Court Opinion

ID: 7049527
Source: CourtListenerOpinion
Date Created: 2022-07-24 06:58:38.826258+00
Date Added: 2024-06-11T16:11:40.951930
License: Public Domain

On Petition for a Rehearing.
Elliott, J.
The principal point decided affecting the rights of Mrs. Collins, who petitions for a rehearing, may be thus stated : A defendant who enters into a conspiracy to defraud the creditors of a co-conspirator, and who, pursuant to the purpose of the conspiracy, obtains a judgment, secures a sale under an execution thereon, thereby securing and retaining the avails of property that, of right, should have gone to the good-faith creditors of the co-conspirator, may be compelled to account for the' proceeds of the sale so procured by fraud.
As our former opinion shows, we sustained our conclusion by ample authority, and we then thought, and still think, that it rests on solid principle. Neither in the original argument nor in that on this petition was there cited any relevant authority to the contrary.
We did not overrule the case of Tasker v. Moss, 82 Ind. *40062, nor was it necessary to do so; we did, however, deny its relevancy. We deny its relevancy because, whatever may be thought of its soundness, it is easily discriminated from this case, for here the fraudulent vendee received and retains the proceeds of proj>erty which ought to have gone to the bona fide creditors, and not the person who, by fraud, was made to seem a creditor, but, in fact, was not.
The cases of First Nat’l Bank v. Carter, 89 Ind. 317, and Beach v. Carter, 93 Ind. 602, are not in point, for here the special finding shows that the defendant was an active participant in the fraud. It appears in the special finding not only that Mrs. Collins had actual knowledge of the fraud, and participated in it as a conspirator, but also that she paid no consideration whatever for the claim she asserted against Smith, and by moans of which she consummated her fraudulent purpose.
We disposed of the decisions in other States which declare that only judgment creditors can assail a fraudulent conveyance, by reference to our statute and our decisions. To the cases referred to in the former opinion we might add others if it were necessary. It is, and long has been, the law of Indiana that a creditor, although he has not taken judgment, may successfully assail a fraudulent conveyance. Field v. Holzman, 93 Ind. 205; Lindley v. Cross, 31 Ind. 106; Love v. Mikals, 11 Ind. 227.
No question as to parties was made in the court below, and none can be made here. We are not concerned with the question as to how the funds derived from the judgment shall be distributed, since that question is not before us. • It may be true that if there are other creditors, they will be entitled to share in the avails of the judgment when it is enforced, but that is nothing to the purpose. Here we.are required to decide, and, properly, can only decide, whether, upon the pleadings as the record presents them and the special finding as it is written, the plaintiffs were entitled to judgment. If other creditors come in and present an issue involving the *401distribution of the proceeds of the judgment, the question as to what the decree shall be will arise; but it is not now before us, as no pleadings of any description were filed presenting that question. If the complaint was thought defective for lack of parties, there was a plain method of attack; or, if facts not apparent on the face of the complaint required the presence of other parties, the question could easily have been presented by an answer.
The cases of Adler v. Fenton, 24 How. 407, and Lamb v. Stone, 11 Pick. 527, can not, it is very clear, be of force in a jurisdiction like ours, where the same tribunal possesses both law and chancery powers, and where the statute gives a creditor, who has no judgment, a right to relief against a fraudulent conspiracy and a fraudulent conveyance of property. Adler v. Fenton, supra, in truth sustains our position, for it is there said: “Unquestionably, the claims of morality and justice, as well as the legitimate interests of creditors, require there should be protection against those acts of an insolvent or dishonest debtor that ¿re contrary to the prescriptions of law, and are unfaithful and injurious. But the Legislature must determine upon the remedies appropriate for this end.’’ Our statutes and our decisions have given the honest creditor the protection which the Supreme Court of the United States says the claims of morality and justice require. It would be a bitter reproach to our courts if they should deny this protection, clothed as they are with the most comprehensive powers of law and equity. But the doctrine we here declare is by no means a novel one in this court. It was declared in Jones v. Reeder, 22 Ind. 111, and has been expressly approved. Blair v. Smith, supra; Chamberlin v. Jones, supra.
We think the true principle which underlies this class of cases is that stated by Gibson, J., in Penrod v. Mitchell, 8 Serg. & R. 523: “ Without doubt,” said this great judge, “ a conspiracy to enable a debtor to elude the process of the law, is immoral, and pernicious in its consequences to society: but *402as it is punishable by indictment, there is no reason that the actors in it should receive castigation for what affects the public, in a civil action whose legitimate object is the redress of private injury. If the value of the property assigned were not the standard, there would be no reason why damages beyond the amount of the judgment might not be given, which, I apprehend, could not be done, even if the value were of greater amount than the judgment.” We apply this principle here. • We adjudge that the wrong is pernicious, that it is punishable as a crime (R. S. 1881, section 2156),that from it the wrong-doer shall reap no benefit, and the creditor suffer no loss. This is nothing more than a just application of the maxim that no man shall take advantage of his own wrong, since, to give the dishonest conspirator benefit would be to yield him the advantage at the expense of the creditor. As held in Chamberlin v. Jones, supra, and many other cases, the wrong-doer who obtains property by fraud and thus excludes good-faith creditors, takes it as trustee and may be compelled to account, and if, as is well settled, the specific property can not be recovered, the plaintiff may have relief by way of compensation. Blair v. Smith, supra, and authorities cited.
The decision in Phipps v. Sedgwick, 95 U. S. 3, if conceded to be otherwise relevant, is not in point, because the court placed its judgment upon the disability created by coverture, saying that “Such a proposition would be a very unjust one to the wife still under the dominion, control, and personal influence of the husband.” Manifestly this rule can not apply in jurisdictions where a married woman possesses nearly all the rights of a feme sole, and where “ability is the rule and . disability the exception.” Lane v. Schlemmer, 114 Ind. 296; Indiana, etc., R. W. Co. v. Allen, 113 Ind. 581; Bennett v. Mattingly, 110 Ind. 197; Chandler v. Spencer, 109 Ind. 553; Rosa v. Prather, 103 Ind. 191.
But for another reason the case cited is not relevant; in that case there was constructive and not actual fraud. Here*403th ere was actual fraud and a corrupt purpose. We have not held, nor intimated, that the vendee would be liable where there was only constructive fraud. Wo are concerned only with cases where the fraud is an actual one, executed by means of a corrupt conspiracy.
Filed Dec. 20, 1888.
Petition overruled.