Central-Penn Nat. Bank of Philadelphia v. Culp

• Decision Date: 06 January 1936
• Docket Number: 18,17
• Citation: 182 A. 239,320 Pa. 358
• Parties: Central-Penn National Bank of Philadelphia, Appellant, v. Culp et al
• Court: Pennsylvania Supreme Court

182 A. 239

320 Pa. 358

Central-Penn National Bank of Philadelphia, Appellant, v. Culp et al

Nos. 17, 18

Supreme Court of Pennsylvania

January 6, 1936

Argued May 28, 1935.

Reargued November 27, 1935.

Appeals, Nos. 17 and 18, May T., 1935, by plaintiff, from orders of C.P. Dauphin Co., Equity Docket, 1934, Nos. 1107 and 1108, in case of Central-Penn National Bank of Philadelphia v. John F. Culp et al., executors. Decrees affirmed.

Bill in equity.

The opinion of the Supreme Court states the facts.

Rule to show cause why the bill of complaint should not be dismissed made absolute, HENRY, P.J., specially presiding, and FOX, J opinion by HENRY, P.J. Plaintiff appealed.

Error assigned was order making rule absolute.

The decrees are affirmed at appellant's cost.

Francis Shunk Brown, with him Ira Jewell Williams, Jr., of Brown &amp Williams, Arthur P. Bretherick and Mark T. Milnor, for appellant.

Geo Ross Hull, with him George H. Hafer, for appellees.

Before FRAZER, C.J., KEPHART, SCHAFFER, MAXEY, DREW, LINN and BARNES, JJ.

OPINION

MR. JUSTICE MAXEY:

Plaintiff is the present holder in due course of a collateral demand note executed and delivered by Isabel S.W. Hoffman on February 28, 1931. Subsequently, on April 17, 1933, the maker conveyed certain pieces of real estate to Jesse L. Lenker and Jennie N. Boak, at which time she was apparently insolvent. On June 5, 1933, plaintiff sued in assumpsit to recover upon the note. The debtor died on October 29, 1933, and plaintiff proceeded to issue a writ of scire facias to join the personal representatives as parties defendant. No praecipe to index the action on the judgment index was filed; nor was the suit prosecuted to judgment. Proceeding on the theory that the conveyances were fraudulent, plaintiff subsequently filed the present bills in equity against the decedent's personal representatives and the respective grantees to set aside the transfers. This was on March 13, 1934. Answers were filed. At the expiration of the year following the grantor's death plaintiff had not yet indexed its assumpsit action on the judgment index, in accordance with the requirements of section 15a ^[*] of the Fiduciaries Act of June 7, 1917, P.L. 447, as amended by the Act of June 7, 1919, P.L. 412. Defendants thereupon moved to dismiss the bills upon the ground that the causes of action had abated. The court below decided in defendants' favor and plaintiff has taken the present appeals.

In behalf of plaintiff it is contended that irrespective of the law prior thereto, a creditor may, since the passage of the Uniform Fraudulent Conveyance Act of May 21, 1921, P.L. 1045, treat the conveyances as valid as between the parties and proceed upon the theory that title passed to the grantees; that in addition to whatever rights it may have against the grantor, the creditor has a direct right in equity against the transferees; that notwithstanding the intervening death of the grantor, this "equitable right" is entirely independent of any lien imposed by statute for the payment of a decedent's debts; that, in any event, the land conveyed by decedent in her lifetime was not at her death "real estate of such decedent" within the meaning of section 15a; and that "the creditor's direct remedy against the transferee is not diminished or cut down by the death of the debtor." In reply to this, defendant sets forth that at common law a decedent's real estate was not answerable for debts not of record; that statutes permitting a creditor to reach realty must be scrupulously followed; that when real estate is fraudulently conveyed, the title remains in the grantor so far as concerns the right of a defrauded creditor; that upon the death of the fraudulent grantor, such property is, as to any defrauded creditor, "real estate of such decedent" within the meaning of section 15a; that a creditor, by virtue of the statute, has a lien upon the land for a period of one year, which may be continued thereafter only by a compliance with the statutory requirements; and that if the creditor fails to continue its lien in accordance with the statutory provisions, its right to realize from the land or its proceeds ceases to exist at the expiration of the statutory period and it is forever debarred therefrom at law or in equity.

The question resolves itself into this: May a general creditor of the decedent, who through lack of diligence has lost all right of recourse that it might have had against any realty in the decedent's estate, nevertheless pursue its remedy against real estate alleged to have been fraudulently conveyed by the decedent in her lifetime? This question must be answered in the negative. Whether, in so far as plaintiff was concerned, title really passed to the alleged fraudulent grantees, or whether plaintiff was required to proceed upon the theory that title remained in the grantor, is immaterial. The basis of plaintiff's claim is the note which decedent executed. Its method of collection was primarily by suit against decedent and execution against her property. Upon her death its right so to do became subject to the provisions of section 15a above cited. Had decedent retained the property in question and died possessed thereof, it is clear that plaintiff would not now have any power to realize therefrom. Its failure to comply with the statute would be fatal to successful prosecution of its claim. The question is not whether the death of the grantor cut down plaintiff's rights and remedies against the land, but whether the fact that the debtor had conveyed her property inter vivos can vest in plaintiff rights in respect to that land which admittedly it would not have if the debtor had not so conveyed it. Plaintiff's remedy by suit in assumpsit properly indexed and prosecuted to judgment, followed by sale of the land to pay the indebtedness, is no longer available. To hold that it may now proceed by bill in equity to accomplish the same result would be to defeat the purposes of section 15a above cited. That section and the prior acts of assembly...