Taylor v. Webb

54 Miss. 36 | Miss. | 1876

Chalmers, J.,

delivered the opinion of the court.

Walter B. Webb, administrator of Thomas Allen, deceased, having recovered two judgments against Marcus E. Carter, in his lifetime, filed this bill to subject to their satisfaction certain real estate, alleged to have been fraudulently conveyed by the debtor, first to his son, A. J. Carter, and then by the latter to Bentonville Taylor. The bill alleged that the conveyance to the son, A. J. Carter, was colorable and without consideration, and that Taylor had knowledge of this at and before the date of his purchase from the son. The bill showing on its face that the judgments had been recovered in the lifetime of Marcus E. Carter, a demurrer was interposed, on the ground that it was not shown that they had been revived against his administrator and heirs, nor were either the administrator or heirs made defendants to the bill.

Was it necessary that the judgments should be revived ? This depends on the question, whether the administrator or heirs were necessary parties to the bill, since, if neither were necessary parties, a failure to revive against them is immaterial. Undoubtedly, in any proceeding to reach legal assets, the holder of the legal title must be before the court; and, therefore, in such cases there must be a revivor, and even in seeking to subject equitable assets, the legal holder of such assets must be made a party. But why should a court concern itself about parties who have neither legal title nor equitable interest in the subject-matter of the litigation ? It will be conceded, that if it is not necessary to join the fraudulent grantor while living, it cannot be essential to make his representatives parties after his death, since it is manifest that if the creditor may ignore the one he may omit the others.

Is a judgment debtor, after return of nulla bona, a necessary party to a proceeding instituted by the creditor to vacate an alleged fraudulent conveyance ? Mr. Bump, in his excellent work on Fraudulent Conveyances (1st ed.), 522, states that the fraudulent grantor during bis life, and bis administrator after death, are necessary parties, but that bis heirs are not; and in support of these positions cites a large number of cases, many of which undoubtedly bear out his statement, but a majority of which, perhaps, only declare that the fraudulent grantor or his administrator are proper parties. We have examined these adjudications with care, and especially the decision of the Supreme Court of the United States in the case of Gaylords v. Kelshaw, 1 Wall. 81, because to the rulings of that distinguished tribunal we are always desirous of conforming our own, in order to render the body of American law symmetrical and harmonious. We regret that we find it impossible to do so in the present case.

There is a wide distinction between proper parties and necessary parties in equity proceedings. The former term frequently embraces all who have any connection with the subject-matter of the litigation; the latter includes only those whose interests are to be affected by the decree sought. No matter how intimate the connection of a party may be with the subject-matter in hand, he is never a necessary party where he is vested neither with the legal title nor with any beneficial interest which can be affected by the litigation. Under such circumstances, the complainant is at liberty to join him or not, at pleasure; and whichever course he maj^ take, the bill is subject neither to plea of misjoinder, nor to demurrer for nonjoinder of parties. Tested by this rule, the correctness of which, we think, will not be disputed, upon what principle is it that, after judgment and return of nulla Iona, a fraudulent grantor, or his administrator or heirs, are deemed necessary parties to a bill to vacate a fraudulent con-vejmnce ? The grant is not only good against them, but it is absolutely unassailable by them. Under no circumstances can they be permitted to attack it, or to claim any interest in the property conveyed. When a court of equity, penetrating through the fraud, uncovers the property, and subjects it to the assaults of the creditor, it declares the fraudulent grantee a trustee for his benefit, of so much of it only as is necessary to satisfy the demands against the' grantor, and leaves the grantee in the undisturbed enjoyment of the remainder. What interest, then, can the grantor or his representatives have in the litigation ? If it is said that they might be able to show payment or plead the bar of the Statute of Limitations, the obvious reply is twofold : first, that as to the property sought to be reached, it is immaterial to them whether the judgment is a subsisting debt or not, since they have no interest in the property to be subjected; and, second, that the grantee, who is alone interested in it, may plead, in exoneration of it, any thing that constitutes a defence to the judgment.

It is said in some of the cases that the fraudulent grantor should be joined, because it is his conduct that is to be investigated ; but the object of the proceeding is to reach property, not character, and however valuable the latter may be in another forum, and a different form of action, it is not perceived how the assailment of it can entitle the party to be heard in a proceeding like this. The truth is, that it is a proceeding in rem; and while the complainant may, if he chooses to do so, join as defendants all who are connected with the property or the transactions to be investigated, he is only compelled to join those in whom the legal title rests, or those who have a beneficial interest to be affected. In consonance with this reasoning are Smith v. Grim, 26 Penn. St. 95; Dockray v. Mason, 48 Me. 178 ; Merry v. Fremon, 44 Mo. 518 ; Cornell v. Radway, 22 Wis. 260. The question was alluded to, as to the heirs of the grantor, but left open in Shaw v. Millsaps, 50 Miss. 380. In the case at bar it does not appear that there was any administrator, or any estate to be administered. We conclude that it was not necessary to have revived the judgments, nor to have made the administrator or heirs of Marcus E. Carter parties, and that the demurrer was properly overruled.

On final hearing, the Chancellor held that the sale from M. E. Carter to A. J. Carter was fraudulent. This holding was, we think, abundantly warranted by the evidence. He also held that Taylor had notice of the fraud, and therefore rendered a decree subjecting the land. Much incompetent testimony was admitted to establish Taylor’s knowledge of the fraud, consisting of the declarations of Marcus E. Carter, made after he had parted with the land, not in Taylor’s presence, and other testimony of a hearsay character. Motions to suppress these depositions, or so much of them as was of this description, were erroneously overruled by the Chancellor. Leaving out of view this illegal testimony, we cannot say that there were sufficient grounds for holding that Taylor knew of the fraudulent character of the conveyance, and yet there is not wanting competent proof of circumstances which seem to point strongly in that direction. It is shown, for instance, that he took the mortgage out of which his fee-simple title afterwards grew, upon the very day that Webb’s execution was levied on the land, as he well knew. His deed of conveyance was acquired two years afterwards, when, as he says, he had been assured by Webb’s attorney (now deceased), that all idea of there being fraud in the matter had been given up, and all intention of subjecting the land to-the judgments had been abandoned; but he fails to explain why he took the original mortgage under such circumstances, and his action in so doing certainly calls for explanation. We think that, while the decree was not warranted by the competent testimony adduced, there was enough shown to warrant us in giving the complainant an opportunity to supply, if possible, his secondary by primary evidence.

The objections urged against the service of process in the proceedings in the Circuit Court, upon which the judgments are founded, cannot be heard in a collateral proceeding.

It was not necessary to show an enrolment of the judgments. That was sufficiently admitted by the answers. While it is there styled “ an alleged and pretended enrolment,” it sufficiently appears that by this it was only intended to assail it for assumed invalidities in the judgments, which did not exist.

The decree will be reversed and cause remanded, with leave to both parties to take testimony in relation to Taylor’s notice of the fraud, or his knowledge that the complainant deemed it fraudulent, and intended to attack it.