Craig v. Hoge

• Citation: 28 S.E. 317,95 Va. 275
• Court: Supreme Court of Virginia
• Decision Date: 18 November 1897
• Parties: CRAIG et al. v. HOGE et al.

28 S.E. 317

95 Va. 275

CRAIG et al.

v.HOGE et al.

Supreme Court of Appeals of Virginia.

Nov. 18, 1897.

Courts—Concurrent Jurisdiction — Creditors' Suit—Reference Convening Creditors—Multiplicity of Suits—Priority of Liens—Excuse for Separate Suits.

1. As between two courts of concurrent jurisdiction, the one first acquiring jurisdiction should retain it, and dispose of the controversy; and, after notice of the pendency of the cause therein, the other court should refuse to assume jurisdiction during the pendency of the prior suit.

2. The circuit court of Augusta county and the hustings court of the city of Staunton have concurrent jurisdiction of suits to adjust priority of liens against an estate deeded in trust for creditors, and to divert to payment of certain creditors the share which by the deed would pass to other creditors.

3. Priority in acquiring jurisdiction of a cause of which two courts have concurrent jurisdiction is determined by the date of service of process.

4. Though a creditors' suit is an exception to the rule that, as between two courts with concurrent jurisdiction, the one first acquiring jurisdiction shall dispose of the whole controversy, and each creditor may sue regardless of the other creditors' suits, if a court in which one such suit is pending orders a reference convening the creditors, all proceedings in the other suits must be stayed.

5. A suit by creditors against the debtor and his trustee for creditors, not brought for the administration of the estate among the creditors generally, but to secure a lien on, and divert to payment of complainants' claims, the share which by the deed of trust would fall to other creditors, is not a creditors' suit, and hence not excepted from the rule that, as between courts of concurrent jurisdiction, the one first acquiring jurisdiction shall dispose of the whole controversy.

6. In a suit by creditors to secure a lien on, and divert to payment of their claims, the share which by the debtor's deed of trust for creditors would fall to other creditors, an order of reference not made for the benefit of all creditors generally, but limited to the special object of the bill, is not such a reference for the convening of creditors as will require a stay of proceedings in another suit to adjust the rights of creditors in the trust estate.

7. On an application by trustees for creditors, praying the court to take charge of and administer the trust estate, the court may, for the purpose of granting full relief to all creditors, and avoiding a multiplicity of suits, pass on the validity of any debts secured by the trust deed.

8. A trust deed for creditors is not invalidated as a whole by the invalidity of some of the debts secured, but will stand as to the valid portion of the debts.

9. Code, § 2460, providing that a creditor suing to set aside a transfer by his debtor shall have all the relief which he would be entitled toafter obtaining a judgment or decree for his claim, and giving him a lien from the date of his suit, does not entitle such creditor, on showing the invalidity of a debt secured by trust deed for creditors, to have' his debt substituted therefor, and his lien declared prior to the liens of other creditors included in the deed, whose liens attached when the deed was made.

10. The fact that creditors suing in a hustings court to obtain a lien on assets of an estate deeded in trust for creditors had not been formally made parties to a prior suit in the circuit court for the administration of the same estate, in which their claims could have been adjusted, and could not have been made parties without an order of court and an order of reference to convene creditors, all of which would have caused great delay, furnishes no excuse for the bringing of the separate suit; such a delay being preferable to creating a conflict between two courts of concurrent jurisdiction.

Appeal from hustings court of Staunton.

Bill by Hoge and Hutchinson against Craig and Bumgardner, trustees for the creditors of John S. McCorkle. Prom a decree of the hustings court of the city of Staunton, defendants appeal. Reversed.

Craig & Hackman and J. & J. L. Bumgardner, for appellants.

A. C. Braxton, for appellees.

RIELY, J. John S. McCorkle on April 28, 1894, conveyed by deed to William E. Craig and J. Lewis Bumgardner all his real and personal property, to secure, in four classes, his numerous creditors. There were prior liens on parts of the real estate so conveyed, some of which were created by deeds of trust, and others by the retention of the vendor's lien.

On May 5, 1894, the said trustees, Craig and Bumgardner, filed their bill in the circuit court of Augusta county against the trustees and beneficiaries in the prior deeds of trust, and the holders of the vendors' liens, for the purpose of having accurately ascertained, under the orders of the court, the liens binding the real estate, and the order of their priority. The bill alleged, as an additional reason for invoking the jurisdiction of the court, that, since the execution of the deed of trust to the complainants, large numbers of the debts secured therein had matured, and been paid by the indorsers thereon, so that it was necessary that it should be ascertained by a commissioner of the court to whom the debts were now payable. The bill concluded with the usual prayer for general relief. Process was duly executed on all the defendants, and the circuit court hence acquired jurisdiction both of the parties to the suit and of the trust subject, —the matter of the controversy.

William Patrick, trustee in two of the prior deeds of trust, subsequently, to wit, on June 22, 1894, advertised for sale the part of the real estate so conveyed to him; and thereupon Craig and Bumgardner, the complainants in the suit in the circuit court, upon a petition to the judge of that court, obtained, on July 18, 1894, an order restraining the said Patrick from selling as trustee the said real estate.

This was the standing of the cause on Oc tober 31, 1894, when Hoge and Hutchinson, creditors of John S. McCorkle, filed their bill in the hustings court of Staunton, on behalf of themselves and all other creditors who should come in and contribute to the costs and expenses of the suit, against Craig and Bumgardner, trustees, and John S. McCorkle and Mary J. McCorkle, his wife, In which they charged that the debts of Mary J. McCorkle, secured in the first and second classes of the deed of trust to Craig and Bumgardner, were voluntary and fraudulent, and were so secured for the purpose and with the intent of delaying, hindering, and defrauding the creditors of the grantor, and prayed that they be pronounced by the court to be null and void, and the complainants be declared to have, by virtue of their suit, a first lien on the moneys which Mary J. McCorkle would have been entitled to receive on account of her debts under the provisions of the deed of trust to Craig and Bumgardner, if her debts had been valid. At the time of the institution of this suit, neither Hoge and Hutchinson, nor their counsel, knew of the suit that had been brought by Craig and Bumgardner, trustees, in the circuit court of Augusta county.

On November 21, 1894, the hustings court of the city of Staunton, with full knowledge of the pendency of the suit In the circuit court, and against the protest of Craig and Bumgardner, trustees, who were defendants to the suit in the hustings court, and the complainants in the suit in the circuit court, entered a decree directing one of its commissioners to inquire and report what was the status of the cause in the circuit court; whether any of the claims secured in the first and second classes of the deed of trust executed to Craig and Bumgardner were without valuable consideration, or fraudulent; the amounts due to the complainants, and to the parties who had filed petitions in the suit, with their respective priorities; what dividends would be applicable, under the deed of trust to Craig and Bumgardner, to any debts secured in the first and second classes which should be found to be voluntary or fraudulent; and what would be a reasonable and proper fee to be allowed to the plaintiffs' attorney out of any fund that should be recovered in that cause for the plaintiffs and the petitioners.

On the same day, but a few hours later, the circuit court, which was then holding its first term since the suit brought in it by Craig and Bumgardner was matured, entered a decree referring the cause to one of its commissioners to take an account of all the real estate conveyed to Craig and Bumgardner, trustees, the liens thereon, the debts secured in the said deed, and of the transactions of the trustees, together with any special matter deemed by the commissioner proper, or required by any party in interest, to be stated. The court had directed on a previous day that such a decree be entered, but it was not prepared by counsel and presented to the court, to be entered on the order book, until that day.

The hustings court, upon the coming In ofthe report of its commissioner as to the status...