Chalupa v. Preston

• Decision Date: 02 December 1918
• Docket Number: 9121.
• Citation: 65 Colo. 400,177 P. 965
• Court: Colorado Supreme Court
• Parties: CHALUPA et al. v. PRESTON.

177 P. 965

65 Colo. 400

CHALUPA et al. v. PRESTON.

No. 9121.

Supreme Court of Colorado

December 2, 1918

Rehearing Denied Jan. 14, 1919.

Error to District Court, Denver County; Geo. W. Allen, Judge.

Action by Burton Preston against Harry Chalupa and another. Judgment for plaintiff, and defendants bring error. Judgment affirmed.

Geo. B Campbell, of Denver, for plaintiffs in error.

Ewing Robinson, of Denver (Delph E. Carpenter, of Greeley, of counsel), for defendant in error.

SCOTT J.

The complaint in this case alleged that the plaintiff, Burton Preston, obtained a judgment against the defendant Joseph S Knotek on the 8th day of December, 1914, in the sum of $3,481 and costs; that on the 17th day of February, 1915, a transcript of said judgment was filed for record with the county clerk and recorder of the city and county of Denver where the defendant resided; that prior thereto, and on the 14th day of December, 1914, execution on said judgment was issued, directed to the sheriff of Morgan county, and on February 27, 1915, return made that the judgment was unsatisfied, except to the extent of $2,000, and that after diligent search by the officer no other property than that sold to obtain the said sum of $2,000 was found upon which to levy; that on February 9, 1915, execution was issued, directed to the sheriff of the city and county of Denver to satisfy the remainder due on said judgment in the sum of $1,516.44 and returned wholly unsatisfied, and no property found; that on November 22, 1914, and subsequent to the commencement of the action in which said judgment was obtained, the defendant Knotek conveyed by three separate warranty deeds three certain pieces of real estate situated in the city and county of Denver, and described in the complaint, to his brother-in-law, Harry Chalupa; that these deeds were without consideration, and with the intent and purpose to hinder, delay, and defeat the plaintiff in the collection of his judgment, and were received by the grantor with full knowledge of such intent; further, that Knotek has no other property within the state of Colorado from which plaintiff can realize his judgment.

It was further alleged that there has been no change of possession of said properties, but that Knotek continues in possession of the same, to reside in one and to collect the rent from others, to pay the taxes, and to treat the same as his own. Prayer was for the cancellation of said deeds, and for foreclosure of the judgment lien.

Separate answers were filed in behalf of Knotek and Chalupa, which, in substance, admit the judgment; admit the sale under execution, but allege a subsequent execution and sale thereunder, from which there was realized more than $2,000, and declaring that there was not to exceed the sum of $1,000 due on said judgment; admit the conveyances; and allege them to be in good faith, and that Chalupa is the bona fide owner of the properties for consideration.

It appears that the original cause of action arose upon a promissory note secured by mortgage upon the premises in Morgan county, afterward sold under execution; that in the purchase of the premises, Knotek had assumed and agreed to pay the indebtedness secured by the mortgage, but suit was brought on the note and a levy made on the land. It also appears that the court set aside the first execution sale, and the property was sold under a second execution, and the court in this trial found there was still due the plaintiff the sum of $1,186.80.

The trial court found for the plaintiff in this case, adjudged the conveyances to be null and void, and held the plaintiff entitled to a lien on said premises for the amount due and unpaid on the judgment, and directed execution and sale of the premises as the property of Knotek.

The errors assigned and important to consider are that equity will not lie in this case, in that plaintiff had not exhausted his remedy at law; and that the evidence was insufficient to justify the finding of the court that the conveyances were made with the intent to hinder, delay, and defraud the creditors of Knotek.

It is contended that the original judgment was against Chalupa and another, as well as against Knotek, and that execution should have been issued against these with a return of no property found, before the plaintiff was entitled to equitable relief, and authorities are cited from some other states which seem to support this contention.

But the law upon this question may be regarded as well settled in this jurisdiction. Stock Growers' Bank v. Newton, 13 Colo. 245, 22 P. 444; Schofield v. Ute, etc., Co., 92 F. 269, 34 C.C.A. 334, involving a Colorado case; Bank v. Newton, 13 Colo. 249, 22 P. 444; Allen v. Tritch, 2 Colo. 222; Emery v. Yount, 7 Colo. 107, 1 P. 686; Mulock v. Wilson, 19 Colo. 296, 35 P. 532; Helm v. Brewster, 72 Colo. 25, 93 P. 1101; Thuringer v. Trafton, 58 Colo. 250, 144 P. 866.

In Allen v. Tritch, supra, it was said:

'The right of a judgment creditor to equitable relief in case of the fraudulent transfer of real estate by the judgment debtor is well settled. He may maintain his action to cancel the fraudulent conveyance before execution.'

In Stock Growers' Bank v. Newton, supra, it was held:

'A judgment creditor, desiring to set aside a supposed fraudulent deed of real estate, may bring his action therefor to test the validity of the deed before attempting to subject the premises to execution sale; or the purchaser, after such sale, may bring his action to remove the cloud from the title by canceling the supposed fraudulent deed, and to recover possession of the premises.'

It will be observed that the judgment lien in this case had attached to the real estate of Knotek in the city and county of Denver, by the filing of a transcript of judgment with the clerk and recorder of that county, before the institution of this suit.

The rule is well stated in Schofield v. Ute, etc., Co., supra, pointing out the two classes of cases of the character in which equity may be invoked. It was there said:

'But there are two classes of cases in which a judgment creditor may successfully invoke the aid of a chancellor because his remedy is insufficient.

'One class includes the cases in which his remedy at law is utterly ineffectual to reach the property of his debtor, or to fasten any lien or claim upon it, as where a creditor's bill is exhibited to reach choses in action, equitable interests, or property of the judgment debtor that has been fraudulently conveyed beyond the reach of the judgment and execution.

'The other class embraces those cases in which the creditor has secured a lien or right at law, the enforcement of which is obstructed by some fraudulent conveyance or incumbrance. * * *

'In the second class of cases to which we have adverted, however, the lien or vested right in the property, and the fraudulent obstruction to the adequate enforcement of this lien or right, are the only

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