107 Ala. 170 | Ala. | 1894
Lead Opinion
The authorities áre well nigh uniform in support of the proposition, that where there is a fraudulent conveyance of property constituting or including the homestead, which is subsequently annulled at the suit of a creditor, the grantor is not estopped as against the creditor to assert his right of homestead in rhe premises. And the reason for this doctrine is found in the creditor’s want of interest in that which is not liable for debt. Thus, it is said by Judge Thompson : “It has been frequently held that a conveyance by husband and wife of real estate in which the wife has an inchoate right of dower, subsequently set aside as being fraudulent as to creditors, will not operate to bar an assignment of dower. The theory of the case appears to be that a conveyance thus sot aside
* * * * * Do the same principles apply also to to the right of homestead? Most of the cases answer this question in the affirmative, and hold that'a conveyance set aside for fraud, at the suit of the husband’s creditors, does not estop the grantor,-or his wife, from claiming homestead in the premises thus conveyed. Such a conveyance does not constitute an abandonment of the homestead such as opens it to creditors. Two general reasons for this rule may be deduced from the cases : First, that the homestead privilege is created for the benefit of the wife and children, as well as for that of the husband and father ; and, therefore, it is not right that the former should be prejudiced by the wrongful act of the latter. Second, that, the conveyance being void as to creditors, it stands as to them as though it had never been made. If it had not been made, the debtor, or his wife, could have asserted' the right of homestead in the premises against them ; and they can not assume the inconsistent positions, the nullity of the conveyance and claiming a right under it. In other words, a fraudulent conveyance does not enlarge the rights of creditors, but leaves them to enforce the rights they would have had if no such conveyance had been made. Expressed in still another way, the interest which a creditor has in the property by virtue of his lien is a derivative interest, proceeding from the debtor and depending upon his title. Hence a creditor cannot acquire a right under the debtor’s title and at the same time impeach that title. He cannot sell, under his execution, the debtor’s title, and at the same time deny the debtor’s right of homestead on the ground that the latter has no title. If the premises are actually occupied by the debtor as a homestead, it can make no difference, so far as the creditor is concerned, by what sort of title the debtor occupies. By attempting the sale the creditor affirms that the debtor has' a salable interest; and th§
“In Boynton et als. v. McNeal et als., 31 Gratt. 459, the same learned Judge, speaking for a majority of the whole court, after a careful re-examination of the whole subject, announces the same doctrine, and quotes from Thompson in his book on Homestead Exemptions, who gives as the reasons for the rule, to be deduced from the cases : First. That the homestead privilege is created for the benefit of the wife and children as well as that of the husband and father, and therefore it is not right that the former should be prejudiced by the wrongful act of the latter; and, second, that the conveyance being void as to creditors,'it stands as to them as though it had never been made. Without undertaking to multiply authorities, or to prolong the discussion, we may say that the rule, and the reasons for it, heartily commend themselves to our approval, and are in accord with the humane policy of the homestead act, which seeks to protect the family of the debtor from the inhumanity which would deprive its weak and dependent members of a shelter. And it cannot be said with propriety that the application of this rule will work a fraud upon creditors, for no creditor can be in any wise injured, in legal contemplation, by any dealing of the debtor with property which the law has removed, or, what amounts to the same thing, has authorized the debtor to remove beyond his reach. — Sears et als. v. Hanks et als., 14 Ohio St. R. 298; Cox v. Wilder, 2 Dill. 45; Crummen v. Bennett et als., 68 N. C . 494.”
And this doctrine was again reaffirmed in the later case of Hatcher v. Crews Admr., 83 Va. 371. The same doctrine has the support of the supreme court of North Carolina, which, by Merriam, J., said: “It was decided in Crummen v. Bennett, 68 N. C. 494, that a party who conveyed his lands to another in fraud of his cred
So also it is held in Missouri, where it is said : “It apx>ears to be the received opinion that neither a fraudulent conveyance nor an act of bankruptcy on the part of the head of the family will produce a forfeiture of the benefits of the homestead exemption,” and further that if the conveyance attacked for fraud was made in good faith, and valid, a sale on execution against the grantor would convey nothing ; but that if it was fraudulent, as insisted, by the execution creditor, then the title was in the defendant, and the homestead law obtained, notwithstanding the invalid conveyance, and exempted the land from execution. — Vogler v. Montgomery, et al., 54 Mo. 577, 584; State ex rel. v. Diveling, 66 Mo. 375.
Mississippi is in line with this view, holding that if the facts exist which otherwise entitle one to homestead, the right is not lost, nor is he estopped to assert it, by reason of his having executed a fraudulent conveyance subsequently set aside. — Edmonson v. Meacham, 50 Miss. 34.
And so in Minnesota, this doctrine is upheld, the Supreme Court of that State saying, with reference to the idea of an estoppel upon which the contrary view is rested : “Estoppels by deed bind only parties and privies, and must be mutual. The plaintiff claims in hostility to the alleged fraudulent conveyance, and if it be set aside in his favor as fraudulent and void, it cannot be considered still in force as to any of the parties to it, so as to prevent the defendant and his wife from asserting the same rights for the protection of his homestead
The doctrine is thus stated in Waite on Fraudulent Conveyances, § 46: “It being a test of a fraudulent transfer that the property alienated must be of some value out of which the creditor could have realized the whole or a portion of his claim, it would seem to follow logically that exempt property is not susceptible of fraudulent alienation. As the creditor possesses no right to have that class of property applied in satisfaction of his claim while the debtor owns it, and would be powerless to seize or appropriate it for that purpose were it restored to the debtor’s possession, the legitimate deduction would seem to be that the creditor’s process could not be fastened upon it in the hands of the debtor’s alleged fraudulent vendee. As to alienations of exempt property there may be a bad motive but no illegal act. When a fraudulent transfer has been avoided, it leaves the creditor to enforce his remedy against the property in the same manner as if the fraudulent transfer had never been executed. The creditor cannot ask to be placed in a better position in respect to the property than he would have occupied if no fraudulent bill of sale had ever been made. And it seems from the current of adjudications that a conveyance of lands, set aside for fraud at the suit of creditors, does not estop the grantor from claiming a homestead in the premises thus conveyed. Such a conveyance does not constitute an abandonment of the Homestead so as to open it to creditors.”
