Westevelt v. Hagge

• Citation: 61 Neb. 647,85 N.W. 852
• Parties: WESTEVELT v. HAGGE ET AL.
• Decision Date: 10 April 1901
• Court: Nebraska Supreme Court

61 Neb. 647

85 N.W. 852

WESTEVELT

v.HAGGE ET AL.

Supreme Court of Nebraska.

April 10, 1901.

Syllabus by the Court.

1. Where an attachment is levied on real estate fraudulently alienated by the attachment debtor and grantor, for the purpose of hindering, delaying, and defrauding creditors, even though the legal title of record is in another, the attachment creditor acquires thereby a lien upon the interest of the debtor in the land attached, which he may enforce by appropriate proceedings after recovery of judgment.

2. Where, after attachment proceedings on land fraudulently alienated, the real estate is reconveyed and restored to the fraudulent grantor, the lien of the attachment becomes thereby effective and enforceable, the same as though the conveyance in the first instance had not been made.

3. Held, under the facts as disclosed by the record, attachment creditor not guilty of laches in enforcing the lien acquired by virtue of his attachment.

4. Where, pending litigation, after the levy of an attachment on real estate, a lien has been acquired by another on the same property, the person in whose favor the lien is created is charged with notice, and takes subject to the rights of the plaintiff in the action wherein the attachment was levied and final judgment rendered.

5. Where a copy of an order of attachment is left with the actual occupant of lands attached, having possession of the premises, and apparent authority over and control of the same, the act will be a compliance with the provisions of the statute, requiring that, “where the property attached is real property, the officer shall leave with the occupant thereof, or, if there be no occupant, in a conspicuous place thereon, a copy of the order,” although such occupant be not the owner or lessee of such premises.

6. Where real estate is attached by a creditor of a fraudulent grantee, to whom the legal title has been conveyed in fraud of the rights of the creditors of the fraudulent grantor, and who has no actual interest therein, and who restores and reconveys the real estate to the fraudulent grantor, who voluntarily incumbers the same for the benefit of his creditors, such attachment creditor thereby acquires no valid lien on the property as against such creditors of the grantor under their liens thus acquired.

7. An attachment lien on land, the legal title to which is in the attachment debtor, is subject to every equity which exists against the debtor at the time of the levy of the attachment, and courts of equity will limit the lien to the actual interest of the attachment debtor in such real estate.

Appeal from district court, Hall county; Thompson, Judge.

Action by Edgar M. Westevelt against William A. Hagge and others. From the judgment rendered, plaintiff and defendant city of Grand Island appeal. Affirmed.O. A. Abbott, for appellants.

James H. Wooley, Fred W. Ashton, Chas. G. Ryan, W. S. Pearne, W. A. Prince, and R. C. Glanville, for appellees.

HOLCOMB, J.

