California Court of Appeal Sep 18, 1907 No. Civ. No. 379.Published
Before: Cooper
Synopsis
APPEAL from a judgment of the Superior Court of the City and County of San Francisco, and from an order denying a new trial. M. C. Sloss, Judge.
The facts are stated in the opinion of the court.
Bishop, Wheeler & Hoefler, and William Rix, for Appellant.
COOPER, P. J.
Plaintiff recovered judgment. Defendant Daniel T. Murphy made a motion for a new trial, which was denied, and this appeal is by him from a part of the judgment and from the order denying his motion for a new trial. The action was brought by plaintiff, the divorced wife of Bertram Samuel J. F. Murphy, hereinafter designated as Samuel J. Murphy, to obtain a decree that two certain deeds, dated respectively May 27, 1886, and May 26, 1897, made by defendant Samuel J. Murphy to defendant Daniel T. Murphy, are fraudulent and void as to plaintiff, and that a certain judgment for the sum of $8,284.13, with interest, rendered in the superior court of the city and county of San Francisco, in favor of plaintiff and against defendant Samuel J. Murphy, in a suit upon a prior judgment for permanent alimony, recovered by plaintiff against the said defendant Samuel J. Murphy in England, be declared a lien upon the property so transferred by said deeds to defendant Daniel T. Murphy, until he shall pay and satisfy said judgment. The court found in favor of defendant Daniel T. Murphy as to the first deed, and hence it will not be necessary to state any facts as to that. The defendant Samuel J. Murphy made default, and hence it will only be necessary to state the facts as to the second deed, and its effect as between the plaintiff and the appellant.
In 1891 the plaintiff and defendant Samuel J. Murphy intermarried. In February, 1895, a decree of divorce was rendered in Great Britain, dissolving the said bonds of matrimony, and awarding to plaintiff $50 per month alimony. Appellant had heard of this divorce prior to the conveyance made to him by his brother Samuel J. Murphy in 1897. A portion of the money due plaintiff as alimony was thereafter, on November 11, 1898, included in a judgment in favor of plaintiff and against Samuel J. Murphy for the sum of £1,450. Upon this last-named judgment the plaintiff brought an action in the superior court of the city and county of San Francisco against defendant Samuel J.'Mur
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phy, and upon the sixth day of May, 1901, judgment was duly entered in favor of plaintiff in said' action for the sum of $8,284.13. From this judgment an appeal was taken and the judgment affirmed.
The action at bar was commenced August 5, 1901, after the entry of the last-mentioned judgment in the superior court, and pending its appeal to the supreme court. No stay bond was executed pending the said appeal. The court below found that the said deed of May, 1897, was executed for the purpose of hindering, delaying and defrauding the plaintiff in collecting any sums that might be due or become due to her from defendant Samuel J. Murphy, and ordered that appellant pay to plaintiff out of the property so held by him for defendant Samuel J. Murphy the sum of $9,944.31, being the amount, with interest and costs, of the said judgment rendered in favor of plaintiff and against said Samuel J. Murphy in the superior court of the city and county of San Francisco, and that until the same be paid it remain a lien upon the undivided interest in two certain pieces of real estate held by appellant for defendant Samuel J. Murphy under the said deed of May, 1897.
