83 diction of a court of equity attaches, as a general rule, by virtue of a lien created either by operation of law, as by judgment, attachment, or other proceeding in the nature of a proceeding in rem, or by contract. The object of the attachment or execution is to bring the attaching party into privity with the property. A creditor, to entitle himself to equitable aid in the recovery of his debt, must show judgment and execution, by which he has gained a legal lien and preference at the time of filing his bill, or at least before issue joined, or he must show some other claim which would be a lien on the property, if the title were in the debtor.85 If the creditor is a judgment creditor he must show that he has a lien either by judgment, if the statute gives such a lien, or if the lien arises from the levy of the writ, that a levy 54; Brinkerhoff v. Brown, 4 Johns. Ch. 671, 6 Johns. Ch. 139. U. S.-Wells v. Dalrymple, Fed. Cas. No. 17,392. Ark.-Harman v. May, 40 Ark. 146. Cal.-Bickerstaff v. Doub, 19 Cal. 109, 79 Am. Dec. 204. See Ruggles v. Cannedy (Cal. 1898), 53 Pac. 911, as to right of creditor who has not acquired a lien upon the personal property of the debtor to attack a prior mortgage on the ground that it has not been recorded, and for fraud. Ill.-Scripps v. King, 103 Ill. 469. Kan. 857. Ky.-Anderson V. Bradford, 28 Ky. 69. Me.-Wyman v. Richardson, 62 Me. 293. Mich.-Krolik v. Root, 63 Mich. 562, 30 N. W. 339; Trask v. Green, 9 Mich. 358; Fox v. Willis, 1 Mich. 321; McKibben v. Barton, 1 Mich. 213. Miss.-Green & Sons v. Weems, 85 Miss. 566, 38 So. 551; Hilzheim v. Drane, 18 Miss. 556. 84 Wash.-Thompson V. Caton, 3 Wash. T. 31, 13 Pac. 185. Wis.-Weber v. Weber, 90 Wis. 457, 63 N. W. 757; Gilbert v. Stockman, 81 Wis. 602. 82. Cassaday v. Anderson, 53 Tex. 527. 83. Peoples' Sav. Bank v. Bates, 120 U. S. 556, 7 Sup. Ct. 679, 30 L. Ed. 754. 84. Williams v. Brown, 4 Johns Ch. (N. Y.) 682. 85. Holdrege v. Gwynne, 18 N. J. Eq. 26. 87 has been made. A creditor cannot attack a conveyance as fraudulent merely upon his contract right. He must either have an attachment or execution upon personal property, or a judgment at law or a decree in equity which is a lien upon real estate. No mere outsider, or person having no lien by contract or process, can litigate any question of fraud arising upon the purchase or transfer of property by other persons. But one who has a general judgment lien on the debtor's property is entitled to maintain a bill to remove a fraudulent obstruction to the enforcement of his lien.88 There are exceptions to the general rule that a creditor, before suing to set aside his debtor's fraudulent conveyance, must have perfected a lien on the property by judgment or otherwise, as, for example, where the judgment debtor purchased lands in the name of a third person, or where by reason of the death of the debtor he has no remedy at law to satisfy his debt." The statutes in some states permit a creditor without a lien to bring suit in equity to subject to the payment of his debt any property which has been fraudulently conveyed by his debtor, and a judgment creditor without a lien is a creditor within the meaning of such a statute."2 90 855. Necessity of exhausting other assets of debtor.-If the debtor has property, other than that which constitutes the subject matter of the fraudulent conveyance, which can be reached at law, the general rule, supported by the weight of authority, is that suit cannot be maintained in behalf of a creditor to set 86. Cates v. Allen, 149 U. S. 451, 13 Sup. Ct. 883, 977, 37 L. Ed. 804. 87. Dana v. Haskell, 41 Me. 25; Mullen v. Hewitt, 103 Mo. 639, 15 S. W. 924; Griswold v. Sundback, 4 S. D. 411, 57 N. W. 339. 