The like view is taken by the Supreme Court of Illinois, where, upon setting aside a conveyance of land embracing the homestead made by Mrs. Jailers as fraudulent and void as against creditors, the court said : “As Mrs. Jaiders still remained in possession of the lands as her homestead and that of her minor children, residing with her, it was just and proper, after cancel-ling the deed that the court should decree that home
And the general principle, of which the rule that a fraudulent grantor may claim homestead and his wife dower in the lands attempted to he convoyed after the conveyance is set aside at the suit of creditors is but an exemplification or application, is thus stated by Mr. Bump : “If creditors avoid the conveyance, the law remits and restores the grantee to his previously existing legal rights. A prior interest will not be deemed to be merged in an estate which has been lost, for the law will not consider a deed to be in force which has been avoided. When a grantee loses an interest which he obtained fraudulently, it is to him as if it had never existed. This gives the statute its proper legitimate effect, permits the grantee to hold nothing by his fraudulent contract, and the creditors to take all their debtor fraudulently conveyed, and nothing more. The very avoiding of the fraudulent conveyance, revives and renews the former interest and restores the parties to their original position. If the transfer consists of a release of an equity of redemption, the mortgage is revived when it is set aside. Although an indorsement on a mortgage is fraudulent, yet when that is set aside the mortgage will be valid. The dower of the debtor’s wife will be revived when a deed from the grantee to her is vacated. If the grantee purchases a prior mortgage he will be entitled to retain it after the fraudulent transfer has been set aside. A fraudulent mortgage does not extinguish the debt for which it was given, and if the security fails the debt remains in full force. As it did not arise c.r turpi causa, it can not be merged by anything merely collateral.”
To our minds this doctrine that a fraudulent grantor may claim homestead after the conveyance is annulled has received the sanction of this court. Of it Judge Stone, speaking for the court in Fellows v. Lewis, 65 Ala. 343, 354, said: “This question has been a great many times before the courts of the country, and, in a large majority of cases, the ruling was against the right of the creditor to subject the homestead, merely because its owner and occupant had conveyed his right to another, even- though the conveyance was voluntary, or made under circumstances which would ordinarily stamp it as
‘ Tn the cases cited above, negativing the liability of the homestead which has been fraudulently conveyed, the reasons given are substantially as follows: The property, homestead, is not liable to seizure under execution, and, therefore, a conveyance of it is a question in which the creditor has no interest. It was not liable, before conveyance, to tlie claim he asserts ; and the conveyance, though fraudulent, puts the creditor in no better condition than he was in before. If the conveyance is set aside as fraudulent, this leaves the homestead as if no attempt had been made to convey it, so far as any claim can be asserted by the creditor. It is void as to him, to all intents and purposes. Pie cannot be heard to say, in one and the same breath, that the conveyance is void, in its attempt to divest title out of the debtor, but is valid in destroying the homestead right. Pie cannot claim both under and against the conveyance ; under it, as a valid parting with the homestead right; against
And to like effect is the case of Smith’s Extr. v. Cockrell , 66 Ala. 64,
The right of a husband to homestead in lands which he has conveyed in fraud of his creditors, after such conveyance has been annulled at their suit, stands obviously upon the same plane so far as the idea of estoppel goes as the right of a wife to claim dower in lands after a conveyance thereof executed by the husband to her in fraud of his creditors has been avoided for that reason. So it is declared by Judge Thompson, (Homestead & Exemptions, §§ 405, 408) and by Judge Dillon (Cox v. Wilder, 2 Dill. 45) ; and so it has been treated and accepted by this court. — Fellows v. Lends, supra. And upon some, but not all, of the considerations which let in a claim of homestead in such cases, it has been expressly determined by this court that the wife’s right to dower is not impaired by such a conveyance after the avoidance thereof by creditors, the court saying: “It is insisted further, however, that petitioner, Mrs. Scruggs, has no right to doAver of this land, because by the conveyance of her husband to her; which though voidable and decreed to be void as to these appellants; Avas valid between the parties to it, her right as dowress became merged in the fee thus transferred to her, and Ayas extinguished. But the contention, in this cause, is between petitioner and appellants ; and in respect of the latter it has been decided, that the conveyance to the petitioner is inoperative and null. In favor of contestants, the title must be regarded as having remained in John W. Scruggs until it Avas devolved on his assignee in banktruptcy. This is the basis on Avhich alone the the claims of appellants are founded : and they cannot be heard to make demands inconsistent with and contradictory of the fundamental propositions on which the case in their favor must rest. As Avas said in the similar case of Mallony v. Horan, (49 N. Y. 119) : ‘When a creditor of the husband pursues him to judgment, and attacks as fraudulent, and sots aside as void, the deed from him, joining in which the wife has released her right of dower, he does not connect himself with the title which that deed has created, and with which the re
We need add nothing by way of discussion or argument to the foregoing collation of authorities, in justification of our conclusion in line with them. It has been made to appear that every accepted • text and every adjudged case, received as authority beyond the territorial limits of the coui't handing it down, supports without equivocation or reserve the proposition that a fraudulent grantor is entitled as against his creditors to homestead in lands he has attempted to convey in fraud of their rights, when and after the conveyance has been avoided and set aside in an action prosecuted by them; and the reasons which underlie the doctrine are so fully and clearly set forth in these texts and adjudications, as brought to view in the foregoing pages, that we are under no necessity to recur to them here. We are constrained both by the authorities themselves and — even more — by the considerations upon which they are based, to hold that
A few words in respect of the opinion and conclusion of Mr. Justice Coleman, and we are through with this part of the case : It seems to us that a fundamental and all pervading error of his position results necessarily from the fact, of which we do not think he has taken due account, that the issue here is not between Kennedy and the persons in whom he fraudulently had the title to the land invested at all, but wholly between him and the creditor at whose suit the land was decreed to belong to him and not to his children, and to bo subjected as his land to the debt of the complainant. The question is not what rights said grantees have against Kennedy in respect of homestead or anything else. They are asserting no rights. The only right the complainant bank ever had or asserted against them — the avoidance of the title they had — has been fully effectuated against them by the decree of this court; and the bank is not now asserting any right whatever against them. But the question is, what are the debtor’s — Kennedy’s—rights in respect of homestead exemption against the bank ; or, perhaps more.accurately, what are the rights of the bank against Kennedy in respect of homestead in the land. As we understand it, the opinion of Judge Coleman does not proceed at all on the idea that the complainant has any independent right against Kennedv in respect of the homestead, but only upon the ground, that inasmuch as the latter could not assert homestead against the fraudulent, grantees, and for that reason
