Shuler v. Halvor

SMITH, J. [1] Action to have the transfer of a certain lot in the town of Summit adjudged fraudulent and void as against [618] plaintiff, a judgment creditor. At the close of the trial, the trial court granted a stay of execution, and plaintiff, for that reason being unable to obtain an execution, began this action to cancel the deed without issuance of an execution on his judgment. Judgment of cancellation of the deed, from which defendants appeal. We shall not consider the question of fraud in the transfer, as we deem it unnecessary in view of other matters presented by the' assignments of error. Appellants assign insufficiency of the evidence to support the findings and the judgment of the court canceling the deed, for the reasons, among others: First. The evidence does not show that the defendant Flora J. Halvor is insolvent. Second. The evidence fails to show any effort whatever on the part of the plaintiff to collect the judgment against Flora J. Halvor. Section 334, Code of Civil Procedure, provides: “The writ of execution * * * shall require the officer substantially as follows: If it be against the property of the judgment debtor to satisfy the judgment-with interest and accruing costs, out of the personal property of such debtor; and if sufficient personal propertjr cannot be found, out of the real property belonging to him on the day when the judgment was docketed in the county, or at any time thereafter.” “Sec. 337. When an execution is delivered to any officer he must indorse thereon the day and hour when he received it, and must proceed to execute the same with diligence. * * * If no personal property be found an indorsement to that effect must be made on the writ before levy is. made on real property.” Under these statutes, personal property is made the primary fund for the satisfaction of an execution, and we are of the view that, before a judgment creditor is entitled to the aid of equity to set aside a fraudulent conveyance of real estate, he must issue an execution on the judgment and exhaust the personal property of the judgment debtor before having recourse to real estate. Easton Nat. Bank v. Buffalo Chemical Works, 48 Hun, 557, 1 N. Y. Supp. 250, holds, that an action to- vacate a judgment, which prevents plaintiff’s judgments from becoming valuable liens upon real estate of the 'debtor, could not be maintained unless execution had been issued on the judgments and was outstanding [619] at the time the action was commenced or had been returned unsatisfied. In Geery v. Geery, 63 N. Y. 253, the court said: “The statute law gives a remedy by execution, and that remedy, upon every reason of public policy and convenience, should be exhausted before a new 'suit should be allowed to be maintained. * * * If the judgment were a judgment in an action at law no one could question that before an action of this kind could be maintained, as to the real estate, an execution must have been issued. * * *” Compton v. Patterson, 28 S. C. 152, 5 S. E. 470; Ryttenberg v. Keels, 39 S. C. 203, 17 S. E. 441; Brown v. John Earwell Co. (C. C.) 74 Fed. 764. In Brock v. Rich, 76 Mich. 644, 43 N. W. 580, it was held that, when the personal property of the debtor was sufficient to satisfy the creditor's judgment, there was nothing which would justify a resort to the debtor’s real estate, even though fraudulently conveyed. In a number of states it is held that a creditor is not authorized to interfere with any disposition which a debtor may make of his property, so long as he is not injured- thereby. The debtor might convey his property with the intention of defrauding his creditors; but, if he still retained property subject to execution out of which the debt might be collected, the creditor could not complain. Brumbaugh v. Richcreek, 127 Ind. 240, 26 N. E. 664, 22 Am. St. Rep. 649; Meaux v. Anthony, 11 Ark. 411, 52 Am. Dec. 274; Stephens v. Parvin, 33 Colo. 60, 78 Pac. 688; Bannington v. Purinton, 105 Iowa, 642, 75 N. W. 639; Drahos v. Kopesky, 132 Iowa, 497, 109 N. W. 1021. In many states where the statute does not make personal -property the primary fund for satisfaction of the execution, it is held that, where the judgment is made a lien upon the debtor’s real property, an action may be maintained to cancel a fraudulent conveyance without issuance or return of an execution. Level Land Co. v. Sivyer, 112 Wis. 442, 88 N. W. 317; Dillman v. Nadelhoffer, 162 Ill. 625, 45 N. E. 680; Cornell v. Radway, 22 Wis. 260. The statute requires the issuance of an -execution, and a levy on -personal property -of the judgment debtor if sufficient personal property can be found to satisfy the judgment, and, if no- personal [620] property can be found, 'an indorsement must be made by the sheriff on the execution to that effect “before levy is made on real property.” These provisions of the statute bring us within the rule of equity announced in that class of cases which hold that issuance of an execution and a return nulla bona are necessary to entitle a creditor to the aid of equity to set aside a deed of real property as fraudulent. Clark v. Anthony, 31 Ark. 546; First Nat. Bank v. Randall, 20 R. I. 319, 38 Atl. 1055, 78 Am. St. Rep. 867; Euclid Ave. Nat. Bank v. Judkins, 66 Ark. 486, 51 S. W. 632; Burdsall v. Waggoner, 4 Colo. 256; Wilckliffes v. Lyon, 5 J. J. Marsh. (Ky.) 84; Halbert v. Grant, 4 T. B. Mon. (Ky.) 580; Martz v. Pfeifer,. 80 Ky. 600; Howe v. Whitney, 66 Me. 17; Brown v. Bank, etc., 31 Miss. 454. In Verner v. Downs, 13 S. C. 449, it was held that execution and a return nulla bona were conditions precedent to the right to maintain an action to set aside a fraudulent conveyance. McMahan v. Dawkins, 22 S. C. 314; Compton v. Pettenson, 28 S. C. 152, 5 S. E. 470; Morrow Show Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 6 C. C. A. 508, 24 L. R. A. 417; Fox v. Moyer, 54 N. Y. 125; Adsit v. Butler, 87 N. Y. 585; Harvey v. Brisbin, 143 N. Y. 151, 38 N. E. 108; Miller v. Miller, 7 Hun (N. Y.) 208; Bigelow Blue Stone Co. v. Magee, 27 N. J. Eq. 392. [2] The statute does not require the return of the execution and the issuance of an alias execution for levy upon real property, the statutory indorsement being equivalent thereto. But personal property being made by the statute the primary fund for satisfaction of an execution, even if such- transfer were set aside as •fraudulent, no levy upon or sale of such real property could be had if there were personal property out of which the execution couicl be satisfied. Furthermore, until an execution has been issued and the return of no personal property found' has been indorsed thereon as required' by the statute, it would not be apparent that the creditor bad exhausted his remedy through legal process, as the debtor’s personal property might be ample to satisfy the execution. In such case, it is not the transfer which obstructs his right to take the real property affected, but the statute which forbids a levy upon a creditor’s land’ in satisfaction of an execution until the creditor’s personal property has been exhausted. Until his right [621] to levy upon and sell such real estate has been established in the mode prescribed by the statute, the cancellation of the transfer Would be an idle act in which counts of equity-are not prone to indulge. The stay of execution by the trial court cannot change the requirement of the statute in this respect. It follows that the judgment canceling the transfer of the lot was erroneous, and is therefore reversed.