Summary
In Francis v. Lawrence, 48 N.J. Eq. 508, 22 A. 259, the court says: "An attaching creditor obtains a lien upon the property by his writ, as a judgment creditor obtains one by his judgment, so such attaching creditor can maintain a creditor's bill to set aside a fraudulent conveyance of the property."
Summary of this case from Baird v. MeyerOpinion
07-06-1891
FRANCIS et al. v. LAWRENCE.
J. A. Landregan, for complainants. Niven & Mint urn, for defendants.
Creditors' bill by R. P. Francis & Son and Henry Schneider against Daniel and Bridget Lawrence, to set aside an alleged fraudulent sale of real estate. Decree for complainants.
J. A. Landregan, for complainants.
Niven & Mint urn, for defendants.
GREEN, V. C. The complainants R. P. Francis & Son on February 5, A. D. 1890, issued a writ of attachment out of the Hudson county circuit court against the rights and credits, moneys and effects, goods and chattels, lands and tenements, of Daniel Lawrence, under which the sheriff, on the same day, attached a lot of land and premises in North Bergen, being property conveyed to the defendant in attachment by one John Fitzpatrick. Henry Schneider is an applying creditor under the attachment. Judgment in the action was entered in favor of the plaintiffs the said R. P. Francis & Son on the 17th day of December, A. D. 1890, for $492.50, and in favor of Henry Schneider, an applying creditor under said attachment, who has also been made a party complainant to this suit, for the sum of $320.19. This suit is brought by R. P. Francis & Son in behalf of themselves and such other creditors as may come in, to set aside a conveyance of the property attached, made by Daniel Lawrence and wife to R. J. Tallon, and by R. J. Tallon and wife to Bridget Lawrence, the wife of the judgment debtor. These conveyances are expressed to be in consideration of one dollar, and are admitted to have been voluntary, the wife saying that the object of them was to put the property in her name. The defense, as developed by the answer, is that, at the time of these conveyances, Lawrence, the grantor, was not indebted, and that he was in a position to legally and equitably make a valid gift to his wife, good as against subsequent creditors.
The deed from Lawrence and wife to Tallon is dated March 25, A. D. 1889. The subscribing witness was Charles Shangood, notary public No. 317, New York county, N. Y. It was acknowledged October 16, 1889, before Henry. A. Gaede, and received in the office of the register of Hudson county for record October 17, 1889, at 10:45 a.m. Mrs. Lawrence says that the first deed was drawn in New York by some person in Christopher street, and was signed there at the time in March when it bears date, was given to her then, and was retained by her in her possession until the other deed was made, hi October, and that its purpose was to transfer the property to her; that Mr. Gaede prepared the deed from Tallon to her; that Tallon is her brother; that all four of them—that is, she and her husband and Tallon and his wife—went down to Mr. Gaede's; that Tallon's wife's name was not inserted in a deed which had been made out, and that a new deed was drawn by Mr. Gaede, which was executed; and that they all waited there while that deed from Tallon and his wife to her was drawn, and that she then gave the deeds to her son, who took them the next day to be recorded. It is evident from this that the deed from Lawrence and wife to Tallon was not delivered or took effect until the 16th of October, 1889, and underthe rule In Gardnerv. Klelnke, 46 N. J. Eq. 90, 18 Atl. Rep.457, and Hagerman v. Buchanan, 45 N. J. Eq. 292, 17 Atl. Rep. 946, these conveyances are void as against any one a creditor at that time.
The point is raised that Francis and Schneider do not stand in the position of creditors, as contemplated by the statute, because Lawrence's indebtedness was on an open account. 1 do not see the force of this contention. A man is as much a debtor with reference to his store bill as he is upon a note which he has given for a certain definite amount. To the amount that these claims were due on the 16th of October, 1889, the law presumes the conveyances attacked to have been fraudulent and void.
