Henderson v. Henderson, No. 125

No. 125 | Pennsylvania Court of Common Pleas, Delaware County | Mar 24, 1890

Opinion,

Me. Justice Clark:

By the last will and testament of Robert D. Henderson, deceased, dated November 8, 1880, his real estate was devised to William B. Broomall, the executor, to be by him sold, and the proceeds thereof, together with the rest and remainder of the testator’s estate, divided among his children in equal shares. The power to sell is not contingent or discretionary; it is absolute and imperative. The provision for his children is a bequest of the proceeds, not a devise of the land, the title to which w'as in his executor. The devise to his executor, with this power and direction, was therefore an equitable conversion of the realty into personalty.

It was - competent, however, for the heirs, formally, or by some decisive act to that effect, to take the land in lieu of the money. Not that the heirs “ had any equitable interest in the land,” as we said in Mellon v. Reed, 123 Pa. 17, “ but, being the only parties beneficially interested, thejr had the power to control the event. In such a case, the heirs take title, not by the will, but by their own act. Their election to take the land is an appropriation of their interests under the will to the acquisition of the land, as upon a purchase, and an equitable estate or title is thereby created in them, which chancery will execute by compelling a conveyance. But until the act of election the heirs have no estate or title which would be the proper subject of a lien either by judgment or by mortgage, or which could be taken in execution.” See, also, Roland v. Miller, 100 Pa. 50, and cases there cited.

On April 24, 1885, when Matthew Henderson entered his judgment, the heirs had not yet made any formal election, nor had they done any decisive act equivalent thereto; Ms judgment, therefore, was not a lien upon the land at the time of its entry. It was not until some time about December 2, 1887, that any steps were taken to this end. On that day the executor sold the entire real estate at a public sale, to Hugh Hazlett and Mary M. Henderson, for $25,000, they being the highest and best bidders, and, on December 5th following, made, executed, and delivered a conveyance to the purchasers thereof in due form. The property prior to this had been laid out in building lots, and the sale would appear to have been made with a view to a partition or division of these lots among the lieirs. Some of the heirs, it seems, were minors, and some had assigned for creditors, and were therefore disqualified from exercising the right of election; and the sale was resorted to in order to put the title in such shape that partition could be made. There is no allegation that the sale was not in due form or in good faith, or that the price was inadequate ; it was a public sale, made upon due notice, and was open to all bidders. Matthew Henderson was not present. He know Broom-all had the power to sell, and that he actually did sell the land, and has made no objection. It is true it was made with a view to partition, and that the purchase money was paid to the executor by the releases of the several heirs, who accepted portions of the land in lieu of their shares of the money; but it seems to be conceded that the trustee acted in good faith, and we cannot see upon what ground the validity of the sale can be impeached; indeed, the present proceeding is in affirmance of the sale, and we do not know that its validity is in any way called in question.

It appears, however, that Alvin P. Henderson’s share of the lots was on December 5, 1887, conveyed by the purchasers at the executor’s sale, not to him, but to his wife, Lizzie C. Henderson, who says that she was informed by her husband he Would have the lots conveyed to her, but she freely admits that she paid no money and gave no consideration therefor, that she was not present when the deed was made, nor had she any one to represent her. She says she understood from her husband that this would mate them, safe, and that no one could take the lots for his debts.

On August 6, 1888, a fieri facias was issued on the Matthew Henderson judgment, and the sheriff was directed to levy upon the right, title, interest, and claim of Alvin P. Henderson in the lots conveyed to his wife ; on the same day, the judgment of James M. Henderson for $2,000 was entered. This judgment, given in trust for certain of the defendant’s creditors, was subsequently marked to the use of George K. Cross, and for convenience we will refer to it as the “ Cross judgment.” It was entered after the conveyance to Lizzie C. Henderson; and the lien thereof, therefore, attached to whatever interest Alvin P. Henderson may have had therein, if he had any, at the date of its entry. The Matthew Henderson judgment, oh the other hand, having been entered long before the re-conversion of the legacies into land, was not a lien against these lots, except by virtue of the levy.

