Case ID: dc_15/html/0291-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice James", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Outerbridge Horsey vs. Benjamin F. Beveridge et al.
    Equity. No. 9308.
    Decided October 26, 1885.
    The Chief Justice and Justices' James and Merrick sitting.
    1. Execution may issue on a judgment of this court at any time before the expiration of twelve years from the date of the return qf the last execution.
    2. An agreement between the judgment creditor and the judgment debtor that the latter will withdraw, all opposition or interference with an execution sale of the debtor’s property, on condition that the judgment creditor will surrender certain ■ of the debtor’s notes when he, the creditor, had purchased the property at the sale, renders such sale fraudulent against ■the creditors of the debtor.
    3. But where a subsequent partition sale of the property is had, the fraud will not impair the title of the purchaser under that sale, but the proceeds being in the hands of trustees appointed by the court, may be followed by the creditors.'
    STATEMENT OE THE CASE.
    Benjamin F. Beveridge, by the death of his mother, became entitled to a one-third interest in a piece of real estate . situated in the District of Columbia. The defendant Loughery, held an unsatisfied judgment against Beveridge, and ■the complainant Horsey another, but previous in date to that of Loughery. Loughery levied upon Beveridge’s interest,in the property and caused it to be sold by the marshal in satisfaction of his judgment. At this sale Loughery became the purchaser for flOO., Afterwards a proceeding in partition was commenced by the tenants of the property, Loughery being made a party by reason of his purchase at the marshal’s sale of Beveridge’s interest. A decree of partition was had, trustees were appointed and the property sold for $5,200. The cause was then referred to the auditor to distribute the proceeds. While the case was pending before the auditor, Horsey discovered the fact of the execution sale of Beveridge’s interest to Loughery and thereupon immediately appeared in the cause by petition and resisted the distribution to Loughery of. the share which, but for the execution sale, would be distributable to Beveridge’s creditors. The share amounted to about $1,500. While this matter was pending, Horsey, deeming it advisable to attack the sale directly and not in a collateral proceeding, obtained an order of court staying proceedings as to the distribution of the Beveridge-Loughery share and giving him leave to conjmence such proceedings, by bill in equity or otherwise, as he might be advised.
    He thereupon filed this bill attacking the sale upon a number of grounds, the following of which were passed upon by the court:
    1. Because the levy and sale did not take place within twelve years from the date of the entry of the judgment, nor from the date of the issuing of the last fi. fa. thereon.
    2. That the purchase of the said property at said sale was made by Loughery for the benefit of Beveridge, and for the avowed purpose of depriving this complainant of his lien upon said property and of the fruits of his judgment, in pursuance of an agreement made before said sale, between Loughery and Beveridge, whereby Loughery was permitted by Beveridge to purchase the latter’s interest at said sale and to retain the same undisturbed by Beveridge, on consideration of Loughery cancelling and surrendering to Beveridge certain of the latter’s overdue promissory notes held by Loughery and amounting to $935.
    The answer to the bill denied all fraud in the sale.
    Testimony was taken and the facts appear in the opinion.
    
      Franklin H. Mackey for complainant:
    The complainant contends that the life of the lien of this judgment must run from the date of the judgment. If this be so, the judgment, so far, at least, as it was a lien upon the property in question, had been dead three months and two days before the issuing of the fi. fa. under which the property was sold. Mulliken vs. Duvall, 7 Gill & J., 355; Hazelhurst vs. Morris, 28 Md., 67; Hagerstown Bank vs. Thomas, 35 Md., 515, 518; Mitchell vs. Chestnut, 31 Md., 525; Johnson vs. Hines, 61 Md., 127; Poe Pr., tit., Scire Facias, ch. xxv, §§ 585-590; Id., tit., Execution, ch. xxvi, § 646; Freem. Exns., § 282; Freem. Judg., § 394a.
    The cases of Tenney vs. Hemenway, 53 Ill., 97, and Davis vs. Ehrman, 20 Penn. St., 256, are instructive upon this point, viz., that the lien of a judgment is not kept alive by the issuing of a fi. fa.
    
