First State Bank of Clermont v. Fitch

• Decision Date: 06 May 1932
• Citation: 105 Fla. 435,141 So. 299
• Parties: FIRST STATE BANK OF CLERMONT v. FITCH et ux.
• Court: Florida Supreme Court

141 So. 299

105 Fla. 435

FIRST STATE BANK OF CLERMONT v. FITCH et ux.

Florida Supreme Court

May 6, 1932

Commissioners' Decision.

Suit by the First State Bank of Clermont against F. H. Fitch and wife. From an order dismissing the bill of complaint complainant appeals.

Reversed. Appeal from Circuit Court, Lake County; J. C B. Koonce, judge.

COUNSEL

T. C Cork, of Clermont, for appellant.

OPINION

ANDREWS C.

This cause is here upon appeal from an order of the circuit court of Lake county sustaining a demurrer to and dismissing amended bill of complaint filed by appellant, who was complainant below, which had for its purpose the setting aside of an alleged fraudulent conveyance.

Briefly stated, the amended bill alleges that defendant F. H. Fitch on November 6, 1925, gave to the Clermont Hills & Lake Company his promissory note in the sum of $1,500, payable in one year, and that before maturity and for valuable consideration the note was indorsed in due course to complainant, and that the maker, F. H. Fitch, stated to complainant that it was a valid obligation and would be paid at maturity; that at the time of making said note and the indorsement of it to complainant the defendant F. H. Fitch was the owner and holder as mortgagee of a certain mortgage covering three certain lots in the town of Clermont, Lake county, Fla., executed by one J. W. Lawhead, to secure the deferred portion of the purchase price of said property which had theretofore belonged to defendant F. H. Fitch and sold to said Lawhead; that Lawhead failed to pay said mortgage when due on November 6, 1926, and thereafter at his (Fitch's) own instance, an agreement was made with Lawhead whereby Fitch delivered to him a satisfaction of the mortgage in consideration of a quitclaim deed to defendant Emma S. Fitch, wife of F. H. Fitch, the mortgagee; that at the time of said transaction the said Fitch was indebted to complainant in the amount stated in the note then past due; and that Fitch owned no other property in this state. The bill further alleges that the only consideration for the said deed made by Lawhead to Mrs. Fitch was the satisfaction of the mortgage executed by F. H. Fitch, which was made for the purpose of hindering, delaying, and defrauding his creditors including complainant; that while the record title is in the name of the said Emma S. Fitch, the beneficial interest in fact rests in F. H. Fitch, and thus a resulting trust as to his creditors was thereby effected by the conveyance to the wife, Emma S. Fitch.

The amended bill further alleges that:

'Your orator further shows unto the Court that the said note was not paid at maturity and the same is long past due and has not been paid; that your orator has attempted to enforce the collection thereof by bringing a suit in the court of law in the Sixteenth Judicial Circuity in and for Lake County, State of Florida, and attaching the property of the said F. H. Fitch hereinafter described, but that your orator has been unable by such proceeding to enforce the collection of said note for the reason that the interest of the said F. H. Fitch in said property is an equitable interest and not a legal interest, and not subject to attachment; and that the said F. H. Fitch is a non-resident of the State of Florida, and that your orator is unable to obtain any valid personal judgment, or to enforce the collection of said note in a suit at law in the courts of this state.'

The bill prays that the deed of conveyance to the defendant Emma. S. Fitch be adjudged and decreed by this court to be subject and subservient to the debt of complainant against the said F. H. Fitch, and that the property thereby conveyed be made by decree of this court amenable to the payment of said indebtedness.

To the above amended bill defendants duly appeared by attorney, and filed separate demurrers, and for grounds, among others, said demurrers in substance state that it is not made to appear by the bill of complaint that complainant has properly instituted a suit in a court of law for the collection of its claim, nor that any valid judgment has been entered against defendant F. H. Fitch on said debt in any court of law in this state, and that complainant has not stated such a cause as entitles it to any relief in a court of equity.