The sheriff’s return, as it now appears upon the writ, is that the levy wras made on the same day the writ came into his hands, August 6, 1888, which is the date of the entry of the Cross judgment; but it is shown in the most satisfactory manner, not only by the sheriff himself, but by other witnesses, that the return, as it was in fact made, was without date, and that the date, “ August 6, 1888,” was afterwards inserted by him, at the instance of the attorney for the writ. That the testimony of the sheriff and of the other witnesses was admissible, in a contested distribution, for this purpose, cannot be doubted; for the purpose was not to contradict the return, but to show what the sheriff’s return in fact was; it was not to contradict the record, but to establish it. It must be conceded that after the writ Avas returned it had passed out of the sheriff’s power; his return was then part of the record, and he could neither add to nor subtract from it without leave of the court. This act of the sheriff was wholly without authority, and it was competent for those claiming in this distribútion under the Cross judgment to sIioav that the date of the levy was no part of the sheriff’s return, but was an unauthorized interference with, and alteration of the record, which could have no force or validity whatever against them. There is a rule of law that the sheriff’s return is conclusive in the case in which it is made, and upon privies: Paxson’s App., 49 Pa. 195" court="Pa." date_filed="1865-03-06" href="https://app.midpage.ai/document/paxsons-appeal-6232443?utm_source=webapp" opinion_id="6232443">49 Pa. 195; and that the record of a court of record imports verity, and cannot be contradicted; there is a rule, equally well established, that an instrument under seal cannot be contradicted by the parties, or altered or amended by parol; yet no one has ever doubted that a return, or a record, or any instrument under seal, may be impeached for fraud or forgery; for the fraudulent alteration is no part of the instrument, or of the record, and upon this principle the words added to this return are no part of it, and may be excluded.

The testimony shows that this levy was not made upon August 6, 1888. It is true, specific instructions to the sheriff accompanied the writ, to levy upon certain property particularly described, and it may have been supposed that this was equivalent to a levy, and justified the insertion of that date; but this was not a levy; it was a mere direction to levy, and no levy was in fact made until August 10,1888. As the Cross judgment was entered on August 6, 1888, and the levy on the Matthew Henderson judgment was not made for four days later, it follows that, unless some other rule of law or of equity intervenes, the Cross judgment must be taken to have precedence in the distribution.

But it is said that the conveyance to Lizzie C. Henderson was in fraud of the creditors of her husband, and that Matthew Henderson was the particular creditor intended to be defrauded; that the interest or title of Alvin P. Henderson, taken on execution on the Henderson writ, was such interest only as remained in him after the fraudulent conveyance to his wife, and that the sheriff’s sale conveyed to the purchaser merely the right to contest her title, as distinguished from the right which would have accrued to a purchaser upon a sale of the absolute estate on a judgment entered before the conveyance; and, to sustain this view, Byrod’s App., 31 Pa. 241" court="Pa." date_filed="1858-07-01" href="https://app.midpage.ai/document/byrods-appeal-6230640?utm_source=webapp" opinion_id="6230640">31 Pa. 241; Hoffman’s App., 44 Pa. 95" court="Pa." date_filed="1862-11-13" href="https://app.midpage.ai/document/hoffmans-appeal-6231913?utm_source=webapp" opinion_id="6231913">44 Pa. 95; Beekman’s App., 38 Pa. 385" court="Pa." date_filed="1861-03-11" href="https://app.midpage.ai/document/beekmans-appeal-6231453?utm_source=webapp" opinion_id="6231453">38 Pa. 385, and that line of cases, are cited. It is contended, further, that the conveyance to Mrs. Henderson was not made in fraud of the Cross judgment; that that judgment was, substantially, for a debt contracted after the fraud was complete, and that James M. Henderson was from the date of the conveyance fully cognizant of the fraud; that, in consequence of this, a sale, if it had been made on that judgment, would not have put the purchaser in a position to contest the fraud, or to raise the fund now for distribution, and that, therefore, the Cross judgment cannot participate in this fund; in other words, that this fund is distributable only to such judgment creditors as the fraudulent conveyance tended to defraud, and the Cross judgment is not one of these.

