May v. State National Bank

• Decision Date: 17 November 1894
• Citation: 28 S.W. 431,59 Ark. 614
• Parties: MAY v. STATE NATIONAL BANK
• Court: Arkansas Supreme Court

28 S.W. 431

59 Ark. 614

MAY v. STATE NATIONAL BANK

Supreme Court of Arkansas

November 17, 1894

Appeal from Jefferson Circuit Court in Chancery JOHN M. ELLIOTT Judge.

STATEMENT BY THE COURT.

This action was brought in the Jefferson circuit court by the appellees, the State National Bank and other creditors of C M. Neel, to set aside two conveyances made by said Neel--one made on the 26th day of November, 1884, conveying to his nephew, C. M. Neel, Jr., a plantation in Jefferson county known as the "Lake Dick Place"; the other made on the 1st day of October, 1885, conveying to his sister, Mrs A. P. Burks, his plantation in said county known as the "Astor Point Place." It was alleged that both of said deeds were without consideration, and made by said C. M Neel in contemplation of insolvency, and with the intention to cheat, hinder and delay his creditors, both prior and subsequent. C. M. Neel became insolvent, and failed about the 15th of November, 1886. The debts of the creditors who joined in this suit were created subsequent to the conveyances in question, with the exception of the debt due Wiley Jones that was in existence at the time the two conveyances were made. Before bringing this suit, each of the creditors had brought actions at law in the same court against Neel, and had levied writs of attachments on the lands in controversy. The attachments were sustained, and judgments rendered for the amounts claimed by them respectively. After the writs of the plaintiffs had been levied, A. H. May, the appellant, who was also a creditor of C. M. Neel, brought suit against him and had a writ of attachment levied on the land in controversy, or a portion thereof. He afterwards removed the case to the United States court, recovered a judgment, and obtained a decree ordering land sold to pay his debts, and at said sale became the purchaser. He was made a party defendant with Neel in this action, and plaintiffs prayed that he be decreed to hold the land subject to their liens, and if their debts be not paid, that the land be sold.

May answered, denying that the conveyances were fraudulent as to plaintiffs, and denying that he held the land subject to their liens. On petition of May this case was also removed to the United States circuit court. Afterwards that court held that the removal was improper, and remanded the cause to the Jefferson circuit court. It was then heard, and a decree rendered in favor of the plaintiffs, from which May appealed to this court.

U. M. Rose and G. B. Rose for appellant.

1. The court below had no jurisdiction, because the case was properly transferred to the United States circuit court, and should not have been remanded. It is true that the amount in controversy was understated in the petition for removal; but that was unimportant, since the true amount was shown by the record. 16 Pet. 97; Dillon on Removals, sec. 70; Foster, Fed. Pr. sec. 385. The amount in controversy is usually stated in the petition for removal; but, as it is not required by the statute, such a statement is merely surplusage. The petition in this case was filed on the 6th day of July, 1888, and hence the proceeding is governed by the act of congress of March 3, 1875. 1 Supp. Rev. St. U. S. p. 613, sec. 3. The petition seems to have been copied from the form prepared by Mr. Foster, whose work on Federal Practice stands deservedly high. Foster, Fed. Pr. 644. See also 42 F. 694. The cause having been improperly remanded, the subsequent proceedings in the State court were void. 103 U.S. 493; 102 id. 136; 100 id. 316; 104 id. 14; 31 F. 505. The final decision remains with the Federal courts, whose jurisdiction may be invoked, in cases of this kind, by writ of error. 19 Wall. 223; 118 U.S. 109. But no appeal would lie from the order of the Federal court remanding the cause. 24 Stat. at Large, 553.

2. The evidence fails to show that, at the date of the deeds, Neel was insolvent. The case must be tried on its own merits, without regard to the former suit by Richardson & May, in so far as the charges of fraud are concerned. 52 Ark. 171.

3. It does not appear that the conveyances were voluntary, but if they were, they were not fraudulent as to subsequent creditors unless Neel, at the time of their execution, had in contemplation the contracting of the debts to plaintiffs, and there is no evidence of this. 56 Ark. 73; Ib. 256; Wait, Fr. Conv. sec. 106; 10 U. S. App. 665; 8 So. 366; 13 P. 536.

4. The filing of the complaint to set aside the conveyances by Neel established a lien in favor of Richardson & May. 38 Ark. 18. Having failed to make themselves party to that suit, their subsequent attachments pending the suit cannot now wrest from May the fruits of his litigation. Bump, Fr. Conv. p. 571; 93 Ill. 402; 4 Wall. 672.

5. None of the plaintiffs have proved that Neel was indebted to them, except Jones. Judgments are only evidence as between parties and privies, and there is no privity between plaintiffs, or Neel, and May, so far as these judgments go. 33 Ala. 469; 36 Minn. 223; 10 U. S. App. 665. As none have shown any debt against Neel, their suit necessarily fails. 52 Ark. 171.

