Miller v. Kehoe

California Supreme Court May 27, 1895 No. No. 15785Published

Before: McFarland

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Holding. The court held that while a fraudulent conveyance may be set aside for the benefit of creditors, the trial court erred in ordering the payment of attorneys' fees and the assignee's costs out of the proceeds of the property sale.

Issues

Whether the evidence supported the finding of a fraudulent conveyance.
Whether an assignee in insolvency is entitled to recover property conveyed prior to the insolvency proceedings.
Whether attorneys' fees and assignee costs may be paid from the proceeds of a fraudulent conveyance sale when the defendant claims an independent interest in the property.

Disposition. remanded with directions to modify

Quotations verified verbatim against the opinion

“The general rule is that counsel fees are not recoverable by a successful party in an action either at law or equity”

“It clearly does not allow a plaintiff who brings suit for himself and others interested with him to recover counsel fees against a defendant who denies the right of any and all the beneficiaries”

“the court below erred in decreeing that attorneys’ fees should be paid to the plaintiffs or to the assignee in insolvency out of the gross proceeds of the sale of the property.”

Synopsis

Fraudulent Conveyance—Creditor’s Bill—Appeal—Conflicting Evidence.—Upon a creditor’s bill to set aside a conveyance alleged to have been made without consideration and with intent to hinder, delay, and defraud the creditors of the grantor, where there is a substantial conflict in the evidence, a finding that the conveyance was made to hinder and defraud creditors cannot be disturbed upon appeal.

Id. —Rights of Assignee in Insolvency—Receiver in Creditor’s Supe —Sale of Property of Insolvent.—Where a conveyance in fraud of creditors was made several months before a proceeding in insolvency was instituted against the grantor the assignee in insolvency is not entitled to recover the property as assets of the insolvent estate; hut the property may be sold upon a creditor’s bill by a receiver appointed for that purpose for the benefit of the creditors suing as plaintiffs in the action.

Id.—Attorneys’ Bees—Costs—Improper Allowance.—The court cannot decree attorneys’ fees to he paid to the creditors, plaintiffs, nor to the assignee in insolvency, out of the gross proceeds of the sale of the property, nor can it allow costs to the assignee in insolvency out of the fund.

Id.—Attorneys’ Bees, When and When not Recoverable.—The general rule is that counsel fees are not recoverable by a successful party in an action either at law or in equity, except in enumerated instances-where they are expressly allowed by statute.

Id.—Allowance of Counsel Bees Out of Bund—Common Interest— Adverse Claim__Counsel fees may be allowed in equity in an action for the preservation or distribution of a fund where all the parties have a common interest; but a plaintiff who brings suit for himself and others interested with him cannot recover counsel fees against a defendant who denies the right of each and all of the plaintiffs, and sets-up in himself an adverse and independent title to the thing in litigation.

McFarland, J. This action was commenced by the plaintiffs, Miller, Horn, and Chapman, against the defendants, Margaret Kehoe and her husband, John W. Kehoe. It was averred in the complaint that said plaintiffs were creditors of the defendant John Kehoe; that said John was the owner of certain described real property, which he had conveyed to his wife, the defendant Margaret, with intent to defraud his creditors; and that he had commenced proceedings in insolvency, which prevented plaintiffs from obtaining judgments against him. The purpose of the action was to have the conveyance from said John to said Margaret declared fraudulent, and to have the property conveyed sold, and the proceeds of the sale applied to the satisfaction of defendant’s debts. It is averred that the action was brought on behalf of said plaintiffs and also in behalf of other creditors “who may come in and make themselves plaintiffs to this action and contribute to the expenses thereof”; and it appears that certain other creditors did come in as plaintiffs. It was also prayed that when an assignee in insolvency of said John W. Kehoe should be appointed he should also be made [342]a party; and E. G. Rudolph, having been afterward appointed as such assignee, appeared and filed a pleading, in which he also averred that said conveyance from John to Margaret Kehoe was fraudulent, and prayed that it be decreed that the property described therein was part of the assets of said insolvent, John Kehoe, and passed to said assignee Rudolph.

The defendants, John and Margaret Kehoe, answered, denying that said conveyance was fraudulent, and averring that the property described therein was acquired with the separate funds of the said Margaret, and was her separate property.

The court found that the said conveyance was made without any consideration and with intent to hinder, delay, and defraud the plaintiffs and other creditors. It found, however, against the assignee, Rudolph, finding that he “ is not and was not entitled to have the said deed canceled or annulled, nor to recover the said property as assets of the said insolvent estate to be administered by him in insolvency.” But the court allowed him his costs.

In the judgment the court, after adjudging the said conveyance to be void as against plaintiffs and other creditors, and that certain amounts of money were due the various plaintiffs, decreed that a receiver appointed for that purpose should sell the said real property, and out of the proceeds of the sale pay the costs, and then to the attorneys for certain plaintiffs nine hundred dollars as attorneys’ fee, and to the attorney for certain other plaintiffs the sum of four hundréd dollars, and to the attorney for said assignee in insolvency four hundred dollars; that the balance of “ said fund ” should be distributed among the creditors in accordance with their respective rights, and that the residue should go to the defendant, Margaret J. Kehóe. The defendants, Margaret and John Kehoe, appeal from the judgment and from an order denying a new trial.

Miller v. Kehoe

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