As to the balance, it seems unnecessary to consider what effect should be given to the fact that contracts had been made by Lawrence with these creditors prior to the 16th of October, 1889, which were at that time in course of fulfillment, and were afterwards completed; for 1 think the evidence of fraud is so clearly established that this transfer must be regarded, independent of that fact, as fraudulent as to these two creditors. This man Lawrence was a carpenter, but not in business for himself prior to March, 1889. Having a son who was a mason, and another a carpenter, he said he thought he would set up in business for himself. In the early part of March he applied to Francis & Son for credit; and on Mr. Francis' assistant, in accordance with his custom, not finding him rated either by Dun or Bradstreet, requiring some assurance of his ability to meet the obligations he sought to incur, he represented himself as the owner of the house and lot in question, as he undoubtedly then was. On subsequent occasions, when making additional contracts, and when pressed for payment, he repeated these representations to the assistant of Francis & Son, by whom he was treated as the owner of this property. Mr. Schneider, the other complainant, had been a sufferer from the failure of the former employer of Lawrence, and when La wrence applied to him he stated to Mr. Schneider that he was not like the former man, but he owned the house and lot where he lived, himself; there was no mortgage on it; and that it was not in his wife's name. At the time of these representations, except the first, his wife was in possession of a conveyance of the property from him to his brother-in-law, for the purpose of vesting the title in the name of the wife. The deed was not delivered to the grantee, and not placed upon the record, but was seemingly held by the wife, so as to allow the husband to trade upon the false credit which he acquired by being the apparent owner of the property, and yet to have it ready to put upon the record at a moment's notice. He continued in his business, and incurred obligations therein, until January, 1890, when he unceremoniously left these parts, without his family or creditors knowing where he had gone. This transaction cannot be regarded in any other light than as a fraud upon the creditors, (Beeckman v. Montgomery, 14 N. J. Eq. 106; Cramer v. Reford, 17 N. J. Eq. 367, 383; Bank v. Hamilton, 34 N. J. Eq. 158;) and, as these conveyances stand in the way of the collection of the judgment which has been obtained, they must be set aside, unless objections raised by counsel are substantial, (Hardenburgh v. Blair, 30 N. J. Eq. 645, 658; Robert v. Hodges, 16 N. J. Eq. 299.)
I have already noticed the first point made by counsel. The second is that the complainants are not entitled to a decree because they have not shown the issue and return of an execution against Daniel Lawrence; and, third, that at the time the bill was filed there was no judgment of record on which they could base a creditors' bill. The reason that a court of chancery will not take cognizance of the claim of a general creditor is that, until such claim has ripened into a judgment, the creditor has no lien which is to be enforced against the property. The court of chancery in these cases comes in to aid the law, and sweep away any impediment which may have been interposed, which would prevent the creditor from enjoying the fruits of his proceedings at law, and the rule, stated generally, undoubtedly is that none but a judgment creditor can maintain a creditors' bill. There is an exception in this state in favor of an attaching creditor, because, under the law of New Jersey, an attaching creditor obtains a lien upon the property by his writ, as a judgment creditor obtains one by his judgment, so that it is uniformly held in this state that an attaching credit or can maintain a suit of this character as well as a judgment creditor. Hunt v. Field, 9 N. J. Eq. 36; Williams v. Michcnor, 11 N. J. Eq. 520; Robert v. Hodges, 16 N. J. Eq. 299; Cocks v. Varney, 45 N. J. Eq. 72, 17 Atl. Rep. 108.
It is urged that it should appear that complainant could not obtain satisfaction of his debt except by the remedy sought, and that he must first exhaust his legal remedies. But, from the very character of the proceeding, the writ of attachment accomplishes all that an execution under a judgment does. The issuing and return of an execution is taken as plenary proof, if any is required, by the court, not only that the plaintiff has exhausted his legal remedy, but that the defendant is without other property to answer the judgment. An attachment does the same thing. The issuing of the attachment is the resort of the creditor to his legal remedy, and the return of the attachment is a bringing into court of all the property of the defendant. It is there to answer the debt, not only of the plaintiff, but of applying creditors. But if the property attached cannot be made available under the attachment, in consequence of some impediment interposed over which equity has jurisdiction, and law has not, then the creditor conies into this court and asks it to remove that impediment, so that the process of law may reach it. There is no execution in attachment. The attachment being returned, the property is sold by the order of the court. If it stands on the record in the name of the defendant in attachment, there would be no trouble inrealizing its value at a sale, but, as in this ease the defendant has put the title in his wife's name, this court lone can clear the title so as to permit the property to be sold under an order of the court of law. In my opinion, the claims of the complainants having been established by the judgment in the attachment suit, a decree should be made declaring that these conveyances are fraudulent as against these complainants.