Snodgrass v. Andrews

HANDY, J., delivered the opinion of the court. This was a bill filed in the Superior Court of Chancery by the appellees, the proprietors of a judgment at law, rendered in February, 1852, against the administratrix of John Snodgrass, deceased, and which remains unsatisfied. The object of the bill is to set aside several fraudulent conveyances and arrangements made by John Snodgrass, in his lifetime, and continued by his administra-trix, in combination with several other parties, by means of which his personal and real estate is colorably placed beyond the reach of execution at law, or in such a condition as to render the enforcement of the judgment embarrassed and uncertain, and also to bring into the estate, for the payment of its debts certain assets, which are now fraudulently covered up, and placed beyond the power of being subjected to the judgment at law. The administratrix, and the heirs of John Snodgrass are made parties, (the alleged fraudulent conveyances embracing both personal and real estate); also. — 487 — the several persons implicated in the alleged fraudulent arrangements. The defendants demurred to the bill, which being overruled, the case is thereupon brought here by appeal, and we are to consider the propriety of the grounds of demurrer. The first ground of demurrer is, that the Probate Court was the proper tribunal to grant the relief sought, or such relief as could properly have been granted, and therefore that a court of equity bad not jurisdiction. In support of this view it is said, that the estate of John Snod-grass being in the course of administration in the Probate Court, it was within the power of that court to compel the administratrix to alter and enlarge the inventory of property of the estate, by including in it the property embraced in the alleged fraudulent conveyances, and that the complainants, as creditors of the estate, would have had the full benefit of the property and assets of the estate, through the medium of the tribunal to which its administration was properly and exclusively committed by law. But we do not consider this position at all tenable. We do not doubt but that there may be cases in which an administrator may be required to embrace in his inventory property of the estate not already contained in it. This, however, would scarcely be done, unless it were clearly shown that the property belonged to the estate, and that it was omitted through the negligence or fraud of the administrator, without any adverse claim set up to it by other persons, or without circumstances showing that the title of the intestate had been divested. And probably he might be required to inventory the property in all cases in which he would be held accountable for it, as assets of the estate on his final settlement, but in no other cases. For otherwise he might be compelled to subject himself to a primó, facie, liability for the property, by including it in his inventory, when it might not really be the property of the estate, — a position of hazard and responsibility which it would be unjust to coerce him to assume. But if the admifiistrator could be compelled to include in his inventory, property situated as that in this case is alleged to be, it would still be unavailable in the payment of the debts against — 488 — the estate. The administrator could not impeach the validity of the conveyances, by which the property was fraudulently conveyed by the intestate to the parties holding it, because such convey-anees, though void as to creditors, are valid between the parties to them and their representatives. He could never maintain a suit to set aside such fraudulent conveyances, or to recover the property on the ground of the fraud therein, and of course, could never by his own action bring the property into the estate for the benefit of its creditors. Ellis v. M'Bride, 27 Miss. 155. It was, therefore, necessary that the creditors should proceed by bill in chancery, to set aside the alleged fraudulent conveyances, and thereby remove the obstructions to the enforcement of their execution. . There is no force in the objection that the bill could not be filed because the estate was insolvent, for it does not appear that it has been declared insolvent; and if such had been the case, the prohibition of the statute against commencing any suit against an administrator after the estate shall be represented insolvent, does not apply to a suit like the present, the object of which is to benefit the estate by subjecting to the payment of the debts, property which would otherwise be lost. The effect of it is, therefore, beneficial to the estate, without charging it with the burthen of costs, which it was the chief object of this provision of the statute to prevent. The second ground of demurrer is, that the bill is multifarious, including several parties as defendants who have no interest in the suit, and against whom no relief is prayed, seeking to reach both the real and personal estate of the intestate, the heirs and administrator of Edwards, and to adjust the partnership of Edwards and Snodgrass; also a discovery and account from the heirs of James Snodgrass, the original pretended purchaser. All these parties are alleged to have been connected with the fraudulent transactions; and the accounts prayed, and interests sought to be adjusted, appear to be necessary, in order to ascertain the condition of the estate of John Snodgrass, and what property or assets will be subject to the claim of the complainants. The object of the bill is to set aside fraudulent conveyances, and in — 489 — some instances, to ascertain the rights of the intestate connected with these transactions, with a view to remove impediments in the way of the execution of the complainant’s judgment; and we think it was proper to include all the parties connected with these transactions in the same bill. It prevents multiplicity of suits, and tends to save expense, and falls within the rule recognized in Butler v. Spann, 27 Miss. 234. The next ground of demurrer is, that the bill cannot be maintained to set aside the conveyances as to the real estate, because the judgment being against the administratrix, was not a lien upon the land, and because a bill to set aside a fraudulent conveyance will not lie where there is no lien. The general rule is certainly well established, that “ in order to obtain relief by bill in equity to assist the execution of a judgment at law, the creditor must show that he has proceeded at law, to the extent necessary to give him a complete title. If he seeks aid as to real estate, he must show a judgment creating a lien upon such estate; and if he seeks aid in respect to personal estate, he must show an execution giving him a legal preference or lien upon the chattels.” Brinkerhoff v. Brown, 4 Johns. Ch. R. 677. Under our laws, a judgment, which operates as a lien upon the property sought to be charged, would be sufficient. This is the rule applicable to cases where property legally liable to execution has been fraudulently conveyed or encumbered, whereby the operation of the legal lien is obstructed, or its full enjoyment, by sale of the property, is prevented, and where, after the obstruction is removed by a court of chancery, the execution may be levied. But the rule is equally well settled, that where the transaction has assumed such a form, or the property has been placed in so peculiar a condition, or is of such a nature, that it could not be subjected to an execution at law, relief may be had in a court of equity; and in such a case, it is sufficient if the creditor has established his debt by judgment at law, in such mode as to show that it is an ascertained and fixed debt, and entitled to payment and satisfaction out of the property of the debtor liable to its payment under the laws of the land. O’Brien v. Coulter, 2 Blackf. 423; M‘Der490 mutt v. Strong, 4 Johns. Ch. R. 687. And in the case of Russell v. Clark, 7 Cranch, 89, it is held by Marshall, C. J., “that if a claim is to be satisfied out of a fund which is accessible only by the aid of a court of chancery, application may be made in the first instance, to that court, which will not require that the claim should be first established in a court of law.” But this rule would probably be applicable only to a case where the-debt, from peculiar circumstances, could not be established at law; for the general rule is, that the creditor will not be allowed to call in question the fraudulent transactions of the debtor until he has established his claim against him; for otherwise it might involve him in an oppressive litigation in defence of his property, at the instance of a party who in the end might be found to have no valid debt against him. If the creditor has established his claim by judgment, and exhausted all the means in his power at law to obtain satisfaction of his debt, without success, he is entitled to the aid of a court of equity, according to the circumstances of the case, in such mode as will enable him to enjoy his just legal right. M'Dermutt v. Strong, 4 Johns. Ch. R. 690; Brinkerhoff v. Brown, Ib. 676; Batsford v. Beers, 11 Conn. 869; Weed et al. v. Pierce, 9 Cow. 722. He is entitled by our laws, not only to levy his execution of the personal estate of the intestate, if a sufficiency thereof be found to satisfy it, but also through the medium of the Probate Court, to have the real estate sold for the payment of it, if necessary. The real estate conveyed by the intestate in fraud of the rights of'creditors, is as much subject to the payment of their debts as the personalty so conveyed; and the creditor should be as much entitled to have obstructions removed, which .interfere with his subjecting the former as thedatter species of property, to the payment of his debt. , o In this case, the creditor has done all that he could do at law, by obtaining his judgment against the administratrix of his debtor, and having an execution issued which was returned 11 nulla bona.” In proceeding to remove obstructions to the enforcement of his judgment, and in subjecting the property alleged to be fraudulently conveyed, he has the right to subject all the property thus situated; for if fraudulently conveyed, it is all equally liable to — 491 — the payment of Ms debt, though it must be reached in different modes. Nor is he to be restricted to the personalty, for that may prove to be insufficient or unavailable, and in that event, he would be driven to a new proceeding against the real estate, which by lapse of time might be doubtful and perhaps unavailing. If the property has been conveyed by the debtor in fraud of his rights, he has the right in one and the same suit to have all the impediments removed, which interfere with the whole property being rendered subject to the payment of his debt, and it is no objection to the proceeding, that it may not require all the property to satisfy his claim. We think, therefore, that this ground of demurrer was not well taken. The last ground of demurrer is, that the Statute of Limitations is a bar to the'relief sought as to the personalty, as the bill alleges that John Snodgrass, jr., purchased the property in December, 1849, since which time he has been in possession of it, claiming it as his own. This position does not appear to be sustained by the allegations of the bill, which' are in substance, that John Snodgrass, jr., pretended to purchase a portion of the property at the sale in December, 1849, and that the title was conveyed to him, “ the property then going or rather remaining in the possession of the said Margaret, (the administratrix,) as the head of the family.” This averment would not show an adverse possession in John Snod-grass, jr., under claim of title, for the substance of it is, that the purchase by him was pretended, and that the property continued in the possession of the administratrix; so that it neither appears that he had possession, of it nor claimed it as his own. In order to constitute adverse p^session, as creating a bar to a recovery against him under the Statute of Limitations, it was necessary that he should have claimed the property as his own, and that he should have had possession adverse to that of the administratrix of his father. Her possession must be considered as a lawful possession held by her as administratrix for the use of the estate, if the property belonged in law to the estate, as is alleged in the bill, and — 492 — could not with any propriety be said to be tbe possession of John Snodgrass, jr. Upon tbe whole, we tbink that tbe demurrer was properly overruled. Tbe decree is therefore affirmed, and tbe cause remanded, and tbe appellants required to answer tbe bill within sixty days.