We attach no importance to the fact that this court has held, in one or two cases in which no question of homestead arose or was involved, that a judgment creditor might proceed by bill in equity against a fraudulent grantee of his debtor to subject the land so conveyed without malting the debtor a party thereto. Assuming that the homestead right can be affected by a decree against the grantee, this might be well said and be true in a case where, whether the conveyance is avoided or not, no question of homestead would arise— where the land did not embrace a homestead — when it would not be true and would not be said in a case involving, and with reference to a homestead .claim. But the homestead right is in no case affected by such decree ; it is not involved in such' case. To the contrary, it revives and is assertable only after a decree against the grantee avoiding the conveyance; and if, as the host of authorities to which we have referred hold, the right to assert it is not cut off by such decree in a case to which the grantor is a party, surely there is no ground for saying it could be cut off by such decree in a case to which the grantor is not a party.
We do not think the case of Bolling v. Jones, 67 Ala., 508, militates against the view we take of this question. That case holds no more than this: that the widow’s, right of homestead under the statute applied in that case pertained to lands which belonged to the husband at the time of his death. At that time the fraudulent mortgage by the husband to the wife and another had not been avoided or even attacked, but was still subsisting, and efficacious between the parties to a divesture of the husband’s title. The land having thus been aliened by the husband, and title not being in him at the crucial moment of time at which the widow’s right of home-was determinable, it was held she was not entitled to homestead in the legal estate. There is nothing decided in the case or said in the opinion, as we understand that case, that could be taken to mean that the widow would not have beeu entitled to homestead, had
The case of Minor v. Wilson, 58 Fed. Rep., 616, seems to have been decided upon certain statutes of Georgia. If it may be taken as denying the right of homestead because of a fraudulent conveyance having been made, it is only an addition to the very few cases supporting a doctrine which cannot stand upon authority or elemental principles.
We deem it too well settled and elementary a proposition to be open to discussion, that a party cannot claim both through and against a deed. Having acquired rights under it, he is estopped to claim rights against it. That is the principle of estoppel we invoke in this case ; and if Judge Coleman’s “fourth proposition” excludes the application of the doctrine of estoppel to such a case, it is; in our opinion, palpably unsound. .
Judge Coleman further says : “My sixth proposition is, that every person who invokes the aid of equity must have clean hands.” Nobody has ever questioned the soundness of that proposition, and it is equally well established that a debtor’s hands are never soiled by the sale and conveyance of his homestead or homestead interest, and as that is the only interest involved in this case, we are utterly unable to see what application the proposition of the dissenting opinion about “clean hands” can'have here.
So far as the fact that Kennedy had had the title to the land in which he now claims homestead vested in his children in fraud of his creditors is concerned, our conclusion is, that transaction having been avoided, that he is entitled, as against the complainant and his creditors generally, to have homestead, or two thousand dollars in lien of homestead, allotted to him, as prayed in petition.
It is contended, however, that the debtor’s claim for exemption came too late — that he ought to have set it up in his answer to the bill, and not having been brought to the attention of the court by answer or plea
The policy of our law as evidenced by constitutional and statutory provisions for the purpose, is to secure to every resident and family an absolute right of homestead. It cannot be alienated by the husband, in whom the title remains, except in the manner carefully prescribed by statute. The owner may file his declaration of exemption in the probate court, and this protects him against a levy upon it, unless, on a contest of his claim as provided, it is held to be invalid, or if he has not filed his-declaration, and the homestead is levied on under legal pocess, he may, at any time, after the levy and prior to the sale, file with the officer making the levy, a claim in writing verified by affidavit in the maner directed by statute, which shall protect his property from sale, unless contested as provided, and his claim has been found to be of no validity. — Code, §§ 2515, 2521; Wright v. Grabfelder, 74 Ala., 460. Every supposed necessary precaution, in these and other sections of the Code, has been taken to protect and preserve this family reservation. The courts generally are united in the conclusion, that such statutes, beneficial in their operation, and springing from a wise public policy, should be liberally construed, so as to give effect to legislative intent. — McGuire v. VanPelt, 55 Ala.,353; Thompson on Homestead Exemption, §§ 4, 7. Waivers of this right, which is deemed so necessary in our law to be preserved for the benefit of the family relation, are not to be favored and declared, except when deliberately and fairly made. In keeping with this policy, it has been held, that though the statutes make no provision for such a claim or contest in a court of chancery, yet the right being clear and of constitutional guaranty, that court will grant relief in such cases com
As has been stated, the object of the bill filed in this case, was to set aside Kennedy’s conveyance of his property, including his homestead, made in fraud of his creditors. To this bill Kennedy was made a party, though as contended he was not a necessary party — the correctness of. which proposition it is unnecessary to question. Kennedy and his grantees, in their defense, maintained the fairness of the transaction; the chancery court decided in their favor, but on appeal to this court the conveyance was held to be fraudulent, and that decision was, on the 22d of December, 1890, reversed, and a decree here rendered for the sale of the property sought to be sold, for the payment of the judgment of the appellee against Kennedy, if the same was not paid, together with the costs, by the 1st day of February, 1891. On the 10th day of March, 1891, said Kennedy filed in said chancery court, his claim of exemption to his homestead, which he described, or to' $2,000 of the proceeds of its sale, if ascertained to be of greater value than that sum. On the 13th of April, the register proceeded to sell the property in obedience to the decree of this court. The residence and lots claimed as exempt, brought, as the register reported, the sum of $8,000. On May 5th, at the spring term of said court, said Kennedy filed another petition in said court, to be allowed the sum of $2,000 out of the proceeds of the sale of his homestead, and on May 8th, the chancellor, by his decree, denied his said claims for exemption, and dismissed his petitions. It thus appears, that the claimant was not lacking in diligence in claiming his homestead rights, after the decision of the case in this court. He made his claim about as soon thereafter as due diligence required.