88. Schofield v. Ute Coal, etc., Co., 92 Fed. 269, 34 C. C. A. 334. 89. Swan v. Dent, 2 Md. Ch. 111; Merry v. Fremon, 44 Mo. 518; Dodd V. Levy, 10 Mo. App. 121; Carr v. Parker, 10 Mo. App. 364. 90. Scoville v. Halladay, 16 Abb. N. C. (N. Y.) 43; Arbuckle Bros.' Coffee Co. v. Werner, 77 Tex. 43, 13 S. W. 963. 91. Snodgrass V. Andrews, 30 Miss. 472, 64 Am. Dec. 169. 92. Wooten v. Steele, 109 Ala. 563, 19 So. 972, 55 Am. St. Rep. 947. See also Statutory modification of rule as to necessity of judgment, § 33, supra. aside a conveyance as being fraudulent as against him." A bill to set aside a conveyance as fraudulent, brought by a judgment creditor who has levied on some of the debtor's property, cannot be maintained where it does not appear that the property covered by the levy would upon a sale have been insufficient to satisfy his demand." But if the lien which the creditor has on the property levied on is unavailable because of prior liens, the suit can be maintained without enforcing the lien against such other property. A contrary rule to that above stated is maintained by the courts of some states," the reasons assigned being that, the grantee's title being tainted with fraud, he has no right to say that all other means shall be exhausted before he shall be 95 93. N. Y.-Morris v. Morris, 62 Hun, 256, 16 N. Y. Supp. 824, an action to set aside a conveyance of real estate is not maintainable where the debtor has abundant personal property out of which to pay the debt; Hyatt v. Dusenbury, 12 Civ. Proc. R. 152; Payne v. Sheldon, 63 Barb. 169, it must appear that there is no other property of the debtor out of which the judgment can be paid. Ark.-Clark v. Anthony, 31 Ark. 546. Cal.-Harris v. Taylor, 15 Cal. 348. Ind.—Brumbaugh v. Richcreek, 127 Ind. 240, 26 N. E. 664, 22 Am. St. Rep. 649, acquisition by the debtor of property at any time before the bringing of the suit will defeat the suit; Sell v. Bailey, 119 Ind. 51, 21 N. E. 338; Towns v. Smith, 115 Ind. 480, 16 N. E. 811; Lee v. Lee, 77 Ind. 251; Morgan v. Olvey, 53 Ind. 6; Baugh v. Boles, 35 Ind. 524; Ritchey v. McKay (Ind. App. 1905), 75 N. E. 161, 1090; Jackson v. Sayler, 30 Ind. App. 72, 63 N. E. 881. Iowa. Gwyer v. Figgins, 37 Iowa, 517. Md.-Morsell v. Baden, 22 Md. 391. Mich.-Pierce v. Rich, 76 Mich. 648, 43 N. W. 582; Brock v. Rich, 76 Mich. 644, 43 N. W. 580, if it also appears that any fraud connected with the transfer can be disposed of in an action at law. N. J.-Burne v. Kunzman (N. J. Ch. 1890), 19 Atl. 667, where it appeared that property covered by the levy might be sufficient to pay the debt; Rutherford v. Alyea, 54 N. J. Eq. 411, 34 Atl. 1078. Wis.-Mason v. Pierron, 63 Wis. 239, 23 N. W. 119. 94. Gayoso v. Lewis, 4 La. 329; Burne v. Kunzman (N. J. Ch. 1890), 19 Atl. 667; Canaday v. Nuttall, 37 N. C. 265. 95. Allis v. Newman, 33 Neb. 597, 50 N. W. 1048. 96. Montgomery v. Turney, 85 Ky. 55, 2 S. W. 562; Patton v. Bragg, 113 Mo. 595, 20 S. W. 1059, 35 Am. St. Rep. 730; Westerman v. Westerman, 25 Ohio St. 500. disturbed in his title," that no title whatever passes by virtue of the conveyance as against existing creditors and they may levy upon the property and sell it without reference to the conveyance and without resorting to a suit in equity," and that a creditor has an absolute right to a suit in equity to annul a fraudulent conveyance, and he need not first subject other property of the debtor, by execution or otherwise." A creditor, before he is permitted to attack the conveyance which he conceives to be fraudulent, is not obliged to search beyond the jurisdiction of the court for unincumbered property out of which to make his debt,' and where the suit is in aid