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Hagan v. Walker et al.

John HAGAN, SURVIVING PARTNER OF THE LATE FIRM OF JOHN

HAGAN & Co., APPELLANT, V. LEROY P. WALKER, ADMINISTRATOR of William H. POPE, DECEASED, AND FRANCES ANN POPE, WIDOW AND GUARDIAN AD LITEM OF William POPE AND JULIA ANN POPE, MINOR CHILDREN OF SAID WilLIAM H. POPE, DECEASED, AND SAMUEL BRECK, ADMINISTRATOR OF LEROY Pope, DECEASED.

A court of equity has jurisdiction of a bill against the administrator of a deceased

debtor and a person to whom real and personal property was conveyed by the de

ceascd debtor, for the purpose of defrauding creditors. In such a case, the court does not exercise an auxiliary jurisdiction to aid legal pro

cess, and consequently it is not necessary that the creditor should be in a condition

to levy an exccution, if the fraudulent obstacle shouid be removed. It is proper to make a prior encumbrancer, who holds the legal title, à part; to the

bill, in order that the whole title may be sold under the decrec; for the purpose of such a dccrcc, the prior encumbrancer is a necessary party; but the court may order a sale subject to the encumbrance, without having the prior encumbrancer before it,

and in fit cases it will do so. If the prior encumbrancer is out of the jurisdiction, or cannot be joined without de

feating it, it is a fit cause to dispense with his presence, and order & sale subject to his encumbrance, which will not be affected by the decrec.

This was an appeal from the District Court of the United States for the Northern District of Alabama.

The bill was originally filed in the names of John Hagan, of New Orleans, and a citizen of the State of Louisiana, and Thomas Barrett, of New Orleans, and a citizen of the State of Louisiana, formerly commission merchants and partners, trading under the firm, name, and style of John Hagan & Co., complainants, against William H. Pope, of Huntsville, and a citizen of the Siate of Alabama, Samuel Breck, of Huntsville, and a citizen of the State of Alabama, the said Breck being the administrator of the estate of Leroy Pope, who in his lifetime resided in Huntsville, and was a citizen of the State of Alabama, and Charles B. Penrose, of Washington city, and a citizen of the District of Columbia, and successor in office of Virgil Maxcy, who in his lifetime resided in Washington city, and was a citizen of the District of Columbia, and Solicitor of the Treasury of the United States.

The suit was commenced in February, 1846. The plaintiffs were judgment creditors of Leroy Pope, by a judgment rendered in April, 1834, upon which an execution in October, 1834, was returned, “ No property found.”

The plaintiffs sought to obtain satisfaction of this judgment, from property which they allege the said Leroy Pope conveyed fraudulently to his son William H. Pope, the defendant.

This property was conveyed, March, 1831, by Leroy Pope to

Hagan v. Walker et al.

William H. Pope, and upon considerations which the plaintiffs alleged to be colorable and inadequate.

The property thus conveyed, was charged to have been the whole estate of the said Leroy, and William H. Pope was charged to have been, before that time, without property, and to have had no ineans of payment for this.

The plaintiffs alleged that the property was never delivered to the exclusive possession" of William H. Pope, but “ remained as much in the possession of the said Leroy as the said William, and that the said Leroy and William enjoyed the pro. ceeds and profits jointly."

They alleged that William H. Pope, in March, 1834, conveyed the land and slaves to the Solicitor of the Treasury in mortgage, to secure a debt due to the United States by the said Leroy Pope, of $29,290.90, which William H. Pope at that date assumed, and for which he gave his notes; and that at the same date he guaranteed to the United States a debt of $20,000, for which other security had been given to the United States by Leroy Pope.

They averred that the $20,000 thus mentioned, was paid from the securities deposited by Leroy Pope, and that the only debt really incurred by William H. Pope, was that for $29,290.90. l'his debt the plaintiffs admitted to be a charge on the property, and they did not contest it. They charged, however, that the securities to the Solicitor of the Treasury were designed by the grantor (William H. Pope) as a fraud upon the creditors of Leroy Pope.

The death of Leroy Pope was alleged to have occurred in 1844, and the appointment of Breck, as administrator, in 1844.

The prayer of the bill was, that the conveyances of Leroy and William H. Pope should be declared null. That, after satisfying the debt of the United States, the remainder of the property should be appropriated to satisfy the debt of the plaintiffs. Process was prayed against William H. Pope and Samuel Breck, administrators of Leroy Pope, and the Solicitor of the Treasury, (Penrose,) a citizen of the District of Columbia.

The defendants, Breck and Pope, demurred to the bill; the demurrer was allowed by the District Court, and the bill was dismissed.

An appeal from this decree of dismissal brought the case up to this court. It was argued by Mr. Johnson for the appellant, and Mr. J. A. Campbell for the appellces.

As the demurrer was sustained in the court below, the points before this court to be argued were, the reasons for dismissing the bill and sustaining the demurrer. These were stated by Mr. Campbell, as follows, and it is sufficient to state the points and authorities.

Hagan v. Walker et al.

