Doster v. Manistee National Bank

• Citation: 55 S.W. 137,67 Ark. 325
• Parties: DOSTER v. MANISTEE NATIONAL BANK
• Decision Date: 13 January 1900
• Court: Arkansas Supreme Court

55 S.W. 137

67 Ark. 325

DOSTER v. MANISTEE NATIONAL BANK

Supreme Court of Arkansas

January 13, 1900

Appeal from Pulaski Chancery Court, GEO. W. WILLIAMS, Special Chancellor.

Decree affirmed.

Cockrill & Cockrill, for appellant.

Appellant did all that the law required of him to assist appellee in its suit; hence he is entitled to share in the proceeds thereof. 137 Ind. 282, 284. Cf. 61 Ark. 199. The rule in this state is that the prior judgment creditor has a lien on property conveyed in fraud of creditors, paramount to that acquired by a subsequent judgment creditor who uncovers the property. 14 Ark. 69; 55 Ark. 116, 123; 57 Ark. 579; 49 Ark 117; 50 Ark. 108; 33 Ark. 762; 23 Ark. 746, 759; 46 Ark. 542. Such conveyances are, in respect to judgment liens, treated as though they had never been made, and the title is considered as still in the debtor. Fr. Judg., § 350; Bl Judg., § 423; Fr. Executions, § 207. Appellant's priority being fixed by law, equity will enforce it. 61 Ark. 199; 3 How. Pr. 185; 19 N.Y. 369; 96 Mo 216; 36 Minn. 494; 67 Pa.St. 434. To the point that the scire facias kept alive the lien of appellant judgment, see Sand. & H. Dig., § 4214; 13 Ark. 543, 557; 15 Ark. 73, 88; 45 Ark. 304; 19 Ark. 297. It was unnecessary for appellant to issue an execution which would have been fruitless. 11 Ark 411, 418; 27 Ark. 637, 641; 56 Ark. 476, 481. Mere delay to sue out process on a judgment does not affect the lien. 18 Ark. 142, 156.

Dodge & Johnson, Carroll & Pemberton, and D. H. Cantrell, for appellee.

Priority in time is enforced only when the equities are equal, and does not apply to a case where the prior judgment creditor has, by negligence or laches sunk his equity below that of a more diligent junior creditor. 31 Ark. 600. This latter took place in the case of Stix v. Chaytor, 55 Ark. 116. The other cases cited by appellant do not involve any contest between judgment creditors, and are not in point. If, as in 55 Ark. 166, supra, the prior judgment creditor's claim could be sunk by laches, below the equity of an innocent purchaser, it should be made to yield to that of a more diligent but junior creditor. 29 Ill. 27; 51 Ark. 418; 33 Ark. 328; Bl. Judge. § 455.

WOOD J. BATTLE and RIDDICK, JJ., dissents.

OPINION

WOOD, J.

This suit is between judgment creditors of Geo. 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 creditor's 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 creditor's suit against Brown et al. 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.):

"4204. A judgment in the supreme, chancery or circuit court of this state or of the district or circuit court of the United States shall be a lien, on the real estate owned by the defendant in the county in which the judgment was rendered from the date of its rendition."

"3049. The following described property shall be liable to be seized and sold under any execution upon any judgment, order or decree of court of record: * * *

Sixth. All real estate, whether patented or not, whereof the defendant, or any person for his use, was seized, in law or equity on the day of rendition of the judgment, order or decree whereon execution issued, or at any time thereafter."

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. Merchants' National Bank, 49 Ark. 117; 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 seized 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 seized in law or equity of such real estate, nor is the grantee seized 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. 301, 1 S.W. 547; Bell v. Wilson, 52 Ark. 171, 12 S.W. 328; Bump, Fr. Conv., §§ 432, 433; Wait, Fr. Conv., §§ 395-99; 8 Am. & Eng. Enc. Law, (1 Ed.), p. 771, and authorities cited by these.

The fraudulent, grantee gets a title that he can alienate, and by so doing confers 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, Fr. Con., § 386; Bump, Fr. Con., § 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 seized in law or equity? To so construe it would be judicial legislation, and that to 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, aequitas 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 of Sandels & Hill's Digest 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 the 13th of Elizabeth, after which our statute as to fraudulent conveyances...