Court Opinion

ID: 9462109
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:32:25.251885+00
Date Added: 2024-06-11T17:37:24.801303
License: Public Domain

CHAMBERS, Circuit Judge
(concurring and dissenting).
I agree with the majority that insofar as the complaint states a cause of action against Neidorf and Glickman as shareholders, the action is founded upon quasi-contract and the six-year limitations period applies. I cannot agree that the same holds true for the cause of action to set aside fraudulent conveyances.
The concept of a fraudulent conveyance arose in England from a hybrid statute 1 designed both to raise revenue and to punish offenders who sought to avoid the forfeiture of property to the Crown flowing from a conviction of treason or felony. 1 G. Glenn, Fraudulent Conveyances and Preferences §§ 61a and b, at 86-92 (rev. ed. 1940). After the concept became transformed into a device for the use of private creditors, the creditor was required, at a minimum, to have reduced his underlying claim to judgment before proceeding to attack the fraudulent conveyance either by way of execution or by a creditor’s bill in equity. See Richardson v. Michel, 45 Cal.App.2d 188, 195-201, 113 P.2d 916 (4th Dis. 1941); 1 G. Glenn, supra, § 85, at 144. One result of this split between proceedings at Law and in equity was that courts tended to look to the procedural posture of the cases before them in order to determine the appropriate statute of limitations. Thus in Hearn 45 St. Corp. v. Jano, 283 N.Y. 139, 27 N.E.2d 814 (1940), the court held that the action was one for rescission of spurious judgments, an equitable action governed by a general residuary statute of limitations. Cf., Silverman v. Christian, 123 N.J.Eq. 506, 198 A.2d 832 (1938) (the equitable action cannot be brought after the legal action is barred).2 Not surprisingly, the underlying nature of a fraudulent con*921veyance received relatively little attention.3
We are now faced with a federal statute which, although adequate for most purposes, calls upon us to say that a remedy developed to aid a judgment creditor in obtaining execution is “founded” upon either an express or implied contract or a tort, when in fact it is more likely to be neither. In making its choice, the majority has not addressed itself to the policy which first prompted Congress to enact a statute limiting actions begun by the government, that is, that in the field of essentially private litigation, the government should stand on an equal footing with private litigants.4 In light of this policy, the court should be mindful that the trend among the states has been to regard fraudulent conveyances as, if not actual fraud, something very much like it, and to apply the usually shorter fraud statute of limitations. Anno., 138 A.L.R. 1289 (1940); and see United States v. Franklin Nat’l Bank, 376 F.Supp. 378, 383 (E.D.N.Y.1973). To place a construction upon § 2415 consistent with the prevailing practice would do no violence to the language of the statute, and would achieve a closer approximation of the Congressional intent. It might also inspire the government to move a little faster in the future than it did in this case.

. The Statute of Fraudulent Conveyances, 13 Eliz., c. 7 (1571).

. The chancellor in Silverman found it unnecessary to explain the nature of the action at law. He applied a general statute of limitations applicable to actions in contract, quasi-contract, and most torts.

. When the question has been considered, the issue not infrequently has been clouded by the creditor’s reliance upon actual fraudulent intent rather than upon proof of insolvency and inadequate consideration. Hager v. Shindler, 29 Cal. 47 (1865); see Presbyterian Church of Santa Barbara v. Rabbitt, 118 F.2d 732 (9th Cir. 1941).
Under the Uniform Fraudulent Conveyance Act, a prior judgment is no longer necessary, and a creditor may seek both to establish his claim and to set aside a fraudulent conveyance in one action. But for limitations purposes, the distinction between these two objectives . remains. 1 G. Glenn, supra § 88, at 148-50.

. Letter from the Attorney General to the Vice President, H.R.Rep. No. 1534, 89th Cong., 2d Sess. (1966); 2 U.S.Code Cong, and Admin. News, 89th Cong., 2d Sess., at 2513 (1966); see United States v. Sabine Towing and Transportation Co., 289 F.Supp. 250, 253 (E.D.La. 1968).