Case Name: Nicholas B. Rappleye v. The International Bank
Court: Illinois Supreme Court
Jurisdiction: Illinois
Decision Date: 1879-09
Citations: 93 Ill. 396
Docket Number: 
Parties: Nicholas B. Rappleye v. The International Bank.
Judges: 
Reporter: Illinois Reports
Volume: 93
Pages: 396–410

Head Matter:
Nicholas B. Rappleye v. The International Bank.
1. Creditor’s bilí—preference of lien in equity. It is a well established principle that where a creditor has, through the instrumentality of a court of equity, sought out and discovered the property of his debtor, which he had before been unable to discover and seize upon by execution at law, he becomes entitled to a preference over other creditors to have his judgment "first satisfied.
2. Where, after the execution of a deed of trust by a debtor to hinder, delay and defraud his creditors, two judgments were recovered against him, and the senior judgment creditor made no levy on the equity of redemption, and took no steps to avoid the fraudulent trust deed, and the junior judgment creditor, after levy upon the property, filed his bill in equity to have the deed of trust set aside, which resulted in a release of the trust deed, it was held, that the junior creditor, by his superior diligence in discovering the fraud and causing the release of the trust deed, was entitled to a preference over the other judgment creditor to the amount of the sum secured in the trust deed.
3. Judgment—no lien on land fraudulently conveyed. A judgment is no lien on lands fraudulently conveyed by the debtor before the judgment was recovered. The debtor in such case has no equitable or legal title upon which a lien can attach.
4. Fraudulent conveyance—whether void, or only voidable-—former decisions. It was said in Gould v. Steinburg, 84 Ill. 170, that “by the statute deeds made in fraud of creditors are absolutely void as to creditors.” These words are not to be understood in their literal sense, but in connection with the matter under discussion, and as having no different meaning from the language used in Lyon v. Robbins, 46 Ill. 279, where it was said, such deeds “ are not void, but only voidable.”
Appeal from the Superior Court of Cook county; the Hon. Samuel M. Moore, Judge, presiding.
On the 7th day of November, 1871, Charles Sonne executed a trust deed to Francis A. Hoffman, of the south half of lots 22 and 23 in Egan’s south addition to Chicago, in the county of Cook; which trust deed purported to secure the payment of k promissory note made by said Sonne, bearing even date with the trust deed, for the sum of $2500, payable to the order of Frederick W. Jaeger one year after its date, with interest. The trust deed was duly recorded. On the 16th day of October, 1873, Nelson Tuttle recovered a judgment against Sonne in the Superior Court of Cook county for $1550 and costs, on which execution was issued October 31, 1873; no return appears on the execution. On April 27,1874, an alias execution was issued on the judgment, and returned no part satisfied and no property found July 25, 1874.
On the 26th day of May, 1874, the International Bank recovered a judgment against Sonne in the circuit court of Shelby county for $3791.62 and costs. On the 5th day of August, 1874, an execution was issued upon the latter judgment, directed to the sheriff of Cook county to execute, which was levied upon the premises above described, and on the 4th day of November, 1874, the execution was returned no part satisfied, and the property not sold by order of plaintiff’s attorney. The indebtedness upon which the judgment of the International Bank was recovered existed before the trust deed was made. On the 14th day of August, 1874, the certificate of the levy made under the execution issued upon the judgment of the bank, was filed in the recorder’s office of Cook county and recorded therein.
On the 29th day of January, 1875, the International Bank filed its original bill in said Superior Court against Sonne, Jaeger and Hoffman, to have the trust deed set aside and the premises subjected to the payment of the judgment of the bank, on the ground that the trust deed and note were given without consideration and with the intent to delay, hinder and defraud the creditors of Sonne. On the 5th day of March, 1875, proceedings in bankruptcy were instituted against Sonne, and his assignee in bankruptcy appointed, by reason whereof proceedings in the Superior Court were suspended.
On the 2d day of March, 1875, the said trust deed was released by Hoffman, the trustee, and on that day the judgment above mentioned, of Tuttle against Sonne, was assigned to Nicholas B. Rappleye. Rappleye afterward caused a pluries execution to be issued upon the judgment, under which the sheriff of Cook county levied upon the premises in question, and advertised the same to be sold on the 21st day of May, 1875.
