Wagner v. Law

• Decision Date: 13 January 1892
• Citation: 28 P. 1109,3 Wash. 500
• Parties: WAGNER v. LAW ET AL.
• Court: Washington Supreme Court

28 P. 1109

3 Wash. 500

WAGNER v. LAW ET AL.

Supreme Court of Washington

January 13, 1892

Appeal from superior court, Pierce county; F. CAMPBELL, Judge.

Action by Christina Wagner against James W. Law and others. From a judgment for defendants, plaintiff appeals. Affirmed.

Relief in equity against fraudulent conveyances of a judgment creditor is not waived by first proceeding to a sale of the lands on execution. Hager v. Shindler, 29 Cal. 47; Hildreth v. Sands, 2 Johns. Ch. 35; Judson v Lyford, (Cal.) 24 P. 286; Lynn v. Le Gierse, 48 Tex. 138; Gould v. Steinburg, 84 Ill. 170; McDonald v. Johnson, 48 Iowa, 72; Howland v Knox, 59 Iowa, 46, 12 N.W. 777; Eastman v Schettler, 13 Wis. 362; Campbell v. Jones, 25 Minn. 155; Jackson v. Holbrook, 36 Minn. 494, 32 N.W. 852; Mays v. Roser, 1 Freem. Ch. (Miss.) 703; Gallman v. Perrie, 47 Miss. 131; Pulliam v Taylor, 50 Miss. 551; Partee v. Mathews, 53 Miss. 140; Allen v. Berry. 50 Mo. 90; Wyman v. Fox, 59 Me. 100; Wyman v. Richardson, 62 Me. 293; Ringgold v. Waggoner, 14 Ark. 69; Lillard v. McGee, 4 Bibb, 166; Harrison v. Kramer, 3 Iowa, 543; Gardner v. Cole, 21 Iowa, 209; Miller v. Jamison, 24 N. J. Eq. 41.

Judson & Sharpstein and Crowley & Sullivan, for appellant.

B. F. Dennison and James M. Ashton, for respondents.

DUNBAR J.

This is an action brought by the judgment creditor, who was also an execution purchaser, to set aside a fraudulent conveyance made by the judgment debtor, which is alleged to be a cloud upon the plaintiff's title. The complaint alleges the fraudulent conveyance of the land for the purpose of defrauding creditors, and especially the plaintiff; alleges the execution and sale and conveyance of the land in question to plaintiff. A demurrer was interposed to the complaint, and sustained by the court below. Judgment was entered in favor of the defendants, and the case is appealed here. The sixth count in the demurrer was as follows: "That said complaints, and each of them, show upon their face that by proceeding to a sale of the land on execution before the previous deeds of the judgment debtor had been set aside by bill in equity, and the title reinvested in him, the plaintiff waived her right to claim relief in equity." The main question to be determined by this court is involved in this proposition, it being contended by the respondent that a bill to quiet title or to remove a cloud must be brought by the judgment creditor in the nature of a creditors' bill, or after an execution and return of nulla bona, and that the fraudulent conveyance must be set aside before the property is subjected to the operation of the execution, and that after such a sale it is too late to bring such an action. While the appellant insists that, under our statutes, and the English statutes, which are part of our common law, in addition to the other remedies which the law allows the creditor, he has a right to levy execution upon the property conveyed as if the same then stood in the name of the judgment debtor, and to advertise and sell the same in the manner provided by law as the property of the judgment debtor. On this proposition, after an examination of all the cases cited which were available, and after as laborious and extended an investigation as time would permit, we are inclined to adopt the views of the appellant. The authorities in support of appellant's views on this proposition are certainly overwhelming, and we no not feel at liberty to disregard them in establishing a rule for this state. Nor do we think, as alleged by respondents, that the cases cited by appellant, as to the right of an execution purchaser to sustain a suit to remove a cloud on his title, were decided on local statutes different from ours. In some instances, this doubtless was the case, but in many others the doctrine was sustained on the particular ground that such a conveyance falls within the provisions of the statute of frauds, and of 13 Eliz., which is in force, as we understand it, in the state of Washington by virtue of section 1 of the Code. This was the basis of the decision in Hildreth v. Sands, 2 Johns. Ch. 35, where the doctrine was announced that a purchaser at a sheriff's sale under the judgment of a creditor is entitled to the benefit of the statute of frauds equally as the creditor himself. And as to the relative rights of the purchaser and the creditor, and the claim interposed that such a proceeding is inequitable because the property, under such a sale, is likely to be sacrificed, we quote the words of the chancellor in that case: "The statute of 13 Eliz., which we have adopted, is said to be declaratory of the common law, and to extend to creditors, and to all others who have any cause of action, and is to be construed liberally, in suppression of fraud. Lord COKE says in Tey's Case, 3 Coke, 80, that it was so resolved by all the barons of the exchequer. So, in Turvil v. Tipper, Latch, 222, a bailiff who executed process was allowed to protect himself under this statute against a fraudulent gift; for it was observed that, when the statute gives the principal remedy, it gives the incident. If it protects the creditor, it must protect his sale, and the purchaser under his judgment. The creditor, on any other construction, would be deprived of the fruit of his judgment, and the execution would be nugatory. There can be no doubt but that the plaintiff, as a purchaser under Whitney's judgment, is entitled to all the relief that the creditor himself would have been entitled to, for he stands in his place, and is armed with his rights; and, though he be a purchaser at a very low price, yet it was a fair purchase, in the regular course of law, and it was owing to the unwarrantable acts of the debtor himself, in throwing a cloud over the title, that his property was thus sacrificed. It does not become the parties to the fraudulent deed to complain of the plaintiff's cheap purchase. However it may be regretted that the property has yielded but a very small compensation to the creditors, this fact cannot interfere with the question of right. The auction price was an accidental thing, growing out of the peculiar circumstances of this case, and affects only the parties concerned; but whether such a fraudulent conveyance shall stand or fall is a question deeply interesting to the whole community." This decree was, on appeal, unanimously affirmed in the court of errors, April 14, 1877, and reported in 14 Johns. 493, where the court, in commenting upon this proposition, says: "The statute, it is urged, protects creditors only from fraudulent deeds, and not a person standing in the situation of the respondent. This proposition, in my judgment, is without any foundation. All the respondent's right to the land in controversy is derived from and under the judgments under which he purchased; the judgments are his title; and he is placed, by the judicial sales which took place, precisely in the place of the creditors." In Alabama, North Carolina, and Louisiana the other doctrine has been announced by the courts, some of them on general propositions, and others, especially in Louisiana, by reason of the provisions of local statutes.

