Coffey v. Norwood & Norwood , 81 Ala. 512 ( 1886 )

SOMERVILLE, J.

— 1. Motion is made to dismiss this appeal, upon the ground that the statute does not authorize an appeal from a judgment or decree which is rendered against an insolvent estate, and certified to the Probate Court under the provisions of section 2881 of the present Code, 1876. There is nothing in this objection, and the motion to dismiss will be overruled. The statute allows appeals to the Supreme Court from any judgment or decree of the Chancery Court, except only in such cases as are otherwise directed by law. — Code, § 3916. The present decree settled all the equities litigated between the parties to the suit, and possessed every element and characteristic of a final judgment. — Adams v. Sayre, 76 Ala. 509. The declaration of the insolvency of John B. Coffey’s estate did not affect the suit further than to authorize a special plea setting up this fact, so as to prevent the issue of any execution on the decree rendered, and to provide a new mode of collecting the judgment in another forum, to which it was, for this purpose, required to be certified.- — Code, 1876, §§ 2580, 2581; Cunningham v. Lindsey, 77 Ala. 510. The finality of the decree is unaffected by this proceeding, or by section 2575 of the Code, as amended by the act of December 4, 1878, allowing the administrator, any creditor of the decedent, or heir or legatee, to contest claims against insolvent estates by filing objections in the Probate Court, and causing an issue to be made up between the claimant and the objector. — Acts, 1878,1879, p. 69.

2. The other ground of objection, that the appeal was taken in the name of one instead of all the defendants, comes too late. It could have been remedied by a counter motion to perfect the appeal by an amendment; and a failure of appellees to raise this objection, before the submission of the cause, is a waiver of it.— Vaughn v. Higgins, 68 Ala. 546, and cases cited.

3. The question is raised by demurrer in this case, whether the personal representative of the deceased judgment debtor was a necessary party defendant to the bill, the return of nulla bona having been made in the life-time of the debtor, and she being alleged to have died insolvent, and no administrator having been appointed on her estate.

The question is one upon which the authorities are in conflict. That the personal representative is a proper party in such cases is quite clear, and this much was settled in Pharis v. Leachman, 20 Ala. 662. But that case does not go further than to hold that no objection could be taken to his joinder as party defendant to a bill filed to reach equitable assets in the hands of a fraudulent grantee. The test must be, whether the fraudulent debtor, Mrs. Kirby, if living, would be a necessary party; for, if it would not be required to join her, neither would it be necessary to join her personal representative, in the event of her death. Would she, then, be a necessary party to this suit, if living, the return of “ no property found ” having been made on the judgment against her, and the allegation of her insolvency having been made in the bill ? It is our opinion, that this question must be answered in the negative. The case is unlike that class of cases in which it is sometimes sought to enforce a debt against real estate, which is properly and primarily chargeable upon the personal assets, the realty being only an auxiliary fund. There it is commonly held, that the personal representative of the deceased debtor, as well as the heir or devisee, is an indispensable party, not only to take an account of the personal assets, and to disclose the alleged deficiency, but “also to make the decree attach primarily to the personal assets, and secondarily only to the real estate.” — Story’s Eq. Plead.,(9th ed.), § 172. The personal representative is there interested, not only in the object of the suit, but in the subject-matfer, and the decree rendered. So, if the legal title remained in the fraudulent grantor, only an equity being in the grantee, it is evident that the former would be a necessary party, in order to bring the legal title before the court. This was the case in Powe v. McLeod, 76 Ala. 418.