of the creditor's legal remedy, he is not bound, as a condition of obtaining relief, to show that the debtor has no other property, or that he is insolvent, or that any execution has been returned unsatisfied.2 Under the statutes in some states a creditor is permitted to sue, although the debtor has other property. The fact that the debtor has some other property subject to execution will not preclude the creditor's resort to equity to set aside a fraudulent conveyance, where such other property is insufficient to satisfy the creditor's claim. And where there have been several fraudulent transfers the creditor may choose the one which he will attack.5 97. Miller v. Davidson, 8 Ill. 518, 44 Am. Dec. 715; Dunphy v. Gorman, 29 Ill. App. 132. 98. Yankey v. Sweeney, 85 Ky. 55, 2 S. W. 559, 8 Ky. L. Rep. 944. 99. Hoffman v. Fleming, 43 W. Va. 762, 28 S. E. 790. 1. Rohrer v. Snyder, 29 Wash. 199, 69 Pac. 748. 2. Botsford v. Beers, 11 Conn. 369; Robinson v. Springfield Co., 21 Fla. 203; Smith v. Muirheid, 24 N. J. Eq. 4; Spooner v. Travelers Ins. Co., 76 Minn. 311, 79 N. W. 305, 77 Am. St. Rep. 651; Gormley v. Potter, 29 Ohio St. 597. 3. Wood v. Potts, 140 Ala. 425, 37 So. 253; Henderson v. Farley Nat. 4. McConnell V. Citizens' State Bank, 130 Ind. 127, 27 N. E. 616; Lee v. Lee, 77 Ind. 251. 5. Miller v. Dayton, 47 Iowa, 312; First Nat. Bank v. Hosmer, 48 Mich. 200, 12 N. E. 212; Cox v. Dunham, 8 N. J. Eq. 594. 56. Exhaustion of estate of deceased debtor.-A creditor of an estate cannot maintain a suit in equity to set aside a fraudulent conveyance made by the decedent, where it appears that the assets are sufficient to pay his claim. He must allege and prove a deficiency of assets. Ordinary creditors, alleging their debtor's sale fraudulent, must show the want of effects to satisfy their claims; and, if he be dead, this must be shown by a judicial settlement of his succession. But by statute creditors of a deceased grantor are in some instances permitted to subject land fraudulently conveyed to the satisfaction of their claims, without regard to the sufficiency of the legal assets of the estate. Where a court of equity is satisfied from the facts of the case that a deceased debtor left no personal estate to be administered, it will not require letters to be taken out or proceedings against an administrator to be shown, to support proceedings against property fraudulently conveyed away by the debtor." 10 § 57. Necessity of pursuing legal remedy against debtor's co-obligor.-In some jurisdictions a fraudulent conveyance by a joint obligor will not be set aside so long as there is a legal remedy against the other joint obligors," unless the co-obligors are residents of and having all their property in another juris 6. State, Little v. Parsons, 147 Ind. 579, 47 N. E. 17, 62 Am. St. Rep. 430; Jordan v. Stephenson, 17 Iowa, 514; Rutherford v. Alyea, 54 N. J. Eq. 411, 34 Atl. 1078. But see First Nat. Bank v. Tompkins, 3 Neb. (Unoff.) 328, 91 N. W. 551, holding to the contrary where the creditor has obtained an attachment lien in the debtor's lifetime. 7. State Bank v. Ellis, 30 Ala. 478; Chamberlayne v. Temple, 2 Rand. (Va.) 384, 14 Am. Dec. 786. 8. Semple v. Fletcher, 3 Mart. N. S. (La.) 382. 9. Wood v. Potts, 140 Ala. 425, 37 So. 253. 10. Jordan v. Stephenson, 17 Iowa, 514; Birely v. Staley, 5 Gill & J. (Md.) 432, 25 Am. Dec. 303. 11. Euclid Nat. Bank v. Judkins. 66 Ark. 486, 51 S. W. 632; Eller v. Lacy, 137 Ind. 436, 36 N. E. 1088; Geiser Mfg. Co. v. Lee, 33 Ind. App. 38, 66 N. E. 701; Riddick v. Parr, 111 Iowa, 733, 82 N. W. 1002; Wales v. Lawrence, 36 N. J. Eq. 207; Randolph v. Daly, 16 N. J. Eq. 313. See Dreyfus v. Childs, 48 La. Ann. 872, 19 So. 929. |