Suppose Kennedy had not been made a party to this suit, — as it is claimed might, properly, not have been done. In such case, it could scarcely be contended that he .could not, after the decision setting aside his conveyance as fraudulent, have filed his claim, as he did, for his exemptions, and that the chancery court could have denied his claim. The reason, if any, why he might not have been made a party is, that as between him and his
The former judgmet of affirmance is set aside ; the decree of the court below is reversed, and the cause is re
Dissenting Opinion
dissenting. — To properly understand the discussion, the facts of the case at bar should be stated. A judgment creditor of John S. Kennedy filed a bill against the debtor and his grantees to set aside a fraudulent conveyance of lands, and to subject the same to the satisfaction of the judgment. The grantor debtor and his grantees answered the bill, each denying the fraud. The grantor denied having or owning any interest in the lands conveyed, and the grantees asserted that that they 'were bona fide owners of the same. - There was no suggestion or claim of exemption or homestead interest by the debtor or the grantees in this litigation. The issues were fairly presented, and after final decree of condemnation and order of sale of the land the debtor filed his petition, praying for an allowance of two thous- and dollars of the purchase money as a homestead exemption, and his right to it, under the facts of the case is tire question for decision. The conclusion of my associate Justices; McClellan and Haralson, rests-upon the broad proposition as stated in their opinion “that when a debtor has conveyed to third persons lands including his homestead interest to hinder, delay and defraud his creditors, and such conveyance has been set aside and avoided at the suit of creditors, such debtor then has the same right to assert his homestead exemption against such creditors as he would have had, had the conveyance never been executed by him.” “The homestead right revives and is assertable only after a decree against the grantee avoiding the conveyance.” The propositions of law are fairly stated in the foregoing extracts from their opinion, and there can be no misunderstanding of the issue. My position is, first, the propositions are not universally sound; and, second, that the principles cannot be invoked in this case by the debtor. The opinion of my associates states that ‘ ‘the authorities are well nigh uniform in support of the propositions” and in confirmation of the statement a great many are cited. Having a sincere desire to agree with my associates, and to have the question settled upon just princi
Freeman on Executions, § 138, states the proposition that fraudulent conveyances apply only to property subject to execution — a proposition not controverted.
The case of DeArman v. DeArman, 4 Ala. 521, decides that an agreement by a debtor as to the disposition of. property, not liable for his debts, is not fraudulent as to his creditors. It decides nothing more.
The case of Vaughan v. Thompson, 17 Ill. 78, holds that a sale or mortgage of property, exempt from levy, is not a fraud on the creditors of the vendor or mortgagor, and if levied upon the owner might maintain trespass. This case further holds that in an action for trespass by the debtor the defendant could show in defense of the action a fraudulent sale of the property. The first proposition does not support the contention, while the latter is in conflict with it.
In the case of Muller v. Inderreiden, 79 Ill. 382, the conveyance was by the husband to the wife. The court decreed that they (husband and wife) were entitled to the homestead, but in this case the claim of exemption was set up, before final decree. It will be observed also in this case, that the grantee, the wife, claimed the homestead, a very important fact as will be seen in the further discussion of the question.
The case of ÍAshy v. Terry, 6 Bush (Ky.) 515, decides no more than that a sale of an exempt homestead is not a fraud on creditors, a proposition no one denies or doubts. The case of Knevan v. Speaker, 11 Bush (Ky.) 1, was where the husband and wife conveyed to the son, and the son reconveyed to the wife. The wife claimed the exempt property under her conveyance. This authority directly supports my position, as will be seen hereafter.
The case of White v. Givens, 29 La. 571, merely decides, that where a debtor has fraudulently disposed of property which was liable to execution, that fact will
The case of Legro v. Lord, 10 Me. 161, has no application. It simply decides that the transfer of a personal privilege which is not leviable, cannot be fraudulent.
The case of Castle v. Palmer, 6 Allen (Mass.) 401, only decides that a conveyance of a homestead in which the wife does not join does not render it liable as a fraudulent conveyance. The conveyance was by the husband to the wife. She claimed and held it against the creditors of the husband. This she was entitled to do under every principle of law.
In the case of Vogler v. Montgomery, 54 Mo. 577, it appears that after judgment against him, Vogler conveyed the land to one Suess, who reconveyed to Vogler. The only question was whether the conveyance to Suess in law was an abandonment of the homestead. The facts, however, showed that Vogler had never surrendered possession or ceased to occupy it as a homestead. The title was reconveyed to him. There can be no doubt of his right to the homestead.
The case of The Bank v. Henderson, 4 Humph. 75, is not in point. No question of exemption arose in the case, and the grantor was not a party to the proceedings. The question arose on a contest between the creditors of a grantor and his grantee as to whether an equitable interest passed by the conveyance.
