Court Opinion

ID: 9652667
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:29:55.454836+00
Date Added: 2024-06-11T18:12:53.389473
License: Public Domain

SIBLEY, Circuit Judge.
We granted a rehearing to reconsider-whether the decree can be upheld at all,, since the administratrix of J. T. Keene was. not made a party.
The cases are in conflict as to-whether in a suit by creditors to set aside a. *335conveyance fraudulent as to them and to administer the property conveyed, the debtor or his personal representative is a necessary party when the debtor has finally parted with all interest in the property conveyed and is under no liability to the grantee should the latter lose it. By the better opinion, since the debtor in such a case has no interest if the conveyance is upheld, and will acquire none if it be set aside as to creditors because it is still good as to him and those claiming under him and they cannot even have an overplus, he will not be affected by the judgment and there is no necessity to have him or his representatives before the court. 24 Am.Jur., Fraudulent Conveyances, § 205; Allan v. Moline Plow Co., 8 Cir., 14 F.2d 912; Keaton v. Little, 10 Cir., 34 F.2d 396. But in the present case Keene in making the attacked conveyances did not part with all his interest in the property conveyed, but retained a vendor’s lien to secure the payment of $20,000 of purchase money notes. These have been inventoried as assets of his estate and charged .as such against his administratrix. If the conveyances are sustained, the notes stand good and she may collect them. But if the conveyances are held fraudulent the notes also may be void. Hughes v. Plughes, Tex. Com.App., 221 S.W. 970. This decree ordering sale of the land with no provision for paying the notes would certainly prejudice them. We have concluded that it cannot be done without affording the administratrix a hearing, and that this part of the decree must be reversed.
We do not order a dismissal of the suit because that is not the prime remedy for a failure to join a party; but opportunity should and will be given to bring in the administratrix by amendment. It appears that she is accessible and her citizenship such as not to defeat federal jurisdiction.
Nor will the suit then be defeated by the decisions in Scott v. Neely, 140 U.S. 106, 11 S.Ct. 712, 35 L.Ed. 358; Cates v. Allen, 149 U.S. 451, 13 S.Ct. 883, 37 L.Ed. 804; and White v. Croker, 5 Cir., 13 F.2d 321. They hold that there is not jurisdiction in equity in a federal court to set aside conveyances made in fraud of creditors and to administer the property conveyed, at the instance of simple contract creditors without judgment or other lien. The reasons there given for dismissing the bill, or remanding it, were that the existence and .amount of the debt made a law issue, and a jury trial of it could not be afforded the debtor in equity; and that the creditors had not exhausted their remedies at law. These reasons will not be good in this case if they be urged by the administratrix, for the Rules of Civil Procedure, 28 U.S.C.A. following section 723c, will now apply, and under them all remedies, legal and equitable, are available, and a jury trial of issues that constitute a case at common law in the meaning of the Constitution may easily be separately had. Rules 38 and 42. We do not foresee any insuperable obstacle to a final settlement of the whole controversy in this suit.
The part of the decree not appealed from does not adversely affect the administratrix and may stand. As to the part appealed from, the judgment is reversed and the cause remanded for further proceedings not inconsistent with our former opinion as modified by this one.
Reversed and remanded.