Court Opinion

ID: 7964475
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:49:20.766461+00
Date Added: 2024-06-11T16:34:36.055788
License: Public Domain

Mitchell, J.1
There are two classes of cases, both commonly called creditors’ suits, which, although closely allied, are clearly distinguishable. The first, a creditor’s suit strictly so-called, is where the creditor seeks to satisfy his judgment out of the equitable assets of the debtor, which could not be reached on execution. The general rule is that such an action cannot be brought until the creditor has exhausted his remedy at law by the issue of an execution and its return unsatisfied. This was required because equity would not aid the creditor to collect his debt until the legal assets were exhausted, for, until this was done, he might have an adequate remedy at law. The execution had to be issued to the county where the debtor resided, if a resident of the state. Its issue to another county would not suffice. Reed v. Wheaton, 7 Paige, 663. The second class of cases is where property legally liable to execution has been fraudulently conveyed or incumbered by the debtor, and the creditor brings the action to-set aside the conveyance or incumbrance as an obstruction to the enforcement of his lien; for, though the property might be sold on execution notwithstanding the fraudulent conveyance, the creditor will not be required to sell a doubtful or obstructed title. In the latter class of cases, the prevailing doctrine is that it is not necessary to allege that an execution has been returned unsatisfied, or that the debtor has no other property out of which the judgment can be satisfied;' for that is not the ground upon which the court of equity assumes to grant relief in such cases, but upon the theory that the fraudulent conveyance is an obstruction which prevents the creditor’s-lien from being efficiently enforced upon the property. As to him the conveyance is void, and he has a right to have himself placed in the same position as if it had never been made. The fact that other property has been retained by the debtor may be evidence that the conveyance is not fraudulent; but if the grantee’s title be tainted *87with fraud, he has no right to say that all other means to satisfy the debt shall be exhausted before he shall be disturbed. Botsford v. Beers, 11 Conn. 369; Weightman v. Hatch, 17 Ill. 281; Vasser v. Henderson, 40 Miss. 519.
There is much conflict of authority as to how far the creditor must first proceed at law. It has been held in some cases that if an execution has not been returned unsatisfied, an execution must be issued and the action brought in aid of an execution then outstanding. Such seems to be the latest view of the courts of New York, after much vacillation and conflict of decision. Adsit v. Butler, 87 N. Y. 585. But the prevailing and, as we think, on principle, the better rule is that the creditor need only proceed at law far enough to acquire a lien upon the property sought to be reached before filing his bill to set aside a fraudulent conveyance. The extent to which he must proceed to do this will depend on the nature of the property. If it be personal, there must be a levy, for until this is made he has no lien. If it be real estate, it is enough to obtain judgment, and docket it in the county where the lands are situated. 1 Am. Lead. Cas. 54, 55; 2 Barb. Ch. Pr. 160; Bump on Fraudulent Conveyances, 523; Weightman v. Hatch, supra; Newman v. Willetts, 52 Ill. 98; Vasser v. Henderson, supra; Dodge v. Griswold, 8 N. H. 425 ; Tappan v. Evans, 11 N. H. 311; Cornell v. Radway, 22 Wis. 260; Clarkson v. De Peyster, 3 Paige, 320; Dunham v. Cox, 10 N. J. Eq. 437-466. The lien on the land, and the right to sell it in satisfaction of the debt, is the basis of the right to have the deed set aside.
This was a suit to set aside a fraudulent conveyance of real estate executed by the judgment debtor, and hence falls within the second class. It follows from what has been said that it was not necessary to issue an execution at all before commencing the present action. Hence it is wholly immaterial that it does not appear that it was directed to the county where the debtor resided. In our view the complaint is good.
Order reversed.

 Dickinson, J., because of illness, took no part in this decision.