The case of Wood v. Chambers, 20 Texas 247, decides no more than a conveyance of the homestead is not a fraud on the creditors. The case of Cox v. Shropshire, 25 Texas 113, cannot be said to be an authority in point. The grantor was not a party to the cause. The question between the creditor and the grantee, was whether the homestead of the debtor had been conveyed in good faith. If so, the grantee was entitled to hold it against the creditor. On the other hand, if he held the prop
The case of Foster v. McGregor, 11 Vt. 595, decides no more than that a sale of property, which is exempt from levy, is not a fraud on creditors. Danforth v. Beattie, 43 Vt. 138, is not in point. The grantor was not a party and made no claim. The case decides that a mortgage of the homestead is not a fraud on a creditor, and that a purchaser at the foreclosure sale, acquired a valid title against the creditor of the mortgagor.
The four cases cited from Wisconsin, Bond v. Seymour, 1 Chandler 40 ; Dreutzer v. Bell, 11 Wis. 114; Pike v. Miles, 23 Wis. 164, and Murphy v. Crouch, 24 Wis. 365, only decide the general principle that a conveyance of the homestead is not a fraud on creditors. In the two latter cases, the conveyance was to the wife.
In the case of McFarland v. Goodman, 6’ Bissell, 111 (U. S. Cir. Ct.) the court declared that the grantor of the homestead reserved from the grant the light to retain possession and use of the homestead, and that under the agreement the grantor could enforce this right against the grantee in a court of equity. In the opinion the court affirmed the doctrine declared in Cox v. Wilder, 2 Dillon, which will be referred to hereafter. But the principio laid down in the case of Cox v. Wilder was not at all necessary to a decision of the case in Bissell, supra.
In Smythe on Exemptions and Homestead, § 555, the text does not support the proposition. The only principle stated is the general one, that a debtor may dispose of his exempt property and it will not be a fraud on his creditors. In the notes to sections 554, 555 of Smythe on Homestead and Exemptions, it is said that New York, Pennsylvania and Indiana hold contrary to the rule contended for by my associates, and to which list my associates add 18 Ill. 511, 54 N. H. 475, 29 Penn. St. 219, to which might be added 8 Lea (Tenn.) 389 and others, including, I think, Alabama.
In Bean v. Smith, 2 Mason 252, opinion by Story, Judge, as far as applicable, is an authority against the proposition in support of which it was cited. It holds that a fraudulent conveyance is good against the grantor. That bona fide creditors of the grantee, without notice,
It will be seen that a vast array of the authorities either have no application, or else do not support the proposition. “The host of authorities” referred to, to quote from the opinion of my associates, which do not sustain them, to those which do sustain them, are in about the same proportion as were Falstaff’s “sixteen men in buckram suits,” to the real number present. I have not examined the decisions of all the states, but as far as investigated I find as many which lay down a different rule from that which I am combatting. Our duty is to ascertain which line of decisions rest upon the soundest principles of law. The cases from Grattan, Virginia, so largely quoted from, were decided by a divided court,.of three to. two, and my opinion is, the dissenting opinion of Judge Christian in 31 Grattan, 459, was not answered. The argument upon which these decisions rest are, as I understand, the opinion of the court in the case at bar, and as I understand from the opinions themselves, as follows :
‘ ‘That a fraudulent conveyance of the homestead does not constitute an abandonment of the homestead, and does not estop the grantor or his wife from claiming it as such.’ ’
“That the homestead privilege is created for the benefit of the wife and children, as well as for the husband and father, and therefore the former should not be prejudiced by the wrongful act of the latter.”
“That the conveyance not being void as to creditors, it stands as to them as though it had never been made.”
“That creditors can only enforce rights they could have enforced, if no such conveyance had been made.”
‘ ‘That as to the homestead it is a matter between the grantor 'and grantee in which the creditor has no concern.”
These are the reasons deduced by Mr. Thompson on Homesteads, §§ 405, 408, 412, and Mr. Waples, pp-531, 534, as stated in the opinion. Tho first two propositions hardly arise in the present case, although I am of opinion they were of controlling influence in the Mississippi cases cited by my associates, and perhaps
But are the reasons given sound, and are they consistent with the settled decisions of this court, and elementary principles recognized by almost every court ? I contend that the following propositions of law are sound and well established, and that any rule which conflicts with their application, cannot be upheld: First, that a fraudulent conveyance is binding and valid between the parties to it, and that as to exempt property the grantee acquires a perfect title against the grantor and his creditors. Second, that in a proceeding by a judgment creditor to subject property which has been fraudulently conveyed, by a conveyance valid between the debtor and his grantee, the contest is not between the creditor on the one hand, and his debtor and his grantee on the other, but that the contest is between the creditor and the fraudulent grantee, and if the grantee fails to make a defense which he could or ought to have made, he is concluded by the decree against him. Third, that the annulment of a fraudulent conveyance, at the suit of a creditor, does not restore the debtor to any right, which he would not have had without such annulment. That the claim of exemption is not revived and assertable by the grantor on the cancellation of the fraudulent conveyance. Fourth, that the-doctrine of estoppel can have no operation in a contest of this character. Fifth, that no person without ah interest in the property, can defeat an execution or the enforcement of a decree, by showing that the property is not liable to the process or decree. Sixth, that every person who invokes the aid of a court of equity must have clean hands. Seventh, that a person entitled to a homestead or other exemption in a proceeding in rem, must interpose his claim before final decree of 'condemnation, or he will be held to have waived it.