The first point urged by the appellant is that plaintiff has not the status of a' creditor so as to entitle her to assail the transfer, for the reason that an appeal had been taken from her judgment rendered in the superior court against Samuel J. Murphy. It is true that a fraudulent conveyance, as against a resident of the state, can only be attacked by a creditor who has reduced his claim to a judgment and who is entitled to an execution, which could be levied and satisfied only for such fraudulent conveyance. Plaintiff alleged, proved, and the court found, that she had a judgment, and one upon which she was entitled to an execution. The appellant claims that, because an appeal had been taken, the judgment was not a final judgment; or, in other words, his contention is—and he asks us to hold—that a creditor, who has reduced his claim to a judgment in a court having jurisdiction cannot be allowed to bring an action to set aside a fraudulent conveyance pending an appeal from such judgment, although no undertaking has been given to stay execution. He asks us to hold that a judgment creditor entitled to an execution may be deprived of the right to maintain
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an action like this pending an appeal which may be delayed for years, and with no security for the final payment of the judgment. We would be loath to follow any case which would sustain such a doctrine, but to the credit of the law no case has been cited which even lends countenance to such contention. The language of the law boobs is that a creditor, who has reduced his demand to a judgment at law, may maintain his action to set aside a conveyance which hinders and obstructs the right of the creditor to reach the debtor’s property by execution. The law presumes that a judgment, until reversed, is a correct judicial determination of the rights of the parties. It presumed so in this case, and, as has been stated, the court on appeal so held. If the appellant’s contention be correct, the law, while giving the plaintiff the right to an execution, would be so impotent that it could not in' any way assist her by removing the obstruction which prevents the enforcement of the execution. It is true, that pending an appeal, the judgment was not final, but it was nevertheless a judgment. It was entered as the code provides it should be. It entitled the plaintiff to a writ of execution. It was admissible in evidence for the purposes of this case. In
California etc. Bank
v.
Graves,
129 Cal. 649, [62 Pac. 259], it was held that the judgment-roll was admissible upon an application for a writ of assistance pending an appeal from a judgment of foreclosure, where no undertaking had been given to stay the execution. The same was held in
Montgomery
v.
Tutt,
11 Cal. 190, in which case Judge Field said: “When the court possesses jurisdiction to make a decree it possesses the power to enforce its execution.”
In
Cook
v.
Rice,
91 Cal. 664, [27 Pac. 1081], the plaintiff asked for an injunction and for damages for certain trespasses upon certain lands. Defendant pleaded as an estoppel a former judgment, in which it was held that the plaintiff was not entitled to any part of the land except ten acres specifically described. When the judgment-roll in the former suit was offered in evidence, it was objected to because the time for appealing had not expired, and the judgment was not final. The court said, speaking through Mr. Justice Temple: “It was not necessary that it should be final in the sense that it was not liable to be reversed on appeal. It was enough that the judgment was in force, not suspended by an
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appeal or otherwise, and that while in force it finally disposed of the controversy. ’ ’
In the case at bar the judgment was in force, not suspended by the appeal, and while so in force it finally disposed of the controversy. Plaintiff having a judgment, the judgment-roll was admissible to show it. It may further be said that defendant Samuel J. Murphy was a nonresident of the state at the time this action was commenced, and it has been held that in such case the plaintiff is not required to be a judgment creditor.
(First Nat. Bank
v.
Eastman,
144 Cal. 493, [103 Am. St. Rep. 95, 77 Pac. 1043].) However, we do not rest our decision upon this ground.
There is no merit in the second point urged by appellant, that the interest in the property upon which the judgment was declared to be a lien was not acquired by him and did not pass to him through the deed declared to be fraudulent, but from an independent source through a decree of distribution from his sister’s estate. The deed contains the following clause: “And whereas on or about the twenty-eighth day of March, 1897, Mary Margaret Isabella Murphy, a sister of the parties hereto, died at Ongar, Essex, England, and the party of the first part is one of her heirs at law, and he desires to grant and convey absolutely to the party of the second part all his right, title and interest in and to the property and the estate of the said Mary Margaret Isabella Murphy, deceased, ’ ’ and concludes with the clause: " The said party of the first part does, by these presents, give, grant, bargain, sell, convey and confirm unto the party of the second part, and to his heirs and assigns forever, all the right and interest of the party of the first part in and to the property and estate of the said Mary Margaret Isabella Murphy, deceased, to which he may be entitled as heir at law or otherwise; To have and to hold the same unto the said party of the second part, his heirs and assigns forever.” The deceased sister had left a will, by the terms of which her brothers and sisters were excluded, and her estate left to one Smullen. The probate of the will was contested by some of the heirs, and pending the contest a settlement of the matter appears to have been made, as shown by the terms of the stipulation contained in the findings. This stipulation was signed by appellant, and also by Samuel J. Murphy by appellant, his attorney in fact. It contained among others the
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following recital: “Whereas since the death of said Margaret I. Murphy, deceased, said Samuel has assigned ... to Daniel T. Murphy . . . and Whereas, William J. Smullen . . . has conveyed any and all rights ... to those who are the heirs at law of the said Margaret I. Murphy; and Whereas, . . . without agreement to the contrary, the said parties . . . would be entitled in the distribution . . . and the said Daniel T. Murphy to one-sixth thereof in his own right, and one-sixth thereof as assignee of said Samuel J. Murphy, Now therefore . . . each of the parties hereto does hereby grant and convey to each of the other parties.” It therefore clearly appears that the share of Samuel J. Murphy to an undivided one-sixth of his sister’s estate was treated in the stipulation as being conveyed to appellant by the fraudulent deed, and the decree of distribution followed, which only fed the deed and made definite the property that passed by it.