But the facts assumed by the appellant are not wholly justified by the proofs. A considerable portion of the Cross judgment, it is shown, is for debt contracted before the deed to Lizzie C. Henderson, and the conveyance certainly tended to defraud him to this extent. Nor does it appear that James M. Henderson, or any of the creditors for whose benefit the judgment was taken, had any participation in the fraud, or in any way gave it their approval. Both of these contesting judgments, one, in part at least, by virtue of the entry as a lien, and the other in consequence of the levy, are liens upon the same interest or estate, and a sale upon either would pass to the purchaser whatever title the defendant had for his creditors, under the conveyance to his wife. If, in this distribution, it had been shown that the plaintiff in the Cross judgment had been a participant in the fraud, he would have been postponed, but the mere fact that the appellant’s judgment was used as the instrument of sale will not give him a preference over prior liens. The case upon this branch is ruled by Hoffman’s App., supra; Jacoby’s App., 67 Pa. 434" court="Pa." date_filed="1871-05-08" href="https://app.midpage.ai/document/jacobys-appeal-6234063?utm_source=webapp" opinion_id="6234063">67 Pa. 434, and Dungan’s App., 88 Pa. 414" court="Pa." date_filed="1879-05-05" href="https://app.midpage.ai/document/dungans-appeal-6235985?utm_source=webapp" opinion_id="6235985">88 Pa. 414. In Hoffman’s App., supra, it is said that a junior judgment creditor cannot appropriate the whole price to the payment of his judgment, on the ground that he was the instrument to effect the sale ; “ it is the estate of the debtor,” as the court said in that case, “ whatever that may be, which is sold at the sheriff’s sale, and therefore the liens upon it which attached after the fraudulent grant must be paid in their order.”

But the rule, thus generally expressed, has a more restricted operation in cases where the facts are different. In Hoffman’s Appeal, all of the judgments, claiming to participate in the fund for distribution, were for debts contracted before the date of the fraudulent conveyance, and were such as the conveyance tended to defraud. It is well settled that a fraudulent conveyance is good between the parties; only persons whom the transaction tended to defraud have standing in court to avoid it; as against all other persons, the deed vests a good title in the grantee. Prior lien creditors, or prior creditors assenting thereto, and subsequent creditors whom the debtor did not intend to defraud, are not defrauded by such a deed, and have no standing to impeach it: Zuver v. Clark, 104 Pa. 222" court="Pa." date_filed="1884-10-08" href="https://app.midpage.ai/document/zuver-v-clark-6237558?utm_source=webapp" opinion_id="6237558">104 Pa. 222. It follows that the Cross judgment is onljr entitled to participate in this distribution to the extent to which the transaction tended to defraud the holder of that judgment. To this extent the judgment was a lien upon the fraudulent title of the husband standing in the name of his wife; the residue of the judgment was a lien upon nothing, and is entitled to nothing in this distribution.

As against this partial allowance of the Cross judgment, the argument of the appellees is that this deed is not to be regarded as a fraudulent conveyance; that there was no fraud, and the auditor so found; that the conveyance to Lizzie C. Henderson was in good faith, and the distribution is to be made upon the footing of a trust in her for her husband’s pre-existing creditors, no part of the consideration having been paid by her. But this finding of the auditor is clearly erroneous; the avowed and confessed purpose of Alvin P. Henderson and of his wife was to make themselves safe, so that no one could take the lots from them for his indebtedness. The fraud is so palpable and plain, that a further reference to and discussion of the facts is unnecessary.

Nor can the assignment of April 23, 1885, which was given to Matthew Henderson as collateral security for the judgment note, affect this distribution. The fund in court is the proceeds of the sale of the interest or title of Alvin P. Henderson in the real estate in the name of his wife, and it must, of course, be distributed to his lien creditors in the order of their priority. The assignment is good only against the fund in the hands of the executor; it can have no force or effect here. If it be said that it was Matthew Henderson’s money, and not the money of Alvin P. Henderson, that formed the consideration of the conveyance, and that a trust resulted to the former, and not to the latter, the remedy was in a different form. This fund arose from the sale of the title and interest, large or small, of Alvin P. Henderson, and must go to his lien creditors in the order of their liens.

In Bailey v. Allegheny N. Bank, 104 Pa. 425" court="Pa." date_filed="1883-10-29" href="https://app.midpage.ai/document/bailey-v-allegheny-national-bank-6237595?utm_source=webapp" opinion_id="6237595">104 Pa. 425, a mortgage executed by one who was only entitled to a share in the proceeds of the land, and not the land itself, was treated as a provisional election on his part to take the land in lieu of the money, contingent upon the agreement of the other heirs uniting therein, and an equitable assignment in the meantime of the interest of the heir as personalty, which after partition attached as a lien to the purpart allotted to the mortgagor in severalty. But that case can have no application here, as neither the assignment nor the judgment could be regarded as a provisional election to take the land; they were both, in terms, to a different effect.

The decree of the Common Pleas is reversed, and the record is remitted in order that distribution may be made in accordance with this opinion; the appellees to pay the costs of this appeal.