Court Opinion

ID: 7285773
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:26:49.792961+00
Date Added: 2024-06-11T16:19:07.293352
License: Public Domain

The Chancellor.
It is objected in the answer, and the objection has been urged in argument, that this is a creditor’s bill under our act entitled “An act respecting the Court of Chancery,” Rev. Stat. 921; and that, no execution of either of the complainants, nor all the executions of the several complainants together amount to $100, exclusive of costs ; and that therefore the bill cannot be sustained.
*203This act provides that whenever an execution issued on a judgment at law against the property of a defendant shall have been returned unsatisfied in whole or in part, leaving an amount or balance due exceeding $100 exclusive of costs, the party suing out such execution may file a hill in Chancery to compel the discovery of any property or thing in action belonging to the defendant in the judgment, and of any property, money, or thing in action, due to him or held in trust for him, except such property as is now reserved by law ; and to prevent the transfer of any such property, money, or thing in action, or the payment or delivery thereof to the defendant, except when such trust has been created by, or the fund so held in trust has proceeded from some person other than the debtor himself ; and that the court shall have power to compel such discovery, and to prevent such transfer, payment or delivery, and to decree satisfaction of the sum remaining duo on such judgment out of any personal property, money, or things in action belonging to the defendant, or held in trust for him, (with the exception above stated,) which shall be discovered by the proceedings in Chancery ; but if the personal property, money or thing in action which shall be discovered as aforesaid shall not amount to $100, no costs shall be recovered against the defendant.
The English Courts, after much discussion, established the doctrine that, to malee a conveyance void as against creditors, it must he a conveyance of property which the creditor could take in execution; for that a conveyance of property not subject to execution cannot bo injurious to creditors, because it would not withdraw any fund from their power which the law had not already withdrawn from it, and a conveyance which in no respect varied the rights of creditors could not be a fraud upon creditors. Under this doctrine, a debtor might hold, or transfer to another for his use, any amount of stock, choses in action, or other property not subject to execution, in defiance of his creditors. 1 Story’s Eq., sec. 367.
Chancellor Kent has very strongly and ably combatted this doctrine, Ib., sec. 368, and note and authorities there cited.
The existence of such a doctrine in England, whether well founded or not, and the least apprehension that such a doctrine was maintainable here, certainly furnished sufficient ground for the *204adoption of our statute. And it is plain from its language, that it was intended to displace, in this State, the English doctrine above mentioned, and to put creditors on the ground on which Chancellor Kent contended they ought to stand without the aid of any statutory provision. It has made no change in the law as to the rights of creditors against fraudulent conveyances of property that may be reached by execution. This class of cases stand as they did before the statute. This objection, therefore, cannot prevail.
This bill is filed by three creditors who have obtained judgments in a Justice’s Court, on which executions have been issued, and returned c< no goods,” amounting, with the costs, to $103 74, for themselves and all other judgment creditors of the Getsingers who shall come in, &c., seeking to set aside a bill of sale transferring to Cooper and Townsend personal property of a tangible kind, on which an ex ecution at law might be levied,, and also to set aside a deed to C. and T. of real estate, on the ground alleged, that the said bill of sale and deed are fraudulent and void as against creditors.
Protection of the right of creditors to payment out of the property of their debtors, against the disposition of their property with a view to defeat that right, by declaring such disposition void as against the creditors, is too obvious a policy and duty not to have been recognized from the earliest periods. And so careful are the courts of the rights of creditors, that the debtor cannot by transfer or conveyance put his property beyond their reach, unless such transfer or conveyance is made both upon good consideration and bona fide ; and even if the transfer or conveyance be made for a valuable and adequate consideration, yet, if it be made with intent to defraud creditors, it is void as against them. The indicia of fraud, the circumstances from which the presumption of an intention to defeat creditors will arise, must of course be clear and strong where a valuable and adequate consideration is paid.
Courts of equity afford their aid in relieving the creditor from frauds of this kind j and transactions the fraudulent character of which might not be reached or declared by courts of law are often exposed by the nature of the proceedings in courts of equity. *205Of this jurisdiction of courts of equity there can, at this day, heno doubt. The duty of the courts of New Jersey of exercising to the fullest extent, and with a scrupulous regard for the rights of creditors, their jurisdiction over this subject, is rendered more imperative by the recent legislation in this State exempting the person of the debtor from imprisonment for debt.
