Opinion
04-22-1896
FULLERTON et al. v. SEIPER et al.
Wm. I Lewis, for complainants. A. A. Van Hovenberg, for defendants.
Creditors' bill by Daniel Fullerton and others against Fred. Seiper and others, to establish a lien on land formerly owned by defendant Seiper, and of which his wife held the legal title. Heard on bill and evidence. Bill dismissed.
Wm. I Lewis, for complainants.
A. A. Van Hovenberg, for defendants.
EMERY, V. C. This is a bill by judgment creditors, filed to establish a lien upon lands formerly belonging to their judgment debtor, and afterwards conveyed to his wife. The pleadings and proofs show that this conveyance to the wife was made under the following circumstances: The property was conveyed on December 12, 1887, to the judgment debtor Fred. Seiper, for the consideration of $2,400, $900 of the purchase money being paid in cash and $1,500 secured by mortgage. The $900 was paid by taking from a building and loan association the sum of $700, which was the proceeds of the joint earnings of the husband and wife, and by $200 borrowed, by the husband for the purpose. Although the money for the purchase was, to some extent, derived from the earnings of the wife, the conveyance was made to the husband, and remained in him until his interest in the lands was, on or about August 4, 1893, sold under an execution issued out of the Passaic common pleas against Fred. Seiper, upon a docketed judgment against him in favor of the Passaic Beef Company, the judgment being for about $67.60, debt and costs. At the sheriff's sale no one attended on behalf of the defendant, and the property was bid in by the plaintiff's attorney for $25, and a deed was subsequently made by the sheriff to one Hicks Griffin, who was the superintendent of the Passaic Beef Company. The plaintiffs attorney testifies that he notified the defendant, before the sale, that if he did not pay the judgment, he would lose the property; but no one attended the sale on behalf of the defendant debtor, nor does the evidence show any satisfactory explanation of his failure to attend the sale. Griffin's purchase at sheriff's sale was not made by any collusion or agreement with Seiper to protect his property from other creditors, but was regularly made, at the sheriff's sale; and therefore the only ground upon which the title thus procured by Griffin can be attacked must be based upon Seiper's equity to have the sale set aside upon sufficient equitable grounds. The property, clear of all incumbrance, appears to be worth $2,500, or, perhaps, $2,800; but Griffin, who held the title for about two months, was not able to effect a sale for $2,500, on account of Mrs.Seiper's inchoate right of dower in the premises. Subsequently, and about October, 1893, he conveyed the property to the defendant Mrs. Seiper, for the sum of $135.60, the amount being made up of the original judgment of the beef company, with sheriff's costs, counsel fees, etc., added. This money was paid by the defendant's wife from her own money, derived from the estate of her father. The proofs taken established, I think, that Griffin, after the sale, claimed, in good faith, the absolute ownership of the property by virtue of the sale, free from any equitable claim of Seiper, that he endeavored to sell the interest obtained at an advance of several hundred dollars over the price paid by him, and that, on the failure of this attempt, he afterwards, on the application of counsel of the defendants, consented to sell the property to Mrs. Seiper for a slight advance beyond the amount of the judgment, costs, and expenses of the beef company. Griffin's evidence further shows that this conveyance to Mrs. Seiper, for this amount, was not made with any view on his part of putting the property in the name of Mrs. Seiper, for the purpose of defeating Seiper's creditors, but was made to Mrs. Seiper for her sole benefit, and because, out of sympathy for her, he was willing to forego any benefit he might have derived from the sale. Griffin made no agreement with Seiper to convey the property to him, as is alleged in the bill, and was not willing to convey the property to Seiper, because he was displeased with him; and the application to Griffin for a conveyance does not seem to have been put to him as a matter of right on the part of Seiper.
