Doster v. Manistee Nat. Bank
| Decision Date | 13 January 1900 |
| Citation | 55 S.W. 137 |
| Parties | DOSTER v. MANISTEE NAT. BANK. |
| Court | Arkansas Supreme Court |
Action by J. W. Doster against the Manistee National Bank. From a judgment for defendant, plaintiff appeals. Affirmed.
Cockrill & Cockrill, for appellant. Dodge, Johnson, Carroll & Pemberton and D. H. Cantrell, for appellee.
This suit is between judgment creditors of George R. Brown to determine which of them has the superior right to certain lots in Little Rock. Appellant obtained judgment against Brown May 16, 1893, and had scire facias issued and served to revive same February 11, 1896, and judgment of revivor was rendered May 25, 1896. Appellee obtained its first judgment against Brown June 7, 1893, and the second May 10, 1895. Execution was issued on these October 29, 1895, and same was returned nulla bona. On the same day — October 29, 1895 — appellee filed a complaint for itself alone to uncover certain property, including the lots in controversy, alleging that same had been conveyed by Brown in fraud of creditors. On December 21, 1896, appellant filed his intervention in appellee's suit, setting up his judgment lien, alleging that he was willing to contribute to the expenses of the action, that Brown was insolvent, and that an execution against him would be of no avail, and asking to be allowed to share in the proceeds of the creditors' bill filed by appellee. Appellee's answer to the intervention of appellant alleged a specific lien on the property by reason of the complaint filed by it, and asked that the rights of appellant under his judgment be subordinated to its lien. At the time of the filing of appellant's intervention appellee agreed with him that the assistance of his attorney in the prosecution of the creditors' suit would be waived, and that in the contest between them it would be considered as though appellant had rendered all the assistance that the law would require. Appellant filed a written assumption of his share of the costs. It was understood that all controversy between appellant and appellee as to their respective rights in the proceeds, if any, of the creditors' suit against Brown and others, should be postponed until that issue was settled. No execution was issued by appellant until long after the present suit had been brought and appellant's intervention had been filed. The decree on the original complaint and answer subjected the lots in controversy to the payment of Brown's debt. Of these lots some were conveyed before and some after the rendition of the judgments. The appellant contends that, as senior judgment creditor, he is entitled to have applied to the satisfaction of his judgment the entire proceeds from any sale that may be had of the lots which were fraudulently conveyed prior to the rendition of the judgment of either party. He grounds his contention upon the following sections of the Digest (Sand. & H.):
Appellant also relies upon the following decisions of this court: Ringgold v. Waggoner, 14 Ark. 69; Apperson v. Ford, 23 Ark. 746-759; Bennett v. Hutson, 33 Ark. 762; Hershy v. Latham, 46 Ark. 542; Wormser v. Bank 49 Ark. 117, 4 S. W. 198; Cohn v. Hoffman, 50 Ark. 108, 6 S. W. 511; Stix v. Chaytor, 55 Ark. 116-123, 17 S. W. 707; McNeill v. Carter, 57 Ark. 579, 22 S. W. 94.
