Court Opinion

ID: 8256963
Source: CourtListenerOpinion
Date Created: 2022-10-16 15:32:43.891763+00
Date Added: 2024-06-11T16:43:01.620483
License: Public Domain

Handy, J.,
delivered the following dissenting opinion:— ( .
I will very briefly state the reasons why I cannot agree with the opinion of the majority of the court.
The original bill, which- is the subject of consideration in this case, was filed by the present appellants, as judgment creditors of Thomas M. Green, for the purpose of setting aside certain fraudulent conveyances made by Green, and seeking to have the property thus fraudulently conveyed, subjected and sold by the aid of a Court of Equity, in satisfaction of their executions. These judgments were valid and unsatisfied when the bill was filed, and executions -upon them had been obstructed, and been returned “ nulla bona,” by reason of the alleged fraudulent conveyances. Of course, if the conveyances were fraudulent, the creditors had the right to go into equity to have them set aside, and to seek its aid in having the property, fraudulently conveyed, appropriated in satisfaction of them.
When the bill was filed for that purpose, and subpoena served, it was notice to all persons, at least in this State, claiming title under the parties to the suit, by purchase after that time; and such purchasers would stand in no better situation than the parties from whom they acquired their titles. This is the universal doctrine in relation to the effect of a lis pendens.
It is undoubtedly true, that a defendant, against whom there is a judgment which is not a lien upon his property, may sell that property, and the purchaser may obtain a good title ;' and upon the same principle of the jus disponendi, a party indebted may make a bona fide sale of his property. But after bill filed and *87subpoena served, for the purpose of subjecting specific property to the claim or demand of the complainant, and if the claim be of such a nature as that the property ought to be subjected to it, under the rules prevailing in a court of equity, the power of unrestricted disposition in the defendant is suspended or lost, and a purchaser from him pendente lite, takes the property subject to the lien which attached upon it by the institution of the suit. And it is immaterial, though the judgment was not a lien, when the suit was commenced; for, in this case, it is not pretended but that the execution was in full force, and capable of enforcement against .the property, but for the obstacles created by the fraudulent conveyances, and which the bill was filed to remove.
The proper distinction is stated by Lord Hardwicke, in Edgell v. Haywood, 3 Atkins, 357, thus: “ If, therefore, after the judgment, or even after the fieri facias, the debtor had assigned the property bona fide, and for a valuable consideration, and without notice, it would .be good, and prevail against the creditor. But after a bill brought, and a Us pendens created as to this thing, such assignment could not prevail.”
And it is well settled by authorities in this country, that if a creditor files a bill in his own name, and for his sole benefit, to set aside fraudulent conveyances, and to have the property applied, by the aid of a Court of Equity, to the payment of his judgment, and no lien has been or can be acquired at law, he acquires a spe^~ cific lien by filing the bill, and is entitled to priority over other j creditors; and that any party purchasing the property sought tcT be subjected to the claim, is a purchaser pendente lite. M‘Dermott v. Strong, 4 Johns. C. R. 687; Edmeston v. Lyde, 1 Paige, 637; Corning v. White, 2 Ib. 567; Farnham v. Campbell, 10 Ib. 598; Weed v. Pierce, 9 Cow. 722; United States Bank v. Burke, 4 Blackf. 141; Hadden v. Spader, 20 Johns. R. 554; Blake v. Bigelow, 5 Georgia, 437.
The filing of the bill under consideration being for the purpose, not only of setting aside the fraudulent conveyances, but to have the property sold and applied to the complainants’ claims, by the aid'of a court of equity, is tantamount to a seizure of the pro-" perty for the purposes of the suit, and so far as the interests of *88the defendant and of supervening purchasers, after the commencement of the suit, are concerned. ,
An exception to the operation of the general rule, with respect to the effect of a Us pendens, prevails in the case of a bill filed to establish an unregistered mortgage against a bona fide purchaser, who had become such since the filing of the bill. And it is held, that the Us pendens is not notice to such purchaser, because the law has appointed the place where mortgages must be registered, in order to be notice to purchasers, and if there be no registry there, the purchaser is not held to constructive notice by any other means. The registration in such a case is the only thing that can operate as constructive notice. But in the present case, not only would the lien of the judgment, if it had existed at the time of the purchase be notice, but the commencement of the suit to subject the property to the complainant’s claim, independent of the lien of the judgment, is notice in law to all persons who might thereafter purchase from the defendants, pending the suit. If this be not true, the very principle upon which the whole doctrine of Us pen-dens is founded must be subverted, and the jurisdiction of the Court of Chancery, which has attached upon the property in controversy, affo.rds not the least impediment to the free alienation of the property, by the defendant to the action. The consequence would be, that all that a party, who had conveyed his property in fraud of his creditors, and against whom a suit in equity was pending, to set it aside and have the property applied by that court to the payment of the debt, would have to do, would be to prolong the litigation until the lien of the judgment had expired, and the jurisdiction of the court over the subject-matter, which had properly vested, would be utterly frustrated. And if the bill was filed to subject equitable assets, upon which a judgment at law is not a lien, the suit in chancery would afford not the least impediment to the defendant’s right of disposition.
It appears to me, with all deference, that such a doctrine is at war with the settled principles of the law of Us pendens, and is anomalous and dangerous in the extreme to the proper administration of justice, and that the effect of it would be, that a bill in equity, filed in order to subject property, fraudulently conveyed, *89to the payment of the party’s just debts, would be but little more than a judicial notice to the party to make other fraudulent conveyances to defeat the jurisdiction of the court.