Under the facts of this case relating to the sheriff's sale to Griffin, and Griffin's conveyance to Mrs. Seiper, and in the absence of any proof of collusion between Griffin and the judgment debtor, in relation to the sheriff's sale, the complainants' claim to subject the lands in Mrs. Seiper's hands to the lien of their judgment must evidently rest on the establishment of two propositions: First, that the sale to Griffin was one which a court of equity would set aside in Seiper's favor, and therefore Seiper, the judgment debtor, had such an equitable right therein as his creditors were entitled to reach; and, secondly, that the subsequent deed was in effect intended as a release of this equitable right, and was, in fact, a conveyance of it to Seiper's wife, for the purpose of defrauding his creditors. In my judgment, the complainant has failed to establish either of these propositions. The only fact relied on, upon which to base a decree setting aside the sheriff's sale, is that the price was grossly inadequate. No fraud on Griffin's part, or mistake, surprise, or accident, or other equitable ground upon which to set aside the sale, is sufficiently alleged in the bill or proved as a fact. In the absence of fraud, mistake, or accident, alleged and sufficiently proved, this court will not set aside sales made under executions issued out of other courts; nor is the inadequacy of price, in this case, sufficient ground on which to base a decree that the sale was fraudulent and that Griffin could not have held the property under the sale. If his attorney's statement is correct, a case of negligence on the part of defendant Seiper was made out sufficient to bring the case within the application of the rule laid down in Smith v. Duncan (1863; Green, Oh.) 16 N. J. Eq. 240, where the inadequacy of price was greater than here, and where the chancellor refused to set aside a sale under execution upon this ground. The cases relied on by complainants have all been examined, but are either cases where the sheriff's sales were set aside because made in collusion with the debtor, or where, in addition to inadequacy of price, some equitable ground was alleged and proved for setting aside the sale. In the second place, the complainants' case fails to establish that the conveyance from Griffin to Mrs Seiper was made with intent to defraud Seiper's creditors. That Griffin had no such direct intent is, I think, clear from the evidence, for he claimed absolute ownership, tried to sell the property at an advance, and finally gave up any benefit of the sale solely as a voluntary concession—or, rather, gift—to Mrs. Seiper, so that she would have a home. If the sale to him was valid against Seiper or his creditors, Griffin had the right to do this upon his own terms. The price obtained by Griffin on a resale and the vendee to whom he conveyed might be evidence bearing upon the question of the good faith of his claim to the property under the sheriff's sale and his intention in making the conveyance; but in the present case, I think, the conveyance to Mrs. Seiper for the sum she paid is satisfactorily explained, and the circumstances attending the conveyance are not sufficient to show fraudulent intent against Seiper's creditors on the part either of Griffin or Mrs. Seiper. There is no sufficient ground, therefore, for imposing on the property in Mrs. Seiper's hands the lien of the complainants' judgment, and the bill must be dismissed.
In reaching the above conclusion, there are two questions which I have not decided: First, whether any decree in this cause, based upon a supposed equitable right of Seiper or his creditors to set aside the sale of Griffin, could be made without making Griffin a party to the bill. As a matter of regular and ordinary practice, it would seem clear that he should have been made a party. See Winans v. Graves (1887) 43 N. J. Eq. 276, 277, 11 Atl. 25. But, inasmuch as the objection was not raised by defendant on the record, and also because the evidence taken by both parties probably comprises all the evidence which would have been taken had Griffin been a formal party, I have considered the case as proved on itsmerits, instead of directing it to be held over for the purpose of making Griffin a party. The second question is whether a judgment creditor is entitled, for the purpose of satisfying his judgment, to pursue an equitable right or cause of action belonging to the debtor, such as the right to set aside a sale. Some authorities declare that the right of action to set aside a contract for fraud is not assignable (3 Pom. Eq. Jur. 1276, and cases cited); and, although such cases are not entirely analogous, there may be some question whether the reasons of the decisions are not applicable here. I do not consider this question, but dispose of the case upon the facts proved, and as if the right to attack the sale would pass to the creditor.