One William Hagge was the owner of certain real estate situated in Hall county, upon which different alleged liens and their priorities are involved in this controversy. At or about the time of the transactions hereinafter narrated, Hagge became financially distressed, because of his connection with, and liability as a stockholder in, the Citizens' National Bank of Grand Island, which closed its doors and suspended business about December 4, 1893. On December 6th there was placed on record in the office of the county clerk a warranty deed, conveying the real estate in controversy from Hagge and wife to one D. H. Veiths, a relative of Hagge, for an expressed consideration of $10,500. The deed bore date August 9th preceding, and was acknowledged on the 24th of the same month. A mortgage from Veiths and wife on the premises was executed at the same time for an expressed consideration of $9,500, and recorded December 26, 1893. Soon after the recording of the instrument conveying the land from Hagge to Veiths, attachment suits were instituted by the appellee Taylor and appellant city of Grand Island, and the real estate was attached at the instance of Taylor as the property of Hagge; it being alleged that he had and was about to convey his property for the purpose of defrauding his creditors, and hindering and delaying them in the collection of their debts. In the suit brought by the city, the property was attached as the property of Veiths on a contract liability claimed to be due the city on a bond, on which he was an obligor, in favor of the city, given by one West, as city treasurer. Each of these two suits was prosecuted to final judgment, and the property attached was ordered sold in satisfaction of the judgments so rendered. On January 26, 1894, Veiths and wife transferred the real estate to Hagge, excepting in the covenants of warranty any lien or liens thereon by virtue of attachment proceedings in favor of the city of Grand Island, and all taxes. Afterwards, through a third party or trustee, the land was conveyed to Mrs. Hagge, the wife of William Hagge. Mortgages were then executed by Mrs. Hagge and her husband, one in favor of James H. Wooley, to secure certain notes evidencing an indebtedness against Hagge, and one to the appellant, as receiver of the Citizens' National Bank, to secure $6,000 of a judgment rendered against Hagge on his stockholders' liability in said bank. The receiver then brought an action in equity to foreclose his lien by virtue of the mortgage securing the judgment, making all others claiming an interest in or lien on the land parties to the action, and claiming a prior lien on the premises, except as to the mortgage executed in favor of Wooley, which, it was admitted, was superior to the lien in favor of the receiver. Issues were joined, in the formation of which Taylor and the city of Grand Island set up their attachment suits and the judgments rendered therein, claiming a lien on the land by virtue thereof superior to those created by reason of the mortgages subsequently executed. On the trial the court found in favor of Taylor, awarding him a first lien; in favor of the assignees of the indebtedness secured by the Wooley mortgage, giving them a second lien. The receiver was decreed to have a third lien. The court dismissed the action as to the city of Grand Island and one other cross petitioner, whose case is not here for review. The receiver and the city of Grand Island appeal from the decree.

In determining the respective rights of the appellants, we are required to consider different and distinct propositions of law, and it is therefore proper to treat the appeal under two heads. The decree of the trial court, giving to the appellee Taylor, on his cross petition, a first lien on the property by virtue of the attachment proceedings instituted by him December 8, 1893, and the judgment rendered thereon, is objected to on the ground, as argued, that the legal title to the property, at the time the attachment was levied, being in the said Veiths, and Hagge having only an equitable interest therein, attachment would not lie, and the plaintiff in the attachment suit acquired no lien on the property by reason of the levy on the land while standing in the name of Veiths, the grantee of Hagge. In Shoemaker v. Harvey, 43 Neb. 75, 61 N. W. 109, it is held in the second paragraph of the syllabus: “If there is no possession of real property by an attachment defendant having an equitable interest therein, no valid levy and sale can be made upon such equitable interest; neither can it, under such circumstances, be subjected otherwise than by invoking the aid of the court of chancery.” The opinion in the case sustains the proposition thus announced in the syllabus, and we have no disposition to modify or recede from same, and, if it be proper to apply the same principle to the facts in the case at bar, then the decree pronounced by the trial court cannot stand.

But is the principle applicable? In the Harvey Case and all similar cases, the underlying principle is that where the interest of the attachment debtor in real estate is purely equitable, uncoupled with possession, then an attachment or execution cannot be validly levied, but resort must be had to a court of equity to bring together the legal and equitable estate, and decree the property to belong to the actual owner. To illustrate: In the Harvey Case, the legal title to the property had never been invested in the Harveys. Their interest and estate, if any, in the property sought to be attached, was equitable only, and could not be reached by the attachment as “lands and tenements” of the attachment debtor. In the case at bar, Hagge was the legal and equitable owner of the property, save only as his title may have been devested by the conveyance made by him to the said Veiths. By the conveyance he attempted to convey all his interest in the land, both legal and equitable. He evidently sought to put it out of the reach of his creditors, either by process out of a court of law or in an action in equity. Taylor levied his attachment on the land on the ground that Hagge had fraudulently disposed of his property with the intent to cheat, hinder, delay, and defraud his creditors. By section 17 of the statute of frauds, such a conveyance is fraudulent and void as to the creditors of the grantors. As to such creditors, the conveyance may be treated as absolutely void and a nullity, as though it had never been made, and the property remained, as it actually was, the property of the debtor. The conveyance is, at most, only a cloud on the title of the debtor, and, if required, may be removed in any proper proceeding brought for that purpose. The attachment laws would be ineffectual, and the provision for the attachment of property which has been fraudulently conveyed would be meaningless, if the construction contended for should prevail.

The proposition under consideration seems, however, to have...