In the recent case of Bean et al. v. First Nat. Bank of Clearwater (Fla.) 135 So. 803, it was held that:

'Where prior to the institution of suit by way of a creditors' bill complainants, as plaintiffs, in a law action had instituted suit by attachment against the debtor defendant, who was a non-resident, and such suit in attachment had resulted in judgment in favor of the plaintiff prior to the final decree in the suit instituted by creditor's bill, the conditions precedent to the maintaining of a suit by creditors' bill as provided by section 3229, Rev. Gen. St. 1920, section 5035, Comp. Gen. Laws 1927, have been met.'

This court had formerly held, in the similar suit of Cornwell v. Williford, 73 Fla. 305, 73 So. 795, that:

'In a case commenced by attachment in which the defendant resides out of the state, personal service upon the defendant of notice of the attachment under the provisions of section 2122 of the General Statutes of Florida 1906, does not give the court jurisdiction of the person of the defendant.' (Italics ours.)

It seems, therefore, that in a suit commenced by attachment, a court may obtain 'jurisdiction of the res' by personal service of notice of such attachment on the defendant 'in another state' under section 3423, Rev. Gen. Stat. 1920 (section 5276, Compiled General Laws 1927), and final judgment may be entered in such attachment suit even though the service of notice does not give the court 'jurisdiction of the person' of defendant, such as would permit the entry of a personal judgment in a suit on a note.

The rule is well established in this state that where property is purchased by a debtor, and the title is taken in the name of another to avoid creditors, the deed to such grantee is subject to be set aside by the creditors. Hammell v. Harrington, 92 Fla. 87, 109 So. 320; Mayer v. Wilkins, 37 Fla. 244, 19 So. 632.

This rule appears to apply more particularly to cases where the title to property is taken in the name of the debtor's wife. In fact, it has been held by this court that where property is purchased and paid for by the husband and a 'deed is taken in the name of the wife, such acts coupled with an existing indebtedness of the husband make a prima facie case of fraud'; and, 'in such case the creditor can follow the funds of the debtor and subject the property in the hands of the wife or her legal representatives, unless the presumption of fraud is negatived by the condition of the debtor and his circumstances at the time, or other rebutting evidence.' Alston et al. v. Rowles, 13 Fla. 117; Roper v. Hackney, 15 Fla. 323; Florida Loan & Trust Co. v. Crabb, 45 Fla. 306, 33 So. 523.

In the case of Hummell v. Harrington, supra, this court held that where a debtor's wife purchased land in her name 'during her husband's indebtedness,' in the absence of clear proof that purchase was with her separate funds, it is presumed that it was made through means furnished by her husband.

See, also, Ostend Realty Co. v. Biscayne Realty & Ins. Co., 99 Fla. 1221, 128 So. 643; Weaver-Loughridge Lumber Co. v. Kirkland, 99 Fla. 427, 126 So. 773; Guggenheimer & Co. v. Davidson, 74 Fla. 485, 77 So. 266.

This court has held, however, that real property, even if held by the wife under secret trust for the husband, is not subject to levy and sale under an execution 'at law' issued upon a judgment against the husband, but it is an equitable asset, and can be reached only by proper proceedings in a court of equity. Blackshear Mfg. Co. v. McClenny, 75 Fla. 308, 78 So. 269; Guggenheimer & Co. v. Davidson, 74 Fla. 485, 77 So. 266.

It is seen, therefore, that a judgment in an attachment suit at law would not reach the property in the instant case standing in the name of the wife.

Directing our attention now to what appears to be a new proposition in equity in this state, we find there are some exceptions to the general rule that a creditor must first obtain the entry of a judgment at law on his debt or claim before a decree may be granted to set aside a fraudulent conveyance which has been effected by the debtor.

In 27 C.J. 731, the rule is...