Martin v. Kennedy , 83 Ky. 335 ( 1885 )

JUDGE PRYOR

delivered the opnsiosr oe the court.

These several actions, five in number and consolidated, were instituted at law, and attachments obtained that were levied on the real estate of Freeman. P. Martin, the debtor. The action was transferred to equity, and during its progress claims were set. up to certain portions of the real estate levied on. by the attachments by the wife of Freeman P. Martin, Mary A. Martin, the mother, and by the two Clarksons, who were the brothers-in-law, and deeds exhibited by each claimant purporting to pass, the absolute title.

In July, 1876, the debtor conveyed to his brothers-in-law the real estate claimed by them in consideration, as recited, of . the sum of thirty-five hundred dollars in • hand paid. In November, 1876, he conveyed certain other real estate to his mother, Mary Martin, and in October, 1876, he conveyed to his wife, Kate Martin, all his interest in this estate ©f his grandfather, as claimed by him from that source, to indemnify her for any moneys 'she might have to pay for him, and for the payment of which she had. pledged her own' estate. Not long after this the-debtor, F. P. Martin, became a. bankrupt, and one branch of this controversy is between the claimants-of the estate by their respective deeds and the creditors of F. P. Martin.

These deeds are attacked as fraudulent and void, being without any consideration. The transactions ■ between the debtor and his near relations, by which he divested himself of title by deeds in such rapid, succession, would indicate the necessity felt by the-debtor of placing Ms property beyond the reach of creditors.

His wife had but little, if any estate. His brothers-in-law were in the same condition, and the conveyance to the mother was evidently based upon a mere ideal claim, and these relations were but the instruments by which the debtor was seeking to avoid the payment of his debts.

If the deeds were without any consideration they were fraudulent as to these creditors,' and the facts, of this record show clearly that all these claimants were holding for the debtor, and that not only constructive but actual fraud existed. It is useless to analyze the testimony or to discuss its effect upon any one of the deeds, as it plainly appears that-they were made for the 'protection of the debtor,, so as between the appellants and the creditors the property levied upon should be subjected to the payment of Freeman P. Martin’s debts.

Freeman P. Martin became a bankrupt, and the appellant, B. Nesbitt, was made the assignee, and the principal question in this case arises as between the assignee’s claim to this property in behalf of creditors on the one side, and certain attaching and lien creditors on the other.

Freeman P. Martin owned an undivided interest-in the estate of one O. R. Powell. This estate was composed of many parcels of real estate in the city of Covington.

In an action instituted in the court below, under the style of Stevenson v. Martin, a partition was made of this landed estate under the direction of1 the Chancellor, and deeds made to the several tenants in common, or to those entitled to an interest in the land.

.A conveyance was made to Freeman P. Martin of his interests, and when this was done he executed to his mother, to his wife, and to his brothers-in-law deeds for several of the lots, which have been (already held in this opinion to have been void as to creditors. He also executed to the National '.Bank of Covington a mortgage upon two distinct parcels of this land allotted to him, and attachments :in behalf of the creditors, who are the appellees here, were levied on certain other specified portions ■of the property, as appears from the return on the (attachments. The litigation resulting in a partition •of this real estate was- brought to this court, and the judgment below was reversed, by which the partition made under the judgment appealed from was set aside and another partition of the realty :made. The bank and the attaching creditors were :not parties to that action, and took or held the property upon which the liens were created subject tq any final judgment that might be rendered fin the action where partition was sought. They .must all be treated as pendente lite purchasers.

The title to all the estate of Martin passed to his (assignee for creditors, and this assignee is in this •case, by his pleading, asking that their rights be protected.

When the last partition was made, one of the lots mortgaged to the bank, and the lots attached by .certain creditors, were assigned to other parties in interest, and it is now claimed by the bank and the. attaching creditors that their liens acquired by their1 attachments and the mortgage on the lots that were' assigned to others, should be shifted on to other lots or parcels of ground assigned to Martin in the last partition. It is not insisted that they have any legal liens on any property but that upon which the liens; originally existed; but these liens having been lost, by the adjudication between the original owners, it is. urged that a court of equity should give them some relief.

These appellees sought to enforce their rights pendente lite, and having levied their attachments, and acquired their liens on specific lots or parcels of ground allotted to the debtor, it is difficult to create for them such an-equity as would enable the Chancellor to transfer liens upon one specific parcel to. another, upon which there is no claim that any lien ever attached.