Thereupon the International Bank filed a petition in the bankruptcy proceedings setting forth among other things that it was its intention to file a supplemental bill in its suit in the Superior Court, and praying that Rappleye and the sheriff might be restrained from selling said premises until the question of priority between the bank and Rappleye could be determined, and praying leave of the bankruptcy court to proceed with its suit in the Superior Court. This leave was refused, but an order was entered restraining Rappleye and the sheriff from selling the premises until the 'further order of the court. On the 31st day of July, 1875, the assignee sold the interest he had in the premises to Rappleye, which sale was confirmed by the court of bankruptcy, and the restraining order against Rappleye and the sheriff was thereupon dissolved and leave given to the bank to proceed with its suit in the Superior Court.
On the 2d day of August, 1875, the International Bank filed its supplemental bill in the Superior Court, setting forth the foregoing, and alleging further that by reason of the filing of the original bill, the fraudulent character of the trust deed had been discovered and it caused to be released, claiming that by reason thereof, as to the interest or estate conveyed by the trust deed, it had gained a priority over the senior judg ment so assigned to Rappleye, and praying, in effect, that the premises might be sold free of incumbrances, the proceeds of sale be paid into court, and that out of the proceeds $2500, the amount of the trust deed, might be first applied upon the judgment of the bank; and an injunction was asked to restrain Rappleye and the sheriff from selling until the question of priority between Rappleye and the bank could be determined.
A temporary injunction was granted. Answers were filed, proofs taken, and upon final hearing the court found that the trust deed was fraudulent, that the bank by filing its original bill discovered the fraudulent character of the trust deed and caused it to be released, and that by reason of such diligence the bank had gained a priority of interest in the premises over the senior judgment of Rappleye to the extent of $2500, the amount of the trust deed so removed from the premises. From the decree Rappleye appeals to this court.
Mr. Charles L. Easton, for the appellant.
Mr. John P. Ahrens, and Messrs. Rosenthal & Pence, for the appellee.

Opinion:
Mr. Justice Sheldon
delivered the opinion of the Court:
lío point is made in the argument for appellant as to the correctness of the finding of the court below in regard to the facts, that the trust deed was made with the intent to delay, hinder or defraud the creditors of Sonne, and that the bank by filing its original bill discovered the fraudulent character of the trust deed and caused it to be released. And from an examination of the evidence we see no reason to question the propriety of the finding in this respect.
It is the rule of priority the court adopted and applied as arising upon the above facts, which is insisted upon as being erroneous.
It is a well established principle, when a creditor has, through the instrumentality of a court of equity, sought out and discovered the property of his debtor, which he had before been unable to discover and seize upon by execution at law, that he becomes entitled to a preference over other creditors to have his judgment first satisfied. Gordon v. Lowell, 21 Me. 257.
In Edmeston v. Lyde, 1 Paige, 639, in reference to this subject of gaining a priority, the court say: " The creditor whose legal diligence has pursued the property into this court is entitled to a preference as the reward of his vigilance." "If the creditor whose execution is first returned unsatisfied, pursues the race of legal diligence by the commencement of a suit here, he will obtain the reward of his vigilance; but if he abandons the pursuit, or lingers on the way before he has obtained a specific lien, he has no right to complain if another credited obtains a preference by superior vigilance."
In Smith v. Lind, 29 Ill. 30, this court said: " There is certainly some merit in searching records, discovering property, investigating title, and procuring sale of it, and all at the creditor's costs and expense, by which he ought to profit. Both these judgment creditors were in a position to use diligence—one only encountered the labor and expense. To him should be the reward."
In Lyon v. Robbins, 46 Ill. 279, a junior judgment creditor caused to be set aside an absolute conveyance made before either judgment, on the ground of its being fraudulent as against creditors, and the question was, whether the junior judgment creditor thereby gained a priority over the senior judgment creditor. The court say: "The deed of Miller (judgment debtor) to Williams was not void, but only voidable. It vested the title in the grantee, subject to be divested by the action of creditors. It was valid as against Miller, and a conveyance by Williams to an innocent purchaser, for a valuable consideration, would have been valid as against all persons. There was then, at the time these judgments were rendered, no estate in Miller to which their liens attached in the order of their rendition, and although the judgment' of plaintiffs in error was junior in date to that of defendants, yet the former having set aside the title of Williams, subjected the premises to sale, and obtained a master's deed before the defendants made any move in this direction, it would now be very inequitable to permit the defendants to come forward and sweep away the fruits of their superior diligence."
