 1 of chapter 74 and sections 5 and 6 of chapter 139, section 2 of chapter 133 must be considered. That section is as follows: “A creditor, before obtaining a judgment or decree for his claim, may institute any suit to avoid a gift, conveyance, assignment, or transfer of, or charge upon, the estate of his debtor, which he might institute after obtaining such judgment or decree, and he may in such suit have all the relief in respect to said estate, which he
The conclusion is that the decree complained of is erroneous. The judgment creditors mqst be given priority according to the dates of their judgment against the firm of F. J. Ruley & Bro., instead of according to the date of the filing of pleadings attacking the fraudulent conveyance. Said decree must, therefore, be reversed and the cause remanded to the circuit court of Ritchie County to be further proceeded with according to the principles herein announced and further according to the rules and principles of equity.
Reversed.