In order to sustain the conclusion reached by my associates, that John S. Kennedy is entitled to two thous- and dollars of the purchase money exempted to him, each and all of the propositions which I have announced as correct law, it appears to me, must be over
First, that a fraudulent conveyance is valid and binding, between the parties, and that there is no difference in this respect, between a conveyance direct, and when the title is fraudulently taken in the name of a third person, I cite the following cases: 2 Brick. Dig., p. 16, §§ 45, 46; Greenwood v. Coleman, 34 Ala. 153; Wiley Banks A Co. v. Knight, 27 Ala,. 336; Walton, Admr. v. Bonham, 24 Ala. 514; Marler v. Marler, 6 Ala. 369; Kelley v. Karsner, 72 Ala. 106; King v. King, 61 Ala. 479; 3 Wait Act. & Def., 199.
That the grantee of exempt property acquires a good title against the grantor and his creditors, I cite the following : Wright v. Smith, 66 Ala. 516 ; Lehman, Durr & Co. v. Bryan, 67 Ala. 558 ; Alley v. Daniel, 75 Ala. 406 ; Clark v. Spencer, 75 Ala. 56; 3 Brick. Dig., pp. 491, 515, 516 ; Smith v. Kehr, 2 Dillon 50. These authorities fully sustain the first proposition.
My second proposition is, that the debtor has no interest-in a proceeding, by a judgment creditor, to reach property which has boon fraudulently conveyed by the debtor, and which is claimed by the grantee, and especially is this true where the grantor disclaimed owning any interest in the same. It would seem that neither argument nor authority is necessary to sustain-this proposition, but- it has been adjudicated by this court-, and the Supreme Court- of the United States. Lithe case of Coffey v. Norwood, 81 Ala. 512, it is held that “where the fraudulent debtor has conveyed to the grantee or donee his entire interest, legal and equitable, in the property sought to be subjected, the conveyance is binding on him his heirs and personal representatives, and is absolutely unassailable by him or them,’ ’ I italicise. The opinion proceeds as follows : “The debtor has no interest, legal or beneficial, either in the property sought to be subjected or in the litigation having reference to it except remotely and incidentally.” “The fraudulent donee can make any defense, that the debtor could have made;” and the decision expressly declares that the debtor is not a necessary party. It was expressly so decided again in the case of Staton v. Rising, 103 Ala. 454. In the case of Buffington v. Harney, 95 U. S. 103
We will consider the third and fifth propositions together, as they involve principles which in some respects bear upon each other. My third proposition is, that the cancellation of a fraudulent conveyance at the suit of a creditor does not restore to the debtor any right or interest in the property which he had parted with by his conveyance; and the fifth is, that no person not owning an interest in the property can defeat an execution or decree of a court subjecting it to the payment of the debt due his creditor. Is it necessary to cite authority or furnish argument to show, that when property fraudulently conveyed is sold to satisfy a judgment against the grantor, that the excess if any is paid to the grantee, and not to the grantor? That if a sheriff makes an unwarranted levy upon more property, which has been fraudulently conveyed, than is necessary, he is liable in trespass at the suit of the grantee and not of the fraudulent grantor? That in the case at bar where the property was claimed by the grantees or donees, and admitted to be theirs by the grantor, that if the proceeds of the sale exceed the judgment and cost, the ex-. cess must be paid to the grantees, and nothing can prevent their recovery of it from the officer making the sale? Where docs the register, by virtue of such a decree get authority to sell any more property, than just sufficient to pay the judgment or decree? Does the remainder nut sold, by virtue of the decree declaring the-conveyance fraudulent, pass back and reinvest in the debtor grantor, or does it remain in the grantee under the deed of conveyance? Suppose in the case at bar the grantee had pleaded in defense that a part of the property was exempt from levy, and sustained it by proof,
My fifth proposition is even more impregnable'. Bear in mind that the judgment creditor has a decree in force, ascertaining specifically that- the property is liable and subjecting it to the satisfaction of the judgment against the debtor, who was a party to the creditor’s bill, and who, after final decree condemning the land, for the first time makes known or sets up by original petition a claim of two thousand dollars of the purchase money as a homestead exemption. Under the pleadings and proof in the case, if there was a wrong done any one by the decree, it was a wrong to the grantees, who as between the grantor and themselves were the owners of the property. What- right has the grantor debtor to come in and redress the wrong done to his grantee? If the grantee had defended on the grounds that the property was ex
It being settled by authority and upon principle that when a debtor sells and conveys his exempt property, by a conveyance valid against him, and thereby has placed it beyond his power, to recover it from his grantee, who sets up a claim to it, upon what principle can it be said, that if a creditor gets possession of the property, by a decree of a court against his grantee or otherwise, that the grantor thereby becomes reinvested with rights, and interest, superior to his creditor, as well as his grantee? My associates contend that the decree of the court against the grantee condemning the land, which, so far as the grantop is concerned, belongs to the grantee absolutely and unassailably, restores to the grantor an assertable right, which, without the decree ho would not have had. I must confess my inability to appreciate the argument. If the argument is sound, it will stand the test of hypothetical cases which may arise. Suppose an insolvent debtor, to defraud his cred-’ itors, sells property, which includes his exempt proper-; ty, to a purchaser, participating in the fraud, for cash-at a fair value, which is paid to the debtor. A judgment creditor of the vendor, files a bill against the fraudulent vendee alone, to subject, the property to his judgment. Under his purchase and deed of conveyance the vendee can make any defense the vendor could make. If, instead of setting up the defense that a portion of the purchased property included the exempt property of his vendor, the vendee,' bent on holding all the property, de- . fends solely on the ground, that his purchase was bona, fide, and upon this issue the case is determined against him, the conveyance declared void and fraudulent as to creditors, (notas to the vendor) and the entire property decreed to be sold. According to the proposition of my' associates, the decree of the court restores to the fraudulent debtor his former rights, his exemption ‘ ’revives and is assertable,” upon the grounds, that as to the ex