We do not see why this case of Lyon v. Robbins does not decide the present case. It is not denied that appellant's judgment was a lien on the equity of redemption of Sonne in the premises, but this was a lien on the land, subject to the incumbrance of the trust deed. Pahlman v. Shumway, 24 Ill. 127. The lien, however, according to this case of Lyon v. Robbins, did not extend to the interest or estate conveyed by the trust deed, notwithstanding the trust deed was fraudulent and void as to Sonne's creditors. The circumstance of the fraudulent conveyance in the former case being an absolute conveyance, and in the present case a trust deed, does not vary the application here of the principle there declared. The difference in that respect in the two cases is, that in the former the grantor parted with the whole of his interest in the premises, leaving no part upon which the lien of a judgment could attach; and in the latter, the grantor parted with only a portion of his interest, leaving the remainder, the equity of redemption, for the lien of the judgment to attach upon.
There was then, according to the case of Lyon v. Robbins, at the time of the rendition of appellant's judgment, and of the recording of the certificate of levy of appellee, no estate in Sonne, except the equity of redemption, to which these liens attached in the order of their accruing. The trust deed was not void, but only voidable. It vested the estate thereby conveyed in Hoffman for the benefit of Jaeger, subject to be divested by creditors. It was valid as against Sonne. Had the deed of trust been foreclosed, and the property bought by a bona fide purchaser, he would have acquired a valid title as against both appellant and appellee. Appellee has prevented that from being done. It has caused, by its suit brought, the trust deed to be released. The holder of the other judgment did nothing whatever in that direction. He was content in having his execution returned no part satisfied and no property found. The equity of redemption, seemingly, was not regarded as of sufficient value to have it sold under execution, as the judgment creditors rested without having it done. Although appellant might have proceeded and have avoided the trust deed, and have subjected the estate thereby conveyed to the satisfaction of his judgment, or have had the lots sold on execution, he did not choose to assume that burden or expense. Appellee then assumed the -undertaking of avoiding the trust deed, and succeeded in effecting the removal of the incumbrance, encountering all the expense and labor thereof. It is through this proceeding of appellee that this estate conveyed by the trust deed has been secured for application to the satisfaction of these judgments. Appellant now comes forward to appropriate to himself all the benefit. It does not seem just. And we think, under the equitable doctrine which courts apply in analogous cases, and the decision in Lyon v. Robbins, appellee is fairly entitled to a preference as a reward of its diligence. It. is the legal maxim, vigilantibus non dormientibus jura subveniunt.
Appellant makes the point that there is a difference in the phraseology of the statute of 1845, the one in force when Lyon v. Robbins was decided, as to the lien of a judgment on real estate, and the one on that subject passed in 1872, and since in force, which should distinguish that case from the one at bar. The difference insisted on is, that the latter statute makes a judgment a lien on all equitable interests in lands, while the former, with only a limited exception not applying to such a case as this, made the judgment a lien on only the legal estate. And it is assumed that-when a debtor makes a conveyance of land in fraud of creditors, there yet remains in him an equitable estate in the land; and it is contended that there is now, under the present statute, a judgment lien on this equitable estate which there was not under the previous statute.
It is a mistaken notion that after the making of a fraudulent conveyance as to creditors, there remains in the fraudulent grantor an equitable estate in the land conveyed. If this were so, he could sell and convey to another such estate. But the fraudulent conveyance is good as against the grantor, and as respects himself vests all his interest in the land, equitable as well as legal, in the grantee. The deed is voidable by creditors, and the estate conveyed is subject to be divested by their action. There is no such distinction as that of equitable and legal estate applicable to the subject. When the creditor proceeds in a court of equity it is not upon the idea of subjecting an equitable estate only which the debtor has in the land, but it is to avoid the fraudulent conveyance, which is voidable by him. It is no more an equitable than a legal estate which he subjects to the satisfaction of his debt. Were there, after a conveyance in fraud of creditors, an equitable estate in the land in the debtor, upon which the lien of a judgment would attach, then, while the judgment subsisted, there would not be the capability in the fraudulent grantee to sell and convey an indefeasible title in the land to a bona fide purchaser for good consideration. But of this power there is no doubt.
This difference then between the two statutes, in the respect of the latter making a judgment a lien on equitable estates in land, does not affect the applicability of the decision in Lyon v. Robbins to the present case.
The decree will be affirmed.
Decree affirmed.