The statute gives a lien from the day of the rendition of the judgment upon the real estate owned by the defendant, or whereof he, or any person for his use, is seised in law or equity. Where a debtor has fraudulently conveyed his real estate before any judgment is rendered against him, or has procured same to be fraudulently conveyed to another, he is not in any sense the owner of such real estate, nor is he thereafter seised in law or equity of such real estate, nor is the grantee seised for his use. The authorities generally recognize the fact that a deed to land, although fraudulently conveyed, carries the title of the grantor. The deed is good inter partes. Meux v. Anthony, 11 Ark. 411; Millington v. Hill, 47 Ark. 309, 1 S. W. 547; Bell v. Wilson, 52 Ark. 171, 12 S. W. 328, 5 L. R. A. 370; Bump, Fraud. Conv. §§ 432, 433; Wait, Fraud. Conv. §§ 395-399; 8 Am. & Eng. Enc. Law (1st Ed.) p. 771; and authorities cited by these. The fraudulent grantee gets a title that he can alienate, and by so doing confer a perfect title upon his alienee, if the alienee be an innocent purchaser for value. This is the doctrine of our own court and of nearly all the states. Ringgold v. Waggoner, 14 Ark. 69; Stix v. Chaytor, 55 Ark. 116-123, 17 S. W. 707; Wait, Fraud. Conv. § 386; Bump, Fraud. Conv. § 492, and numerous authorities cited. Of course, this would not be possible if the conveyance of the fraudulent grantor did not carry the title to the fraudulent grantee. It follows, then, logically and necessarily, that under this statute alone the judgment creditor has no lien upon lands fraudulently conveyed by the debtor prior to the rendition of his judgment. This construction certainly conforms to the plain and unequivocal language of the act. Why should we so change and extend it as to make it apply to lands which the defendant, at the time of the rendition of the judgment, did not own, and of which neither he, nor any one for him, was seised in law or equity. To so construe it would be judicial legislation, and that, too, with unjust results; because, "when the law gives priority, equity will follow it" (Senter v. Williams, 61 Ark. 189, 32 S. W. 490); and in passing upon the rights of judgment creditors to lands fraudulently conveyed prior to the rendition of the judgments the effect would be to ignore that old and excellent maxim of equity, "Vigilantibus non dormientibus æquitas subvenit," and to declare in favor of those merely prior in time, although ever so unequal in diligence. Such a doctrine would encourage fraudulent judgments. It would impose oftentimes upon the junior judgment creditor the expensive, but still thankless and bootless, task of uncovering assets, which, by his diligence, he had discovered, for the benefit of another, or else the disagreeable experience of seeing the fraudulent debtor concealing and appropriating to his own use assets which justly belonged to his creditors. But, while the language of the statute itself is plainly against a construction which would lead to such inequitable consequences, appellant, to sustain his contention for a lien, would have us construe section 3472, Sand. & H. Dig., as in pari materia, and to hold that his judgment was a lien on Brown's estate, just as though the legal title had been all the time in Brown. The section referred to is as follows: "Every conveyance * * * of any estate or interest in lands made or contrived with the intent to hinder, delay or defraud creditors or other persons of their lawful actions, damages, forfeitures, debts or demands, as against creditors and purchasers prior and subsequent shall be void." If the latter statute is to be taken as in pari materia with the statute under consideration as between judgment creditors and their debtors, still that cannot aid appellant. Ever since the passage of 13 Eliz., after which our statute as to fraudulent conveyances was modeled, the word "void," as therein used, has generally been held to mean "voidable." Mew, Eng. Case Law Dig. 338, and authorities collected; Pom. Cont. § 282, and authorities cited; Bump, Fraud. Conv. § 451, and authorities cited in note 1. As we have seen supra, such is the view of our own court, and this is undoubtedly correct, for every fraudulent conveyance carries the legal title, subject only to defeasance by creditors and purchasers. Such conveyance is not void per se, even as between the debtor and creditor; must less between creditor and creditor. Even as between the debtor and creditor, if the creditor condones the fraud, and takes no steps to avoid the conveyance, it stands forever as a divestiture of the title of the debtor. Nor will the mere rendition of a judgment in favor of the creditor against the debtor avoid the latter's fraudulent conveyance. The judgment simply fixes the amount of the debtor's liability, for which is subject the property he actually owns, or of which he, or some one for him, is seised and possessed. Nor do courts of law annul and set aside fraudulent conveyances. Some process, after judgment at law is rendered, is necessary in order to fix and secure a lien upon property that has been fraudulently conveyed, and to uncover it for the judgment creditor. In some jurisdictions the creditor has choice of three remedies: "First, he may sell the debtor's land upon execution, and leave the purchaser to contest the validity of the defendant's title in an action of ejectment; or, secondly, he may bring an action in equity to remove the fraudulent obstruction to the enforcement of his lien by execution, and await the result of the action before selling the property; or, thirdly, he may, on return of an execution unsatisfied, bring an action in the nature of a creditors' bill to have the conveyance adjudged fraudulent and void as to his judgment, and the land sold by a receiver or other officer of the court, and the proceeds applied to the satisfaction of the judgment, as, in the case of...
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