It is said in the opinion of my associates, that I mis-, apprehend the fact, that the issue here is between the debtor and the creditor, and that the grantee is not present claiming anything, and that the creditor has obtained a decree condemning property, which, is clearly not liable. I have tried to make it clear, that the debtor has no right to raise this question, that he has parted with all interest in the property, by a conveyance confessed to be binding on him, and that the decree of the court declared the conveyance void “only” as to the creditor, not as to the debtor. As to him the conveyance remains as it was before. As to the statement that the. grantees are not present claiming anything, my reply is, they have no right to be heard. They have had their day in coux’t, and by final decree, they lost xxpon the issxxe tried. They caixnot re-try the case and “vex” the complainant on another issue, which, if it existed, should have been presented. And the same rule applies to the debtor. He was also a party and is eqxxally concluded by the decree as the grantees. My associates have failed tó show why it is, that the grantee is concluded by the final decree, and the grantor is not, who was also a party to the sixit. But this question coxxxes urxder another Ixead of the discussion,
I have discussed these questions at some length, because as to them my position is squarely against that of my associates, as applicable to the case before us. -Tn the case of Cox v. Wilder, 2 Dillon, in the Virginia cases, and in the Mississippi cases cited, the clairn of ex: eraption was brought forward by answer or cross-bill to the original bill, and not after final decree, as here, and my reading of these cases has led me to the conclusion that the courts in those cases would have held, on account of the construction of the homestead laws in each of those states, and the- facts proven in the cases, the interest of the wife and children in the homestead, the fact that the husband never ceased to occupy and claim the homestead as such, that the conveyance of the homestead was not valid and binding on the grantor in favor of their respective grantoos, but that the grantor could have successfully resisted the claim, of the grantee. Put upon these grounds, and those, cases are entirely in harmony' with me. T do not read these decisions as my' associates ’do, as holding that an absolute conveyance which is binding on the grantor, of property in which no one had an interest except the grantor, in which no interest is reserved, and against which he could not claim an interest or defend, is not in law, an abandonment of the homestead. This is the doctrine of my associates, and it drives them to the doctrine of “revivor” and “restoration” of a right which confessedly did not and could not exist without the decree of cancellation. In other words the decree which condemns the property to the satisfaction of the judgment,
, My fourth proposition is that the doctrine of estoppel has no operation in a contest of this kind. An estoppel arises when one person has been induced ■ to act, or prevented from acting, or has -been induced to change his position, by reason of something said or done, or conduct by the person, or, proceeding from him, against whom it is invoked. This statement is broad enough to cover every phase of an estoppel. The debtor in the present case does not come within either of the conditions.
My sixth proposition is, that overy person who invokes the aid of a court of equity must have clean hands. In this case, we have the petitioner stating to the court in, substance as follows : I was in debt. I sold and conveyed my .property in such a way*- that I had no further interest in, it, and would not and could not have reclaimed it, and I did this for the jrarpose of defrauding my creditors, and in the litigation ,1 have aided my grantees to make the fraud successful, but my creditors have succeeded in exyiosing my fraud, and have obtained a decree subjecting the property to the xoaymaent of .my debts. No wife or children are interested. I ask, therefore, the court to give the property back to me. That is petitioners case, and I leave this proposition without further comment.
Some Alabatna decisions have been cited by ury associates, as supporting their contention; and I-will consider them before concluding my .seventh and last proposition. .The first of these is Smith’s Executor v. Cockrell, 66 Ala., 64. Courts are not bound by all that may, bp. said by way of argument and illustration in an opinion, but only by the conclusion of law' upon the facts of-, tile case raised by the record. The facts of the case of Smith v. Cockrell, supra, show that one Robert Johnson,
The next case cited from the reports of this State and relied upon is that, of Fellows v. Lewis, 65 Ala., 343. A
The next case cited is that of Humes v. Scruggs, 64 Ala., 40. In this case Mrs. Scruggs claimed dower in certain lands which her husband fraudulently conveyed to her, and which conveyance had been set aside at the instance of a creditor of her husband. The question was as to the effect of the cancellation of the husband’s deed upon the dower interest in the land. It was insisted that the dower became merged in the greater estate conveyed to her by her husband, and that upon the annulment of'that deed, the dower interest was annulled also. This contention was held to be unsound. The dower .interest was not created or vested in the wife by her husband’s deed. It existed independent of it. The cancellation of the deed of the husband set aside only that which was conveyed by the deed. The effect of the decree did not reach further than the deed itself. When the deed of the husband was removed or annulled, the dower remained in the wife, as it was independent of the deed. The case is not in point, and but for certain dicta in the opinion, I presume the case would not have been cited.