Not only this, but the complaint, which is verified, contains the following allegation: “that one-half of said eleven-forty-eighths so claimed by defendant Daniel T. Murphy is. claimed under said indenture of May 26, 1897, and but for said alleged transfer of May 26, 1897, would now be the property of defendant Samuel J. Murphy, and subject to the payment of said judgment in favor of plaintiff.” This allegation is not denied, and no issue was made thereon.
The decree of distribution but followed the stipulation entered into in regard to. the estate of the deceased sister. It was conclusive upon the heirs, and passed the legal title to appellant, but it did not affect the right of a judgment creditor to show who was the real owner of the property. In
Martinovich
v.
Marsicano,
137 Cal. 355, [70 Pac. 459], the appellant had obtained a judgment, pending administration of an estate, against one of the heirs. Before distribution the heir, against whom the judgment had been obtained, made a deed, conveying all her interest in the estate to the other heirs, and upon petition and due notice a decree of distribution was made to the other heir. The court held that the decree of distribution was not binding upon the judgment creditor, and in no way affected his lien. (See, also,
Estate of Crooks,
125 Cal. 561, [58 Pac. 89] ;
Barnard
v.
Wilson,
74 Cal. 512, [16 Pac. 302];
Chever
v.
Shing Hong Poy,
82 Cal. 68, [22 Pac. 1081].) Such decree of distribution cannot be made the shield to protect the property of Samuel
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J. Murphy from all attacks by creditors. It cannot bind a court of equity, nor prevent it from investigating the facts, and brushing aside all illegal and fraudulent transfers for the purpose of seizing the assets of the debtor, and applying them to the satisfaction of the judgment creditors ’ claim. In such a case a court of equity will not be turned aside by shadows, but will grasp the substance—the assets of the fraudulent debtor—no matter where they may be found, and apply them to the payment of the honest creditor.
It is argued that the plaintiff had a remedy at law, as she could have levied execution upon and sold the alleged interest of Samuel J. Murphy in and to the real estate standing in the name of appellant. It is said “she could have first sold out the interest of Samuel J. Murphy in the property, and then brought suit to set aside the conveyance.” We have never before heard of a rule that one must be a judgment creditor, and also have gone through the form of a levy and sale under execution before he could maintain an action to set aside a fraudulent conveyance. The contention is not worthy of further discussion.
The evidence supports the findings, and the judgment is the legal conclusion from the facts found. The judgment and order are affirmed.
Kerrigan, J., and Hall, J., concurred.
AI Brief
AI-generated · verify before citing
Holding. A judgment creditor may maintain an action to set aside a fraudulent conveyance even while an appeal of the underlying judgment is pending, provided no stay bond has been filed. Furthermore, a decree of distribution does not shield property from a court of equity investigating fraudulent transfers to satisfy a creditor's claim.
Issues
Whether a judgment creditor may maintain an action to set aside a fraudulent conveyance pending an appeal of the judgment when no stay bond has been filed.
Whether a decree of distribution of an estate prevents a court of equity from reaching property fraudulently transferred by a debtor heir.
Disposition. affirmed
Quotations verified verbatim against the opinion
“The language of the law boobs is that a creditor, who has reduced his demand to a judgment at law, may maintain his action to set aside a conveyance which hinders and obstructs the right of the creditor to reach the debtor’s property”
“It cannot bind a court of equity, nor prevent it from investigating the facts, and brushing aside all illegal and fraudulent transfers for the purpose of seizing the assets of the debtor”