In re Lowe

• Decision Date: 01 January 1884
• Citation: 19 F. 589
• Parties: In re LOWE, Bankrupt.
• Court: U.S. District Court — District of Indiana

19 F. 589

In re LOWE, Bankrupt.

United States District Court, D. Indiana.

1884

Taylor Rand & Taylor, for themselves.

McMaster & Boice, for assignee.

WOODS J.

The facts shown by the report of the master are to the effect that on the second day of January, 1877, Taylor, Rand &amp Taylor recovered, in the superior court of Marion county, a judgment against Nahum H. Lowe. Lowe owned real estate in Marion county which, before the rendition of that judgment he had conveyed to another with intent to cheat his creditors, the grantee not being a goodfaith purchaser. After the rendition of this judgment Lowe was adjudged a bankrupt. The assignee afterwards obtained a decree against the grantee in said conveyance, declaring the same void; and Taylor, Rand & Taylor having presented a claim that their judgment constituted a lien upon the property from the date of rendition, the court ordered that the assignee sell the property and report the proceeds, and that all liens be transferred to the fund. Upon these facts the master reports that Taylor, Rand & Taylor have a lien as claimed which should be first satisfied. The assignee insists that this is not so; that the judgment did not constitute a lien so long as the title remained in the fraudulent grantee; and that the decree setting aside that sale, rendered at the suit of the assignee, inured to the benefit of the estate--that is to say, to the benefit of all creditors alike. This conclusion is based mainly upon the proposition that the assignee having been first to institute suit to set the fraudulent conveyance aside, became entitled, by virtue of his superior diligence, to preference over a judgment creditor who had failed to bring any such suit.

It seems clear, under the Indiana Statutes, (Rev. St. 1881, Secs. 608, 752,) that the judgment of Taylor, Rand & Taylor became at once, upon rendition, a lien upon the real estate in question. Section 608 declares that such judgments 'shall be a lien upon real estate and chattels real, liable to execution;' and by section 752 it is enacted that 'lands fraudulently conveyed with intent to delay or defraud creditors' shall be liable to all judgments and attachments, and to be sold on execution against the debtor. It has been determined, too, that the sale upon execution may precede any suit or proceedings to set aside or annul the fraudulent conveyance. Frakes v. Brown, 2 Blackf. 295. It is not deemed necessary now to determine whether or not there may be a race of diligence between the owners of different judgments in such a case, or whether or not, when the conveyance has been set aside at the suit of any of them, the lien of each judgment must be deemed to have attached at the date of its rendition, as if the fraudulent conveyance had never been made. The latter would seem to be the logical conclusion. The complaint to set the conveyance aside must aver the facts which show that the property is subject to the lien of judgments already rendered against the fraudulent grantor, and the complainant cannot well disclaim or escape the result; certainly not on the pretense that he had, in ignorance of the facts or of the legal consequence, put forth effort or incurred costs which should not be turned to the benefit of another. Indeed, the very doctrine of superior diligence would seem to lead to the same conclusion, when properly applied.

Under the statute a judgment against the fraudulent grantor is made a lien, and consequently he who obtains the first judgment is first in...