The complainants who filed this bill were creditors on judgments obtained before a Justice of the Peace. Their judgments are no liens on real estate. They issued executions against the personal estate of the defendants the Getsingers, which were returned “ no goods.” They are in position, then, to ask the aid of this court against a transfer of personal property of the Getsingers of a nature to be subject to execution, if such transfer is framlulent and void as against them, unless the fact of their judgments being less than $100 each, or the fact that their three judgments together amount only to $108, including costs, prevents; or unless such judgment creditors cannot unite in filing a bill and the amount of either of the judgments is insufficient to justify the interposition of this court.
Without saying what amount of judgment and execution before a magistrate should be sufficient to invoke the aid of this court, I am of opinion that such creditors may unite, and that the amount of these three judgments together is sufficient to call for the exercise of the jurisdiction of this court, in reference to personal property of a nature to be subject to levy on execution, in the protection of their rights against a fraudulent transfer thereof. 8 Wend. 339.
The answer in this cause was filed Sept. 14, 1846. The replication was filed Nov. 8, 1846. On the 12th of May, 1846, Jonathan Lore, one of the complainants, recovered another judgment against the Getsingers, in the Circuit Court of Cumberland county, for $665 93, on which a fi. fa. was issued ; and the fi. fa. was returned “ no goods,” on the second Tuesday of August, 1846. An alias fi. fa. was subsequently issued on this judgment, tested the second Tuesday of August, 1846, returnable the second Tuesday of N ov., 1846, by virtue of which a levy was made on the 9th of October, 1846, on personal property of the Getsingers, consisting of household furniture, (mentioning the *206articles,) and hay and grain, “ together with all the moveable property in the possession of John Getsinger and Joseph Getsinger. The property levied upon under this alias fi. fa. was claimed by Cooper and Townsend, by notice in writing delivered to the Sheriff; and a jury was summoned, according to the provisions of the statute in that respect, to try the right of the claimants to the said property. The complainant in the said judgment did not indemnify the Sheriff against the demand of the claimants ; and the right of said claimants was tried by a jury, and the property levied upon was found by the jury to be in the claimants.
On the 11th of August, 1846, Jonas Hess recovered a judgment in the Circuit Court of Cumberland, against the Getsingers, for $1,429 19, on which an execution was issued, tested the second Tuesday of August, 1846, returnable the second Tuesday of November, 1846, by virtue of which the Sheriff levied on the same property levied on by virtue of the alias fi. fa. issued on the said judgment of Jonathan Lore, with the same general clause added; and Cooper and Townsend having put in a claim to the property, the claim was tried before a jury, and the property levied on was found to be in the claimants. The claim was tried on the 31st of October, 1846; Hess omitting to indemnify the Sheriff.
On the 11th of August, 1847, Lorenzo Ogden recovered a judgment in the Circuit Court of Cumberland, against the Get-singers, for $1,203 13, on which a fi. fa. recorded October 29, 1846, was issued, returnable the second Tuesday of November, 1846, which was returned “no goods nor lands.”
On the 23d of June, 1846, an order was taken on the part of the complainants, that the complainants be at liberty to amend their bill, by making Lorenzo Ogden and Jonathan Hess parties complainants, and by setting forth their respective judgments, executions and returns ; and further to amend the bill by setting out the judgment recovered by the complainant Jonathan Lore since the filing of the bill, and the execution issued thereon returnable to the August term, 1846, and the return thereof “ no goods.” It was agreed on the argument of the cause, that this *207order should be considered as having been subject to the decision of the court as to the propriety thereof.
When the bill was filed, no one of the complainants had any lien on the real estate, their judgments being obtained before Justices of the Peace. When the bill was filed, therefore, the case made by it was not such as to give the court any ground on which to entertain the cause so far as it sought to affect real estate. w The bill could not properly pray any action of the court in reference to the real estate, or any relief in respect thereof. Such a bill cannot become the basis of a proceeding in reference to real estate on the ground that judgments were subsequently recovered which were liens on the real estate, and by permitting an amendment of the bill introducing the subsequent judgments affecting real estate.
It will not bo necessary, therefore, and not proper, perhaps, to say anything as to the deed for the real estate from the Getsingers to C. and T., or the character of it as fraudulent or otherwise.
As to the bill of sale of the personal estate, I am of opinion that it' cannot be sustained as against creditors.
From the evidence as to the value of the real property, and the fact that it was mortgaged, the wives not joining in the mortgages, for within $1250 of the consideration named in the deed, and within $1,000 of what one of the papers says was to be actually paid, it appears to me that the real estate, if, in view of other circumstances which I will not now mention, the deed therefor can be sustained, was very amply worth all the defendants have agreed to pay to or for the Getsingers.
