Talbott v. Randall

• Citation: 5 P. 533,3 N.M. 367,1885 -NMSC- 016
• Parties: TALBOTT v. RANDALL and others.
• Decision Date: 26 January 1885
• Court: New Mexico Supreme Court

5 P. 533

3 N.M. 367, 1885 -NMSC- 016

TALBOTT v. RANDALL and others.

Supreme Court of New Mexico

January 26, 1885

Appeal from Second judicial district court, Bernalillo county.

Niell B. Field and Warren Bristol, for appellant.

William B. Childers, for appellees.

AXTELL C.J.

The very able opinion filed in this case by BELL, J., before whom the proceedings were had, is adopted by us as the law of the case; and, for the reasons set forth in said opinion, the judgment and decree of the lower court should be affirmed and it is so ordered.

WILSON J., concurs.

Opinion of the Lower Court in Above Cause.

This is a bill in equity, brought to set aside a conveyance heretofore made by the defendant John W. Randall and his wife to the defendant John Randall, on the ground that the same was fraudulent and void as to this and the other creditors of the said John W. Randall. It appears from the bill that the complainant had, prior to the commencement of this suit brought his action at law against the said John W. Randall to recover an alleged indebtedness, amounting to about $1,700. In his action at law the plaintiff therein and complainant here had sued out a writ of attachment and endeavored thereunder to levy upon the real property of the said John W. Randall, but failed because of the conveyance aforesaid, by which the legal title to the property had passed to the defendant John Randall. Upon the filing of this bill the court granted to the complainant a preliminary injunction, restraining the defendants from further conveyance of the property until the final hearing and determination. The injunction granted was accompanied by an order upon the defendants to show cause why the same should not be continued. The case now comes up for hearing upon that order. The only question presented by the bill is whether the complainant has the necessary standing in court to entitle him to the relief prayed for. Courts of equity have invariably intervened, when applied to by creditors who have established their claims in an action at law, to remove such obstructions as may exist to the collection of the debts thus established by enjoining defendants from so transferring their property as to place it beyond the reach of execution, and by setting aside conveyances which are found to be void as against such creditors. The general rule is that equity will enjoin any transfer of a debtor's property made with intent to defraud and delay his judgment creditors, or to give a portion of such creditors preference over others. But I think it is well settled that such power in the court can only be invoked in behalf of creditors who have established their claims by judgment in a court of law, and will not be exercised on behalf of mere contract creditors or creditors at large whose claims are not reduced to judgment. The rule and the reasons for it are aptly stated by a learned author, who says: "Equity has jurisdiction of fraud, but it does not collect debts. A creditor must establish his demand at law, and obtain a lien upon the property before the transfer interferes with his rights, or he has any title to claim relief in equity. No creditor can be said to be delayed, hindered, or defrauded by any conveyance until some property, out of which he has a specific right to be satisfied, is withdrawn from his reach by a fraudulent conveyance. Such specific right does not exist until he has bound the property by judgment, or by judgment and execution, as the case may be, and has shown that he is defrauded by the conveyance in consequence of not being able to procure satisfaction of his debt in a due course of law. Then, and then only, he acquires a specific right to be satisfied out of the property conveyed, and shows that he is a creditor, and is delayed, hindered, and defrauded by the conveyance." Bump, Fraud. Conv. 534, 535.

Another author says:

"A judgment creditor only can inquire into the transmutation of his debtor's property." Jer. Ch. 405.

High (Inj. § 1403) says:

"It is to be observed, however, that the jurisdiction is not exercised in favor of mere contract creditors, or creditors at large, whose claims are not reduced to judgment; and, in the absence of statutory provisions authorizing relief, courts of equity will not, at the suit of other than a judgment creditor, interfere by injunction to restrain a debtor from any disposition of his property, however fraudulent, which he may see fit to make. The principle upon which the rule is based, is that until the creditor has established his claim by judgment he has no right to question the action of his debtor, and has no concern with his frauds; and to allow the interference in behalf of mere general creditors before judgment, would lead to an unjustifiable and often oppressive interruption of the debtor's right to control his property."

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