A levy or a mortgage upon the undivided .interest of the debtors in the entire realty would determine at once the rights of the creditors; or if the mortgage had been executed on a particular parcel of this realty, to which the debtor had no title under the first partition, but which had been assigned him in. the last partition, the title having been vested in the debtor would have inured to the benefit of the mortgagee.

In this case, in making the allotment, many distinct parcels of land were given to each joint owner, with the boundary specifically defined. On certain of these lots liens were attempted to be created. The liens were lost, or the property adjudged to belong to some one else, and for that reason a court of equity is asked to enlarge the liens by placing them upon other realty, so as to indemnify the creditor for the loss sustained.

It can not be said that the attaching creditor or the mortgagee, by acquiring this lien, became invested with the interest of the debtor to that extent in the real estate owned by him, particularly when he was not a party to the litigation in which the title was determined asserting his right to participate in a future allotment. Besides, these are liens purely legal, and confined to specific property that, if not belonging to the debtor, affords the creditor no security. The rights of others have intervened, who, as •creditors of the insolvent debtor, are entitled to share in the distribution of his assets, and the Chancellor would not seek an equity in behalf of these appellees for no other reason than that they may occupy the position of preferred creditors.

In Green v. Arnold, 23 American Reports, 466 [11 R. I., 364], where there was a suit for partition, the common estate, consisting of sixteen parcels, upon some of which liens existed by mortgage, the Chancellor held that the decree could not extend any mortgage to property not included or •described by the mortgage. “We can no more,” says the court in that case, “extend the mortgages over land not covered by them than we could so many absolute conveyances.”

In Randell v. Mallett, 14 Maine, 51, the mortgage was on so many acres of an undivided tract that -made the purchaser, if absolute, a tenant in common, rand at least gave to the mortgagee an interest to that extent undivided. Here there are numerous parcels allotted to each tenant in common,-and when levied on or mortgages executed on a particular lot -described by metes and bounds, it must be treated as a distinct estate. We perceive no remedy in .such a case by a purchaser of 'the absolute estate ■in a specified lot except upon his warranty, or if •.a party to the subsequent division, he might ask the Chancellor to assign the particular lot pur- ■ chased by him to his vendor, in the event his ven•dor refused to protect him. Here the estate has ;gone to the assignee for creditors, with no lien ■existing, and we know of no rule of law or equity (.authorizing the Chancellor to transfer the lien from -one distinct parcel of land to another, upon which there is no pretense a lien ever existed.

It is maintained in argument that there are no •creditors of the bankrupt but those now before the ‘Court. This fact the court below could not assume, .and if there were no other creditors but those parties to this proceeding, McKee, Finnell, Handy, etc. are in court as creditors, resisting the superior equities ■asserted by the appellees; so we have both the (assignee for creditors, and the creditors, or some of them, in court raising the question here presented. It will be conceded that if the equities on the part ■of the appellees existed, the assignment in bankruptcy could not change their relation to the debtor ■or to his estate; but it is manifest that their legal rights can not be converted into equities, so as to give to tile appellees a prior lien npon other estate-of the debtor than that to which the original lien, attached.

This brings ns to the consideration of the last-question raised by the assignment of errors. Theassignee (appellant) of Martin, as well as some of the creditors, are contesting the liens of the attorneys who were employed by the debtor, or if not by him, under an employment from some one else, asserted against the property in controversy. The-record does not show the authority of the commissioner when making these deeds to insert liens in. behalf of any attorney; and while in a proper state-of case a lien for a reasonable fee will be retained, we perceive nothing in this record to- justify the-Chancellor in allowing $2,000 to one attorney, $1,500-to another, $1,250 to another, and $1,000 to another, to be paid out of the estate of Freeman P. Martin.

Contracts between clients and attorneys will, of, course, be enforced, and where there are no exceptions to the allowance this court can not interpose;, but here liens are attempted to be asserted to the-prejudice of other creditors, and we see no such state of case as is now presented that will authorize the Chancellor to say that these liens exist. The-facts must appear as to the nature and extent of the recovery by the attorney for his client before a lien is created. What property, real or personal, has he recovered? The Chancellor should be enlightened in regard to these matters before allowing these liens to be enforced.

The judgment in this case is affirmed on the appeal of F. P. Martin and wife, on the appeal of Clark-son, and reversed on the appeal of the assignee, Benj. Nesbitt, and others, and cause remanded for1 psroceedings consistent with this opinion.