Opinion
129/438.
04-28-1941
WALTON v. HILLIER et al.
Winard & Winard, of Newark, for complainant. Louis Auerbacher, Jr., of Newark, for James H. McLeod.
Syllabus by the Court.
1. Priority between Circuit Court executions against the same debtor should be determined by the Circuit Court.
2. In settling priorities, the Circuit Court is not limited to the record of the judgments and executions, but may go into extrinsic evidence of any matter pertinent to the inquiry, including even questions of fraud.
3. Chancery will not settle the priorities in a summary proceeding, even where one of the judgment creditors, before issuing execution, obtained from Chancery a decree that certain land was held in trust for the debtor and was subject to the lien of the judgment.
Suit by Fanny D. Walton, as executrix, against Richard Hillier, and others, wherein certain lands were decreed to be held in trust by holder of legal title for the named defendant and subject to lien of complainant's judgment. On complainant's petition that another judgment creditor and sheriff be required to show cause why sale of land under complainant's writ should not proceed and why complainant's writ should not take priority over other judgment creditor's execution.
Order to show cause discharged.
Winard & Winard, of Newark, for complainant.
Louis Auerbacher, Jr., of Newark, for James H. McLeod.
BIGELOW, Vice Chancellor.
The complainant recovered in the Essex County Circuit Court a judgment against Richard Hillier for $4,280, and then brought suit in this court praying a decree that certain lands, of which Adelaide Rowland appeared to be the legal owner, were held in trust for the judgment debtor and subject to the lien of complainant's judgment. On February 5, 1941, a final decree was made pursuant to this prayer. Complainant thereupon filed in the register's office a certified copy of the decree and on February 27 procured from the Circuit Court a writ of execution which was delivered to the sheriff that afternoon.
The same day, another judgment creditor of Hillier's, James H. McLeod, caused execution to be issued on his judgment and delivered it to the sheriff at about the same hour as complainant's execution. The sheriff levied under both writs against the property which stood in Mrs. Rowland's name. On petition of complainant, McLeod and the sheriff have been ordered to show cause why the sheriff should not proceed to sale, under complainant's writ, and why his writ should not be given priority over McLeod's execution.
It will be observed that both executions issued, not out of the Court of Chancery, but out of the Circuit Court; and that McLeod was not a party to the suit lately pending in Chancery.
Counsel for complainant and McLeod have cited a large number of cases on themeritorious question which creditor has priority. It is significant that none cited from our Equity Reports, except Kinmonth v. White, 61 N.J.Eq. 358, 48 A. 952, arose on a motion to settle priorities between holders of executions out of a law court. In the Kinmonth case, there were five judgment creditors, each of whom had filed a bill in Chancery to set aside the same fraudulent conveyance. The bills, although not consolidated, were heard and decided together. After the decrees, there was a sale by the sheriff and all the complainants came back to Chancery to have their priorities in the proceeds determined. This case would be authority for the present motion only if McLeod had come into this court for relief, or had been a party to complainant's bill.
In the other Chancery cases which have been cited by counsel, the question of priority arose in sundry ways, as in Dey v. Allen, 77 N.J.Eq. 522, 78 A. 674, on the distribution of surplus money in a foreclosure suit, or as in Swift & Co. v. First National Bank, 114 N.J.Eq. 417, 168 A. 827, on a bill to quiet title. In Sitley & Son v. Morris, 73 N.J.Eq. 197, 67 A. 789, the executions issued out of this court.
Smith v. Collins, 81 N.J.Eq. 348, 86 A. 957, 958, comes close in principle to the present proceeding. It was a bill to restrain an execution sale on the ground that the property levied on by the sheriff was an equitable interest which could not be sold in execution. Although the complainant was the debtor himself, his position resembled that of the complainant in the case before me, who insists, among other things, that the debtor's interest in the Rowland land could not be reached by execution without the aid of Chancery. Vice Chancellor Learning, in the cited case, denied relief on the ground that "the judgment creditor is entitled to assert the existence of a legal estate in his judgment debtor, and to have his claim of legal title tried by a legal tribunal."
There is no doubt of the competency of the Essex County Circuit Court on petition and motion to order the sheriff to proceed to a sale and to pay the money realized into that court and thereupon to determine whether complainant or McLeod is entitled to priority therein. McAdams v. Mundy, 79 N.J.L. 480, 76 A. 1031; Heinselt v. Smith, 34 N.J.L. 215; Woodruff v. Chapin, 23 N.J.L. 555. There used to be a difficulty when the executions issued out of different law courts, but now, in such case, a justice of the Supreme Court may decide the controversy. R.S. 2:27-331, N. J.S.A. 2:27-331.
In settling priorities, the law court is not limited to the record of the judgments and executions but may go into extrinsic evidence of any matter pertinent to the inquiry including even questions of fraud. Matthews v. Warne, 11 N.J.L. 295; Williamson v. Johnston, 12 N.J.L. 86. In such an inquiry, the proceedings in this court would, of course, be considered. The ultimate question for determination is purely legal, whether, considering the state of the title, the records in the law court, the record in this court, complainant or McLeod is entitled to priority. The order to show cause will be discharged for the reason that relief should be sought in the Circuit Court.