The consideration for the whole personal property nominal in the bill of sale, was, I think, nominal in fact. The considerations, growing out of the testimony, leading to the conclusion that this bill of sale ought not to be supported as against creditors are too numerous to be stated at length. The court, in my judgment, cannot sustain such a transaction without an utter disregard of the right of creditors.
The consideration for the deed for the real estate expressed in the deed is $1250. This is to be considered as the consideration subject to the mortgage. By a writing under the hands and *208seals of C. and T., bearing even date with the deed, thus, “ for and in consideration of certain real estate this day conveyed to us” (them) by the Getsingers and their wives, “ do hereby promise, covenant and agree” to and with the Getsingers, “ to pay Joseph Schmouse - $500
Three notes in the Cumberland Bank, one in favor of Lorenzo Ogden, to fall due March 1, 1846, for - 250
One in favor of Richard Mitchell, to fall due April 8, 1846, for - - - - - ' * 150
And one in favor of Jonas Hess, to fall due April 10, 1846, for ..... 100
$1,000
On the same day the Getsingers give a receipt to C. and T., by which they say they have received of them $1,000, viz: (their assumptions to pay the above mentioned claims, setting, them out,) in full consideration of the deed of same date made by them to C. and T. of certain real estate. This paper then states that they have received the further sum of $1, in full for-the consideration of certain personal property specified in a bill’ of sale of that date made by said Getsingers to C. and T.
Then another writing under the hands and seals of C. and T. appears, purporting to be signed the same day, as follows :
“LIABILITIES OF THE MESSRS. GETSINGER.
The bond and mortgage to Brick, the Lees and Bickley, - - - ,755 28
Interest thereon, - - - 420 00
Lee and Bickley’s judgment and execution, Interest and Sheriff’s costs, 2,433 43
Constable’s executions, about $250
Schmouse’s claim, 500
Three notes in Bank, (being the notes specified in the two preceding writings,) 500 1,250 00
(These three last items amounting to $1250, the consideration expressed in the deed for the real estate.) Footed $15,858 66
*209Then follows : “ In consideration of certain real estate conveyed to us (by the Getsingers and wives) by deed bearing even date herewith, and in consideration of a bill of sale of certain personal property of like date, we promise and agree to pay off the above claims, or so much thereof as shall be honestly due and owing thereon; we believe said judgment and execution to be covered by the mortgage; and to indemnify and protect the said Getsingers and their property from any and every suit, claim and demand whatsoever founded on any of the claims above set forth.”
It proves that the belief of C. and T. that the said judgment was for a part of the debt secured by the mortgage was correct.
When the judgment was paid, therefore, it paid so much of the debt secured by the mortgage on the real estate which they bought subject to the mortgage. It can form, then, no part of the consideration for the personal property.
Schmouse’s claim and the three notes in Bank are expressly stated in the assumption of G. and T., and in the receipt of the Getsingers, to be in consideration of the real estate ; and therefore can be no consideration for the personal estate.
There is nothing left, then, for a consideration for the bill of sale but the constable’s executions, supposed to be $250 ; they proved to be $224; and the consideration called for in the deed of the real estate is large enough to pay these in addition to Schmouse’s claim and the three notes, it being $1250 ; and the bill of sale is actually made for the consideration expressed of one dollar.
The transfer of the personal estate cannot be permitted to stand on the idea of its being a consideration for which C. and T. convoyed a part of the real estate to the children of the Get-singers to induce the wives of the Getsingers to sign the deed for the real estate. Perhaps it might be permitted to C. and T. to make a reasonable compensation to the wives to induce them to sign the deed; but certainly the husbands could not be permitted to give C. and T. all their personal estate as a consideration for C. and T.’s conveying to the children a part of the real estate to induce the wives to sign the deed for the real estate.
In reference to the personal estate, the most they can in any *210shape be considered as having given for it is $224. I am unwilling to give the sanction of this court to a transaction so novel and extraordinary, so suspicious in its character, and of such dangerous tendency as a precedent, as the transaction in reference to the personal property in this case.
It is unnecessary to inquire as to the effect of the verdicts of the juries before stated, inasmuch as there is sufficient of other personal property to satisfy the judgments existing at the time of filing the bill and the executions thereon issued and levied.
The bill of sale of the personal property will be declared void as against the complainants.
Decree accordingly.