Fleming v. Grafton

54 Miss. 79
CourtMississippi Supreme Court
DecidedOctober 15, 1876
StatusPublished
Cited by13 cases

This text of 54 Miss. 79 (Fleming v. Grafton) is published on Counsel Stack Legal Research, covering Mississippi Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fleming v. Grafton, 54 Miss. 79 (Mich. 1876).

Opinion

Simrall, C. J.,

delivered the opinion of the court.

The facts on which the questions that we are to consider arise are these : On Oct. 13, 1866, George Grafton recovered judgment for a large debt against John Grafton, which was duly enrolled. On the 2d of April preceding, John and wife [84]*84conveyed the lands in controversy to Sojourner. On Jan. 1, 1867, Sojourner mortgaged the property to Fleming & Baldwin, to secure a debt due to them from his grantor, and also for plantation supplies. In January, 1868, Fleming & Baldwin assigned the debt and mortgage to Sarah Richards, as collateral security. In January, 1873, this mortgage was foreclosed, and at the sale Fleming became the purchaser. Executions were issued from time to time on the judgment, without result, until July 16, 1874, when George Grafton brought this bill in chancery, to set aside the conveyance to Sojourner, his mortgage to Fleming & Baldwin, and the purchase by Fleming at the foreclosure sale, on the ground that all these acts and conveyances were collusive, and contrived to defraud the complainant.

It is argued on behalf of Mrs. Richards, the assignee of the debt and mortgage, that she is an innocent purchaser, in no wise connected with the dealings between Grafton, Sojourner, and Fleming & Baldwin, and that, however those transactions may be tainted with fraud, she ought not to suffer or be prejudiced. Mrs. Richards, the creditor of Fleming & Baldwin, doubting their solvency, applied to them for security. To meet her wishes, they turned over to her, as collateral, the debt and mortgage. She became the mere assignee of the evidences of debt, with a right to enforce the mortgage as a security. She did not thereby become the purchaser of the property. Moreover, she is not a bona fide purchaser. Since she paid no money, parted with no valuable thing, incurred no new obligation, extinguished no debt, it would follow that whatever infirmity attached to the debt or the security;, as against her assignor, could be set up against her. It is not pretended that the debts due from Grafton and Sojourner rvere not bona fide liabilities. The mala fides in Fleming & Baldwin begins in an effort to obtain an advantage over George Grafton (who had already brought suit against John), by securing the past indebtedness of John, and enabling him and his son-in-law Sojourner to hold and enjoy the property, so that George could not collect his debt.

It has been urged by counsel that the defendants below could not maintain their plea of the Statute of Limitations, [85]*85because of the fraud which concealed from the complainant his rights. It is not perceived, precisely, the applicability of the proposition of law to the facts. The conveyance by John Grafton to his son-in-law was recorded. So was the mortgage to Fleming & Baldwin. It was open to the complainant to inquire whether Sojourner had the means to make so large a purchase, and to observe for himself, or make inquiries as to the manner that the property was held, controlled and used after the conveyance to Sojourner. These circumstances were public. If he has lost by failure to act in proper time, it is referable to his own negligence.

Is the remedy of the complainant cut off against the property by the statute fixing a limitation of seven years to the continuance of the judgment lien ? It was held at this term, in the case of Partee v. Mathews, 53 Miss. 140, that a court of equity would decline to aid the creditor, after he had lost his lien by expiration of seven years from the date of the judgment, that being the time that the statute preserves it.

We have been invited, in able arguments, oral and written, to reconsider the doctrine laid down in Partee v. Mathews, and the prior decisions in this court on which that case rests, and to overrule them. The principle announced in those cases is, that a creditor who brings his bill in chancery to set aside a fraudulent conveyance of the debtor’s land must show that he has a lien on the land by judgment, or in some other form. They were all suits by judgment creditors, and the discussions and conclusions of the court were directed exclusively to the rights of such creditors against the property which had been thus conveyed.

These decisions are impugned, because they rest, as argued by counsel, on a misconception of the ground or reason on Which the relief is granted; the mistake being in the assumption, as it is said, that the lien is a necessary constituent of the creditor’s equity. The true and controlling consideration for relief, suggested by counsel, is the original and inherent jurisdiction in the court, because of the fraud of the debtor.

But a court of equity will never interfere to break up a contract, good between the immediate parties, at the suit of a stran[86]*86ger to it, unless he shows that be has some specific right to the property, the subject of the contract, superior to that which passed by the conveyance.’ The mere fact that he is a creditor is not enough. He must also be a creditor with a specific right or equity in the property. That, we propose to show, is and must be the title which he brings into a court of’ equity, when he seeks relief touching property liable to execution.

But there are two classes of cases in which a court of chancery relieves the creditor. The distinction between them is broad and marked, and the facts which make up the equity of the creditor are very different, and so is the reason on which the jurisdiction is based. One class is, where the creditor comes to obtain satisfaction of his judgment out of the property of his debtor,, which cannot be reached by execution at law; that is, where he proposes to appropriate equitable assets to the satisfaction of his judgment. The other is, where he has a right at law, the property being subject to final process, but he seeks the aid of a court of equity to remove some obstruction fraudulently or inequitably interposed to prevent or embarrass a sale under execution.

In the former case, it has been uniformly held by the courts in England and in this country, that the creditor must show, as a condition on which he will be relieved, that he has pursued his remedy at law fruitlessly; that is, that he recovered judgment, and had execution returned nihil. Balch v. Wastall, 1 P. Wms. 445; Cuyler v. Moreland, 6 Paige, 273; Bethell v. Wilson, 1 Dev. & Bat. Eq. 610; Neate v. Duke of Marlborough, 3 Myl. & Cr. 407.

It is because there can be no levy, or right of lien, on the chose in action, or other equitable assets, that a court of equity lays hold of it and applies it to the judgment. The right to exert the jurisdiction attaches on the fact that there is no property that the execution will reach. But the filing of the bill, after a return on the legal process of nihil, gives to the creditor a specific lien, and a preference over all other creditors. Edgell v. Haywood, 3 Atk. 352, 357.

The inquiry which we propose to make is, in what circumstances the court will relieve in the second class of cases; that is, what constitutes the right of the judgment creditor, when [87]*87he seeks relief against a fraudulent conveyance. On what precise ground does the court exert its jurisdiction ?

In Smith v. Hurst,

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Bluebook (online)
54 Miss. 79, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fleming-v-grafton-miss-1876.