The long quotation from the case of Richardson v. Wyman, 62 Me., 280, simply shows that dower was not
Í think my associates dispose of the case of Bolling v. Jones, 67 Ala. 508, in rather a summary manner. In their comments on Bolling v. Jones, they seem to overlook the fact that in Smith v. Cockrell, 66 Ala., supra, the conveyance was not set aside until after the death of the husband, just as was done in the case of Bolling v. Jones. It is clear from an examination of the two cases, as well as many to -which reference lias already been made, that Mrs. .Johnson was entitled to the homestead under her deed of conveyance, and we have no doubt that if Jones, the husband, had conveyed to his wife, she would have held the homestead against his creditors. The cases of Bolling v. Jones and Smith v. Cockrell, cannot be reconciled upon the theory of my associates, but are not inconsistent, when put upon the grounds for which I contend. En tlie case of Bolling v. Jones, the very question under consideration was involved and necessarily decided as to the right of the widow, to claim a- homestead exemption in Lands, which had been fraudulently mortgaged by her husband in his lifetime. The court, Briokell, O. J., delivering the opinion, laid down the rule, “that a homestead was not given to the widow in lands, the husband had alienated in his life, but only in lands of which he died seized and possessed, having an estate therein of-which his personal representative, under an order or decree of the probate court, could make sale for the payment of debts.” “The mortgage,” says the court, “though void at the instance of pre-existing creditors, is valid as between the parties, their heirs, personal representatives, and privies in estato. There remained in the mortgagor at the time of his death no more than the equity of redemption in the premises. * * * The equity of redemption was also an .estate in which the widow could claim a homestead exemption.” The mortgage was set aside at the suit of a creditor as fraudulent, and the land condemned to be sold. The widow claimed $500 of the proceeds of this sale as her homestead exemption. The court held she was not en
In the case of Minor v. Wilson, 58 Federal Reporter, 616, the precise question arose, and it was there held,' (JPardoe', J., delivering the opinion) “that a decree declaring a deed made by' an insolvent debtor and his wife void as against a' judgment creditor, doe's not revest title in the grantor, so as to enable him, or his family to establish a homestead therein to the prejudice of the creditor’s claim.” Althbugh the opinion refers to the' statute of Georgia, the reasoning and principle declared by the court, in reaching the conclusion are precisely those held in the former opinion rendered by this court in this case and in this opinion. I do not think it improper to state here a fact known to all who were members of the court at the time, that the late Chief Justice Stone, who delivered the opinion in the case of- Fellows v. Lewis, supra, and quoted at length by my associates as expressive of .his' views, and also the dissenting opinion in Bolling v. Jones, supra, in the case now before' us, fully concurred in the views and conclusions expressed in the opinion delivered in this case which declared, for the reasons stated, that the petitioner was
My seventh and last proposition is, conceding that John R. Kennedy, pr his grantees, might at one time have interposed a claim of exemption, by neglecting or refusing to do so, until final decree of condemnation, the right to do so was waived and forever lost. -On this proposition I will state the position of my associates in their own language. Say thoy : “It may be admitted' that in a direct proceeding in equity against one who is’ the owner of lands, to condemn them to sale, in which he has a right of homestead exemption, and who ih making answer sets up no claim to such exemption, and allows thorn to be condemned to sale for the payment of the decree rendered against him, and they are sold thereunder, he will be held to have waived hi's right to claim," and would not he heard afterwards to complain.” T have italicised the words ‘ ‘and they are sold thereunder,”' for that phrase marks the difference betwoonus. Strike out the words, “and they are sold thereunder,” and it loaves the proposition as I contend to be the correct and-sound one, and precisely applicable to the case of .John S. Kennedy. He was a party defendant, in a' direct proceeding in a court of equity to condemn the lands,’ and he set up no claim to exemption, and allowed the lands to be, condemned for the payment of the' decree. The issue between us is whether in such a proceedings he must make his claim, before or after final decree. I have come across but one decision in all my investiga-” tion which, in my opinion, bears out my associates oil' this point, and that is the case in 14 Ohio State, 298, ’ supra. On this proposition my associates repudiate Mr. Thompson on Homestead, on whom they so much rely upon in the other. He says in sections 715, 716, 720,-“Ro long as the judgment remains in force, it is in itself evidence of the right of the plaintiff to the thing’ad-” judged, and gives him a right to process to execute the judgment, it is not necessary to the conclusiveness of’ the former judgment that issue should have been taken’ upon the precise point -which it is proposed to 'controvert in tin1, collateral action. Tt is sufficient if that point” was essential to the former judgment. There is nothing'
.In Cassell v. Williams, 12 Ill. 399, it is said: “If a party fraudulently transfer his property for the purpose of avoiding the payment of his debts, or even sell it .for a valuable consideration,.after it has become subject to the lien of an execution against him, he cannot after-wards claim the property as his, and recover from the officer selling it, three times its value, upon the ground that it was exempt from execution against him.”
In Wait on Fraudulent Conveyances, section 129, .it,is said: “The debtor could not gain or lose, whichever way it .ipight be decided.” In Potter v. Phillips, ,tli.e court said that though the debtor was a proper party, it did not see why he was to be regarded as a necessary party; whether the conveyances were fraudulent, o.r in good faith the property irrevocably passed beyond his control. He could be prejudiced in no way, in a legal sense, by a determination which subjected the property to .the payment of his debts. So it was decided in Minnesota, that where a creditor sold land which the debtor had fraudulently alienated,' the fraudulent gram-tee might bring an action against the purchaser to determine his title without bringing in the fraudulent grantor. It is remarked in some of the cases that the frau
In the case of McFarland v. Goodman,, 6 Bissell 111, one of the cases relied upon by my associates, it is expressly declared “that if the grantors had been a party to the suit to set aside the conveyance, and had not set up the claim of homestead exemption they would have been concluded by the decree of sale, and could not have set it up afterwards.”
Our own reports abound with decisions, which bear on this question, and in mv opinion ought to be conclusive of it, none of which are noticed by my associates. In the case of Stanley v. Ehrman, 83 Ala. 215, the appellee sought to condemn the lands of the wife for a debt due for articles purchased for the comfort and support of the family. After the judgment of condemnation and order of sale of the land, but before the sale, the claim of homestead exemption was interposed. The court held that, the claim was waived. Says the court: “Had a valid claim of homestead exemption been made in the suit during the progress, it would have beén sufficient, to defeat the order of sale, but if not made until after the order of sale, it will be held to have been waived.” There are many decisions where lands havé been levied upon by a constable, for want of personal property, and application made to the circuit court for an-order of sale, in which it was held that unless the' exemption was claimed, before the order of .sale was entered, the claim came too late — Toenes v. Moog, 78 Ala. 558; Randolph v. Little, 62 Ala. 396; Sherry v. Brown, 66 Ala. 51. The decisions in our State which hold that a claim of exemptions may be made before sale, refer to sales under executions which are to. be levied generally on the estate of the debtor, and provision is made for such claims by the statute before sale,
The Chief Justice Brickell and Associate Justice Head, ■ having been of counsel, do -not- sit. .1 regret that the questions involved must be determined by less than a majority of the whole court.. It is my opinion, after ■ careful consideration, that, the petitioner is not .entitled
Reversed and remanded.