Dee v. Foster

• Decision Date: 09 January 1912
• Citation: 21 Haw. 1
• Parties: LAWRENCE H. DEE v. ELIZABETH FOSTER.
• Court: Hawaii Supreme Court

21 Haw. 1

LAWRENCE H. DEE v. ELIZABETH FOSTER.

Supreme Court of Territory of Hawai'i.

January 9, 1912

Argued January 4, 1912.

RESERVED QUESTION FROM CIRCUIT COURT, FIRST CIRCUIT.

Syllabus by the Court

The statute of 13th Elizabeth relating to conveyances made in fraud of creditors was in affirmance of the principles of the common law and is a part of the common law of this Territory.

A deed void because made with intent to defraud a creditor is, as to the defrauded creditor, void at law as well as in equity.

The purchaser at an execution sale of a debtor's interest in land acquires the legal title and may, in an action of ejectment against one in possession claiming under a deed from the debtor, attack the validity of the deed on the ground that it was made with intent to defeat the judgment and defraud the judgment creditor.

W W. Thayer for plaintiff.

R B. Anderson and L. P. Scott (Kinney Prosser, Anderson & Marx on the brief) for defendant.

ROBERTSON C.J., DE BOLT, J., AND CIRCUIT JUDGE COOPER IN PLACE OF PERRY, J.

OPINION

ROBERTSON C.J.

This is an action of ejectment for the recovery of certain land at Makolelau, Molokai. The case was being tried in the court below, jury-waived, when the court reserved for the consideration of this court the question hereinafter stated.

It is made to appear that on April 24, 1900, the plaintiff in this case and others, stockholders in the Kamalo Sugar Company, Limited, acting for the corporation upon the refusal of the directors of the company to take action, commenced a suit in equity against Frank H. Foster, the husband of the defendant in this case, and two others, asking for an accounting and other relief, which suit resulted in the entry on June 9, 1902, of a final decree against the defendants requiring them, among other things, to pay into court for the benefit of the said corporation the sum of $34, 820. Execution against the property of the defendants was issued upon that decree on July 7, 1902, and pursuant thereto the sheriff sold the land in question as the property of Frank H. Foster. The plaintiff herein purchased the land at the execution sale and now claims under the deed executed and delivered to him by the sheriff in the name of Frank H. Foster. The defendant put in evidence two deeds purporting to convey the land in dispute, one from Frank H. Foster, in which the defendant joined, to one Harry Armitage, dated July 7, 1900, and the other from Armitage to the defendant, dated the same day. The deeds were duly recorded and each expressed a consideration of one dollar. The plaintiff, attacking the validity of those deeds, offered to show the value of the land in dispute, and that at the time Foster made the deed to Armitage he had not other property sufficient to satisfy the decree which was subsequently rendered against him in the then pending suit.

The trial court thereupon reserved to this court the question, " Can the deeds from Frank H. Foster to Harry Armitage and from Harry Armitage to the defendant above referred to be attacked in this action by the plaintiff on the ground that the same were executed and delivered in fraud of creditors?"

In most, if not all, of the states express statutes govern conveyances made in fraud of creditors, but we have no such statute in this Territory. In England, the statute of 13th Elizabeth declared to be " clearly and utterly void" as against the person defrauded, or his representatives, all conveyances made with the intent to " delay, hinder, or defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, " etc.

It has been authoritatively held that that statute was declaratory of the common law and in affirmance of its principles. Cadogan v. Kennett, 2 Cowp. 432, 98 Eng. Rep. (reprint) 1171; Sumner v. Hicks, 2 Black 532; Sands v. Codwise, 4 Johns. 536, 596; Gardner v. Cole, 21 Ia. 205, 210.

The rule that a conveyance made with the intent to defeat a judgment is void as against the judgment creditor was regarded as law in this jurisdiction by Chief Justice Lee as long ago as 1847. Wood v. Stark, 1 Haw. 8. And in Cockett v. Hubbard, 1 Haw. 101, the learned chief justice said: " Fraud is so offensive to every principle of law, that where a conveyance is tainted with it, the deed cannot be permitted to stand. Where a man purchases property with a view of defeating the claims of creditors, the sale is void; for the purpose is iniquitous. The law will not allow one man to assist another in cheating a third."

Had the principle not been previously recognized we would not hesitate to hold that it was incorporated into our law by the provision of the Judiciary Act of 1892 which has become section 1 of the Revised Laws.

In some of the states the statute of Elizabeth has been held to be a part of the common law of the State. Robinson v. Holt, 39 N.H. 557; Tobie Mfg. Co . v. Waldron, 75 Me. 472. It is a part of the common law of this Territory.

We cannot give our assent to the contention of counsel for the defendant that, because in this Territory the jurisdictional distinction between law and equity is maintained, relief against conveyances made in fraud of creditors can be had only on the equity side of the court. Such fraudulent transfers are void at law as well as in equity. Clements v. Moore, 6 Wall. 299, 312; Moore v. Williamson, 44 N. J. E. 496. " The statute of Elizabeth applies, so far as its language, our only guide, indicates, to all cases and to all courts; the debtor remains the owner." 2 Bigelow on Fraud 395.

Although as between the parties to such a conveyance, the title will pass, yet as against a defrauded creditor the transfer is void; the debtor remains the owner; a sheriff's deed of the debtor's interest will pass the legal title to the purchaser;...