But these reasons have no application to a case where the fraudulent debtor has conveyed to the grantee or donee his entire interest, legal and equitable, in the property soughtto be subjected. The conveyance is binding on him, his heirs, and personal representatives, and is absolutely unassailable by them.' — Davis v. Swanson, 54 Ala. 277. Neither the debtor, if living, nor, if he be dead, his personal representative, can enjoy any of the fruits of.a successful prosecution of the suit to set aside the fraudulent conveyance ; for, after the complaining creditors’ demand is satisfied, the remainder of the fund goes to the fraudulent grantee. The debtor, therefore, has no interest, legal or beneficial, either in the property sought to be subjected, or in the litigation having reference to it, except remotely and indirectly. Nor can the grantee be prejudiced in any manner by omitting to join the grantor, or his personal representative, as he can make any defense to the complainant’s demand which the grantor, or the personal representative, could do if he were a party to the suit. — Halfman v. Ellison, 51 Ala. 543. This view is fully sustained by the case of Houston v. Blackman, 66 Ala. 559, where it was observed, that the fraudulent donee, having the right to make any defense which the debtor, or the personal representative could have done, and “ as no decree is- sought, or can be obtained, which will affect the rightful personal representative, though a proper, he is not a necessary party.” It was further said : “It is only when the assets in the hands of the personal representative, as a general rule, may be affected by the decree, that he is an indispensable party ” ; citing Story’s Eq. Plead., § 177. This view has not been adopted by the Supreme Court of the United States, but is sustained by the weight of authority in the courts of the highest resort in the several States. — Bump, on Eraud. Convey. (3d ed.) 548; Wait on Eraud. Convey., § 136; Taylor v. Webb, 54 Miss. 36; Smith v. Grim, 26 Penn. St. 95 ; Cornell v. Radway, 22 Wis. 265 ; Merry v. Freemon, 44 Mo. 518 ; Dockray v. Mason, 48 Me. 178 ; Story’s Eq. Plead. (9th ed.), § 233, note (c) ; Gaylords v. Kelshaw, 21 Wall. 81; Walker v. Powers, 104 U. S. 245 ; Buffington v. Harvey, 95 U. S. 99.

In this case, as we have said, it is made to appear that there is no administrator of the estate of Mrs. Kirby, nor any estate to be administered, she having died insolvent. We hold that her personal representative was not an indispensable party to the maintenance of the present bill, although a proper party.

4. The testimony, in our opinion, shows satisfactorily that the transfer made by Mrs. Kirby, the judgment debtor, to John B. Coffey, was not only made without any consideration, he being a mere donee, but it was consummated for the declared purpose of hindering, delaying, or defrauding other creditors of their just demands, and this was done with the connivance of the donee. It is a case of actual fraud on the part of the donor, participated in by the donee, and this vitiated the transaction as to the complainants, although a part of the debt, upon which the judgment is based, accrued after the transaction. — Seals v. Robinson, 75 Ala. 363 ; Gardner v. Boothe, 31 Ala. 186 ; Stiles v. Lightfoot, 26 Ala. 443.

The chancellor erred, however, in one important particular in the rendition of the decree. This decree against the estate of John B. Coffey should have been, not for the entire amount of the judgment recovered against Lavinia Kirby, but only for the amount of the note, fraudulently transferred by her, as the judgment debtor, to said John B. Coffey, with interest. This note was a lien on the land described in the bill, and to this lien the complainant is entitled to be subrogated. It bore date February 18, 1879, was for the sum of three hundred dollars, and seems to have been payable one day after date.

The decree will accordingly be reversed, and a decree will be rendered in this court, adjudging the complainant to be entitled to the relief prayed, to the extent of said note and interest, which, upon calculation to date, is the sum of five hundred 69-100 dollars ; for which amount a decree will be rendered against the defendant, John B. Coffey, as the administrator of the estate of John B. Coffey, deceased. This amount will be declared to be a lien on the land described in the second paragraph of the bill, for the satisfaction of which the register will proceed to sell the said land, after giving thirty days notice by advertisement in the usual mode; and he will report his action in the matter to the chancellor. From the proceeds of sale shall be paid the expenses of making the sale, and the costs of suit in the court below. It being made to appear that the estate of said Coffey has been declared insolvent, no execution shall issue on said judgment; but any balance remaining unpaid shall be certified to the proper Probate Court, in accordance with the requirements of section 2581 of the present Code.

The appellees will be taxed with the costs of this appeal.