J. M. & J. G. Taylor, Crawford & Hudson, Dan W. Jones, and W. S. McCain for appellees.

1. The cause was properly remanded to the State court. The petition should have stated "exceeded $ 2000," instead of $ 500. Act Congress March 3, 1887; 57 F. 913. The petition fails to show that appellant was a non-resident. Acts 1888, p. 435, sec. 2. The act of the Federal judge is conclusive. Ib.

2. The judgments are prima facie evidence of indebtedness. Wait, Fr. Conv. sec. 84, note 2, and sec. 270; 2 Freeman, Judg. 418; Bump. Fr. Conv. p. 557; 2 Black, Judg. sec. 605; 31 Ark. 546; 10 U. S. App. 665.

3. The deeds were clearly fraudulent. The whole thing was a sham (45 Ark. 520), even against subsequent creditors. 56 Ark. 75; 42 id. 42; Mansf. Dig. sec. 3374; 38 Ark. 427; 118 Mass. 527; 19 Pick. 231; 7 Allen, 146; 12 id. 606; 100 Mass. 126; 20 Wall. 36.

4. The bill filed by Richardson & May was not a creditor's bill, but a bill to foreclose a mortgage. When a debtor has made a fraudulent conveyance, it is still subject to attachment and execution. Mansf. Dig. sec. 3001; 42 Ark. 308; 55 Ark. 122. If the deeds were fraudulent, then the attachments constituted valid liens, and were not displaced by the subsequent filing of a creditor's bill. 110 U.S. 710; 14 How. 52; Wait, Fr Conv. secs. 73, 81.

5. The appellees followed the suggestion in 33 Ark. 338. See Ib. 769; Wait, Fr. Conv. secs. 58-60.

N. t. White for Wiley Jones and M. A. Austin and J. W. House for State National Bank and Mississippi Mills.

1. The cause was properly remanded to the State court. The order was final, from which there was no appeal, and the jurisdiction was re-vested in the State court. 131 U.S. 240; 41 F. 609: Ib. 450; 28 id. 769; 33 id. 692; 37 id. 279; 138 U.S. 694; 104 id. 407; 123 id. 56; Ib. 286; Ib. 679; 137 id. 141; Ib. 451; 37 F. 821; 112 U.S. 190; 132 U.S. 267; 52 Miss. 457; 63 Cal. 608.

2. In order to set aside a conveyance for fraud, it is not necessary to establish a specific design to hinder or delay any particular creditor who assails the transfer. A fraudulent intent as to any one creditor will render the transfer fraudulent as to all. Bump, Fr. Conv. p. 28; 37 Ark. 560; 39 Am. Dec. 250; Mansf. Dig. sec. 3374. Where a conveyance is set aside for fraud, all creditors share in the result. 13 Cal. 71; 66 N.Y. 381; 12 Serg. & R. 454.

3. The conveyances were voluntary, and Neel was insolvent. Besides this, he was about to engage in a hazardous business, and by these conveyances placed his property beyond the reach of creditors. Hence the conveyances are fraudulent as to subsequent creditors. 1 McCarter, N. J. 106; Pom. Eq. Jur. sec. 973; 69 Pa.St. 29; 44 Pa.St. 416; 42 Mo. 301; 34 N.J.Eq. 160; 39 N.Y. 169; 69 Mo. 631; 12 Serg. & R. 454; 13 How. 92; 1 Bond, C. C. 175; 14 Ark. 69; 30 Ala. 400; 49 N.H. 106; 34 N.Y. 508. The conveyances were merely colorable, and Neel never intended to part with the real title and ownership. 86 Ill. 229; 11 Paige, Ch. 594; Wait, Fr. Conv. sec. 89, p. 144.

4. The attachments of plaintiffs were levied before the attachment of Richardson & May, and their liens are prior and paramount. 32 N.W. 802; 19 N.Y. 369; 19 F. 589; 69 Am. Dec. 551; Drake on Att. (6 ed.) sec. 239; 15 Ark. 343; 19 id. 85; 46 id. 49; 39 id. 100; Mansf. Dig. sec. 325; 26 Am. Dec. 467; 35 id. 206.

RIDDICK, J. BUNN, C. J., did not participate in the decision of this cause.

OPINION

RIDDICK, J., (after stating the facts).

It is first contended that this case had been properly removed to the United States circuit court, that said court erred in remanding it, that therefore the circuit court of Jefferson county had no jurisdiction of the case, and that its decree is void. We need not stop to consider this point, for we are of the opinion that, under the act of congress of March 3, 1887, which controls this question, the order of the United States circuit court in remanding the case was an order from which no appeal or writ of error will lie, and that the jurisdiction of the State court cannot now be questioned. In re Pennsylvania Co., 137 U.S. 451, 34 L.Ed. 738, 11 S.Ct. 141.

It is next contended that the evidence does not show that, at the time the conveyances in question were executed, Neel contemplated contracting the debts to plaintiffs, and that even if the court should find that said conveyances were voluntary, they would not be fraudulent as to plaintiffs, for they are all, except Jones, subsequent creditors. The chancellor found that the conveyances in question were made without consideration, and, after considering the evidence, we have arrived at the same...