    If a purchaser at an auction sale, by fraudulent management or misrepresentation, prevent the attendance of others or use any influence to put down fair competition in bidding, a court of equity will interpose and set the sale aside on the ground of fraud. Newman vs. Meek, 1 Freem. Ch., 441; Underwood vs. McVeigh, 23 Gratt., 429: Barrett vs. Bath Paper Co., 13 S. C., 128; Plaster vs. Barger, 5 Ind., 232; Martin vs. Ranlett, 5 Rich. L., 541; Dutcher vs. Leake, 44 Ill., 398; Slater vs. Maxwell, 73 U. S. (6 Wall.), 268; Cocks vs. Izard, 74 U. S. (7 Wall.), 559; Aldrich vs. Maitland, 4 Mich., 207; see Plaster vs. Barger, supra (a case of an execution sale). Creditors must have the benefit of debtor’s property.
    The term “vendor,” at a sheriff’s sale includes all whose interest it is that the property should bring its full value, and subsequent judgment creditors are such persons. Barrett vs. Bath Paper Co., 13 S. C., 146.
    A combination between the debtor and purchaser at a judicial sale for the benefit of the debtor, is fraudulent as to his creditors; so is every sale with intent to injure or delay the creditors, and this may be proved by circumstances or by the declaration of the parties. 1 Story Eq., § 295; Jones vs. Caswell, 3 Johns. Cas., 29.
    It makes no difference whether the offer he to pay cash or to release an old indebtedness. Gardiner vs. Morse, 25 Me., 140.
    It is never a defence to say of a particular agreement coming within the condemnation of a general rule of public policj, that it ought to be excepted therefrom because it did not have the effect which the law attributes to such -a class of agreements. Firemen’s Ch. Assn. vs. Berghaus, 13 La. An., 209.
    Moral fraud is not the test. Jones vs. P. & C. R. R. Co., 32 N. H., 555.
    Leon Tobriner for defendants:
    The objection that the levy and sale under the fi. fa. did not take place within twelve years from the date of the judgment or from the issuing of the last fi.fa., is settled by the opinion of the court in Thompson vs. Beveridge, 3 Mackey, 170.
    To render a sale void because of a combination to “stifle the bidding,” a trick or artifice must be resorted to. The object must be to stifle competition; to get the property at an under value; the combination must be made in contemplation of a sale. See Barrett vs. Bath Paper Co., 13 S. C., 159.
    Objections based upon irregularities in the proceedings of the marshal in levying the writ, cannot be raised in this suit and can only be taken advantage of in the cause in which they were committed. Cooper vs. Harter, 2 Ind., 253 5 Swiggart vs. Harber, 5 Ill. (4 Scam.), 371; Reed vs. Austin, 9 Mo., 713; Rigg vs. Cook, 9 Ill., (4 Gilm.), 348; Miles vs. Knott, 12 Gill & J., 453; Ludlow vs. Ramsey, 78 U. S. (11 Wall.), 587; Cooper vs. Reynolds, 11 U. S. (10 Wall.), 315.
   Mr. Justice James

delivered the opinion of the court:

On the 18th of May, 1812, the plaintiff recovered judgment in this court against the defendant Beveridge for $388.60, with interest from August 17,1871. On August 17, 1872, plaintiff caused a fieri facias to be issued on this judgment, which was duly returned nulla bona, and again on July 14, 1884, an alias fi. fa., which was also returned nulla bona.

On December 21, 1871, Alois Meisel and others recovered judgment in this court against the same defendant for $100, with interest from January 21, 1871. The defendant Loughery purchased this judgment some time in January or February, 1884, and on March 22,1884, just twelve years after the issuing of the last fi. fa., caused an alias fi.fa. to be issued.

Meantime, in May, 1883, Amanda Beveridge, mother of the defendant Beveridge, died a widow, intestate, and seized and possessed of the eastern half of lot 6 in reservation 11 in Washington, and thereupon the said defendant inherited one-third interest in the premises. Loughery caused the Meisel judgment to be levied thereon on March 24, 1884, and on May 5,1884, a sale under this levy was made by the marshal of the District, at which Loughery became purchaser for $100. On the next day a deed was executed to him by the marshal.

Under the rule laid down in Thompson vs. Beveridge, 3 Mackey, 174, it appears that both the plaintiff’s judgment and the Meisel judgment had been continued in force by the issuing and return of the writ of fi. fa.

At the time of the sale under the Meisel judgment, there were several other prior judgments which were then liens on the premises, but those liens were allowed afterwmrds to expire. It appears that when Loughery bought the Meisel judgment, he held promissory notes of the defendant Beveridge to the amount of $935. It is unnecessary to go into the details of the pleadings and proofs relating to the use made of this claim in making the judicial sale; but we are satisfied that an agreement was made between Loughery and Beveridge that the latter would withdraw all opposition or interference with the sale if Loughery would give him up these notes on making the purchase at the marshal’s sale; and we hold that the purchase by Loughery was thereby tainted by fraud against other creditors.

On the 24th of May, 1884, Loughery conveyed the undivided interest purchased by him to Leon Tobriner, in trust, to secure his note for $325, to the defendant Zachariah Tobriner. Afterwards, on 23d June, 1884, proceedings in partition were commenced in this court by one of the heirs of Amanda Beveridge, to which Loughery and Leon and Zachariah Tobriner were made defendants. That cause proceeded to a decree for sale, in which Leon Tobriner and the defendant Blair were appointed trustees to sell, and the premises were sold for $5,200. The cause was referred to the auditor to state the account of the trustees and a distribution of the proceeds. It was only after this that the plaintiff learned, for the first time, of the judicial sale of Beveridge’s interest to Loughery, and thereupon, upon his petition, he was made party to the proceedings. It appears that the proceeds of the partition sale are in the registry of the court.

As we have already said, we hold that the arrangement between Loughery and Beveridge was in fraud of the rights of other creditors, but this fraud does not affect the title of the purchaser at the partition sale, and the property itself cannot be reached. But the proceeds of the property are still in the hands of the court, and, as against Loughery, we see no difficulty in treating them just as we should have treated the property. We shall still hold that Loughery cannot, by the arrangement concerning the notes held by him, acquire any interest beyond the judgment assigned to him and which he was seeking to satisfy.

We hold, therefore, that after payment of the amount due on this judgment and of the note secured to Zachariah Tobriner, the proceeds of the sale in the partition proceedings shall be applied to the judgment of plaintiff, and that only the balance, if any, should go to Loughery.

Decree accordingly.