Cranson v. Smith, 47 Mich. 189, 10 N.W. 194, is a case exactly in point, which holds squarely the doctrine contended for by respondents. There it was held that the purchaser at an execution sale of the defendant's interest had no equity to file a bill to set aside a conveyance in fraud of creditors made by him before the date of the judgment. There is no attempt to review the authorities in this case. The court agrees with the contention of the plaintiff that the interest of the defendant sought to be reached is not an equitable one, but, as between him and his creditors, is the legal title, the object being to set aside a deed alleged to be utterly void as to creditors, and bases its decision on the main question solely, on the ground that such a course would tend to prevent an honest competition at the sale; and in support of that it cites only a prior state decision, ( Messmore v. Huggard, 46 Mich. 558, 9 N.W. 853,) which it evidently felt bound to follow; and on the motion for rehearing it reaffirmed its reliance on that case. A consideration of the opinion rendered by Judge COOLEY, in Messmore v. Huggard, convinces us that the decision in that case was misunderstood, or at least minsinterpreted, in Cranson v. Smith. Expressions and opinions of a court must be construed with reference to the subject-matter under consideration and the principles involved in the case. An investigation of the case cited shows that the statement relied upon by the court had no application to the principles involved in the case which it was deciding, or to the circumstances surrounding it. In Messmore v. Huggard the court reaffirms the decision in Cleland v. Taylor, 3 Mich. 202, where it was held that the right to question the bona fides of any conveyance by the judgment debtor was as much available to the creditor after he had caused the land to be sold on execution and became the purchaser as it was before; but the court distinguished just such a case as the one at bar, so far as the interest sold is concerned, from the case under consideration, by saying: "But the case of Cleland v. Taylor and the others referred to have little analogy to this. In those cases the judgment debtor had conveyed away his whole interest, and any offer to sell on an execution against him necessarily attacked his conveyance. The judgment debtor would understand this, and his grantee would understand it, and take his measures accordingly. So would all persons who should be inclined to become bidders at the sale understand it, and all would stand on an equality with the judgment creditor in making bids....