Jackson v. Holbrook
| Decision Date | 28 April 1887 |
| Parties | JOEL G. JACKSON and Wife <I>vs.</I> EMILY R. HOLBROOK. |
| Court | Minnesota Supreme Court |
On November 21, 1873, one R. J. Mendenhall, being owner of the premises, conveyed them to one Crump, the deed being recorded December 8, 1873. Afterwards Mendenhall procured from Crump a power of attorney to sell and convey the property, and, on October 28, 1874, conveyed it, as such attorney, to Henry T. Welles and Thomas Lowry. (The complaint alleges, and the answer denies, that Mendenhall, when he conveyed to Crump, was insolvent; that the conveyance was without consideration, and made to defraud creditors; that Mendenhall procured the power of attorney from Crump in order to control the land in his own interest; and that the conveyance to Welles and Lowry was made without consideration, and for the sole use of Mendenhall, and for the purpose of hindering and delaying his creditors.)
At the date of the conveyance to Crump there were various judgments docketed against Mendenhall, among them one in favor of Solomon Gray, docketed January 2, 1874, and another in favor of Van Valkenburg & Co., docketed January 21, 1874. In August, 1876, execution issued on the latter judgment, under which, on September 28, 1876, the lots were sold to one Byron M. Smith, whose certificate was recorded January 27, 1879. No redemption was made from this sale, and on August 27, 1881, Smith conveyed all his right, title, and interest to E. M. Wilson by deed recorded August 29, 1881.
After the conveyance from Mendenhall to Crump, and during the year 1875, seven judgments were recovered and docketed against Mendenhall. On February 7, 1876, these seven judgment creditors brought suit in Hennepin county against Mendenhall, Crump, Welles, and Lowry, to have the deed from Mendenhall and that from Crump set aside as fraudulent as to such judgment creditors. This suit was tried, and on May 25, 1877, a decree was entered adjudging the deeds to be void as against the plaintiffs' judgments. Executions were thereupon issued on these judgments, under which, on July 14, 1877, the lots were sold to E. M. Wilson, whose certificate was recorded August 3, 1877. No redemption was made from this sale.
On June 22, 1878, Wilson conveyed the lots by quitclaim deed to the defendant, and on September 2, 1881, after his acquisition of the title acquired by Smith by his purchase at the sale under the Van Valkenburg judgment, Wilson executed and delivered to defendant a second quitclaim deed. The first of these deeds was recorded July 16, 1878, and the second September 20, 1881. On September 14, 1881, and April 1, 1882, defendant executed to plaintiffs the deeds containing the covenants in question.
After the conveyances to plaintiffs, and on October 24, 1883, execution issued on the Gray judgment, under which, on December 22, 1883, the lots were sold to one Edwin C. Whitney; and on December 22, 1884, in order to protect their title, the plaintiffs redeemed from this sale, paying $1,002.80, the amount required by law to effect a redemption, which sum, with interest from the date of payment, the plaintiffs seek to recover. (The sale under the Gray judgment, and plaintiffs' redemption, were alleged in the complaint, and put in issue by the answer.)
At the trial before Young, J., and a jury, the plaintiffs proved the sale under the Gray judgment, and their redemption therefrom, and also the proceedings in the suit against Mendenhall, Welles, and Lowry, in which Mendenhall's and Crump's deeds were adjudged void as to the judgment creditors who were plaintiffs in that suit, and also the sale made July 14, 1877, to Wilson, under the executions on the judgments of such plaintiffs, and the issuance and record of the sheriff's certificate.
The plaintiffs then called Mendenhall as a witness, and asked him whether, at the time he conveyed to Crump, he owed Gray the debt on which the latter, on January 2, 1874, recovered his judgment. This was objected to as incompetent and immaterial; the objection was sustained, and plaintiffs excepted.
The plaintiffs then offered to prove by the witness that on November 21, 1873, when he conveyed to Crump, he was insolvent, and was indebted to Gray in the amount alleged in the complaint, and for which the latter recovered his judgment; and that the deeds to and from Crump were made without consideration, and for the purpose of hindering and defrauding Gray and others of Mendenhall's creditors. The evidence offered was excluded, on defendant's objection that it was incompetent, irrelevant, and immaterial, and the plaintiffs excepted.
The plaintiffs then offered to prove that Wilson's purchase at the execution sale of August 14, 1877, was made at defendant's request and for her benefit. This also was excluded, on the same objection, the plaintiffs excepting.
The plaintiffs then rested, and, on defendant's motion, the court dismissed the action, the plaintiffs excepting. They appeal from an order refusing a new trial.
Torrance & Fletcher, for appellants.
Woods, Hahn & Kingman, for respondent.
Under the statutes of this state, the holder of a junior judgment lien acquires no preference over a senior judgment lien upon the same real estate, by virtue of prior proceedings to execute his judgment; and, as to all persons claiming under a judgment debtor subsequent to the lien of the senior judgment creditor, the rights of the latter are superior, and cannot be divested by any proceedings of a junior lienholder, claiming under the same debtor, to which the senior creditor is not a party. The whole policy of the statutes, in respect to the preferences of prior judgment liens against real estate, would be subverted, if a junior judgment creditor could acquire a preference merely by virtue of superior diligence in taking proceedings to enforce his lien; nor do we understand that the law recognizes any different rule, as between judgment creditors, where the judgment debtor has made prior fraudulent conveyances which are void alike as respects both. The judgments in such cases are liens at law, and, as to real estate, necessarily take precedence according to the date of the record. Wadsworth v. Schisselbauer, 32 Minn. 84, (19 N. W. Rep. 390.)
The judgment creditor may rest exclusively upon his rights and remedies at law, without invoking the aid of a court of equity. Tupper v. Thompson, 26 Minn. 385, (4 N. W. Rep. 621;) Campbell v. Jones, 25 Minn. 155; Kumler v. Ferguson, 22 Minn. 117. The procedure in this class of cases is very clearly and satisfactorily discussed by Comstock, J., in Chautauqua County Bank v. Risley, 19 N. Y. 369, 375, who says, after considering the equitable remedy as between creditors: S. C. 75 Am. Dec. 347, 360, and notes; and see White's Bank v. Farthing, 101 N. Y. 344, (4 N. E. Rep. 734;) O'Brien v. Browning, 49 How. Pr. 109; Morss v. Purvis, 5 Thomp. & C. (N. Y. S. C.) 140, 141, note; Shand v. Hanley, 71 N. Y. 319, 324; Bergen v. Snedeker, 8 Abb. N. Cas. 50, 58; Union Nat. Bank v. Warner, 12 Hun, 306; Bergen v. Carman, 79 N. Y. 146, 153.
A judgment creditor seeking relief against prior fraudulent conveyances of land has the choice of three remedies. He may sell the debtor's land upon execution issued on his judgment, 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 the return of an execution unsatisfied, bring an action in the nature of a creditor's bill, to have the conveyance adjudged fraudulent and void as to his judgment, and the lands 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 equitable interests the debtor's assets are reached and applied. Erickson v. Quinn, 15 Abb. Pr. (N. S.) 166.
In the first two classes, the creditor enforces his judgment at law, and the sale upon execution must necessarily be subject to prior statutory liens. The purchaser in such cases succeeds to such title only as the debtor had, treating the debtor's fraudulent transfer as void. Freeman on Executions, § 447. As to cases falling within the second class, the object of the equitable suit is to make the legal remedy more effective. In such case, no trust is created in respect to the property, but the creditor falls back upon his legal remedy, and, instead of bringing his equitable suit before the sale, he may, if necessary, maintain it after sale in the form of an action to remove a cloud...
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