I. That the jurisdiction of the Court of Chancery to set aside conveyances executed by a failing debtor to defraud creditors, is not an original and independent jurisdiction of that court, but is an auxiliary and limited jurisdiction. The creditor must show that the remedies at law have been exhausted - that there is an obstruction which can only be removed by the aid of the Court of Chancery, and that his cause is so situated at law, that, upon the interposition of the court in the manner sought, he could immediately enforce the right he claims. 3 Mylne & Craig, 407; 11 S. & M. 366; 8 Barb. N. Y. R. 593; 7 Ala. 319, 928; 1 Hill's So. Car. R. 297, 307; 20 Johns. 554; 2 Rand. 381; 1 Paige, 388.

II. The bill shows in this case three facts sufficient to have determined the lien of the judgment against Leroy Pope, under the laws of the United States, and the State of Alabama.

Five years had elapsed from the 3d of March, 1839, before the filing of the bill. The act of Congress of that date determined the lien. 5 Stat. at Large, 338.

Ten years had elapsed from the judgment and return of the last execution. ·Clay's Digest, 206, 207, 28, 29; 5 Ala. R. 188; 18 Ala. 675; 19 Ala. 207.

The death of Leroy Pope put an end to the lien of the judg.ment and the right to issue execution. Bush v. Jones, 13 Ala. R. 167.

III. The plaintiff sets forth the conveyance of Leroy Pope to William H. Pope, to have taken place in 1834. He does not aver that the conveyance was upon any trust for Leroy Pope, nor does he aver that any title remained in Leroy Pope. The bar of the statute of limitations of six years will apply to the personal property. 7 Yerger, 222; 1 Bailey, Ch. R. 228; 1 Humph. 335; 1 Hill, Ch. R. 113; 8 Yerger, 145; 7 Wheat. 60, 117, &c.; Peck's Rep. 41.

IV. The Court of Chancery, except in cases of express trusts and fraud, follow the courts of law in the application of the statute of limitation.

In this case no trusts in favor of Leroy Pope are charged to exist; nor is there an averment that the plaintiff did not disco: ver till within six years the fraudulent purpose and consideration upon which they were made.

In the absence of such averments, the court will presume the possession to have been consistent with the legal title, and the bar of the statute will run from the date of the title deeds. 4 How. S. C. R. 503, 560; 7 How. 234; 10. Wheat. 168.. .

In reference to personal property, the limitation upon personal actions is adopted in equity. 1 Dev. & B. Eq. 95; 5 Ala. R. 90, 508; 3 Ala. R. 756.

Hagan v. Walker et al.

V. No averment is made by the plaintiff showing the condition of the estate of Leroy Pope, after his death. The bill contains an averment, that the crops from the lands and other profits of the estate have been large, and that Leroy Pope enjoyed them till his death.

There is nothing to show that ample means are not to be found in the hands of the administrator to pay the debt. No presentment to, nor demand of, the administrator is a verred, and no refusal to pay on his part shown. A bill must show this, or it is fatally defective. 3 Ham. 287; 5 Har. & J. 381; 5 Gill & J. 432; 2 McCord's Ch. R. 416, 169.

VI. The court had no jurisdiction of the cause. The Solici. tor of the Treasury, a citizen of the District of Columbia, is made a party. The prayer of the bill is to cancel deeds made to him, and to appropriate property in which he has a legal right. 3 Cranch, 267 ; 14 Pet. 60, 65.

Mr. Justice CURTIS delivered the opinion of the court.

John Hagan & Co. filed their bill in the District Court of the United States for the Northern District of Alabama, in which they state that, in the year 1834, they recovered a judgment at law in that court against Leroy Pope, for upwards of seven thousand dollars, which is wholly unsatisfied; that a writ of fieri facias, running against the lands, goods, and body of the debtor, was regularly issued, and, on the 10th day of October, 1834, was returned nulla bona; and from that time to the filing of the bill, there has not been, in that district or elsewhere, any property of Leroy Pope out of which the judgment-debt could be collected, except certain property afterwards mentioned. The bill further alleges that, about a month before the complainants recovered their judgment at law, Leroy Pope, intending to defraud the complainants, and to hinder them from obtaining payment, made conveyances, both of real and personal estate, to a large amount, to his son, William H. Pope, who was a party to the fraud, and is made a defendant in the bill; that Leroy Pope died in the year 1844, and Samuel Breck, who was appointed his administrator, is also a party defendant.

The complainants are averred to be citizens of Louisiana, and William H. Pope and the administrator citizens of Alabama. The defendants having demurred to the bill, it was dismissed by the District Court, and the complainant, who is the surviving partner, appealed to this court.

The principal ground upon which the demurrer has been rested in this court is, that the bill does not show that the complainants are entitled to equitable relief. The argument is, that the jurisdiction of a court of equity, to aid a judgment-creditor, Hagan v. Walker et al.

by removing a fraudulent encumbrance on the property of his debtor, is ancillary merely; that this aid is not given unless the creditor has obtained a lien at law upon the specific property sought for, if that be legal property upon which an execution could be levied; or if it be equitable assets, not liable to a levy by execution; that the creditor must have exhausted his legal remedy, by a return of nulla bona on his execution, and must also be in a condition to proceed at once at law to enforce his right, if the obstacle should be removed. That if his judgment has become ineffectual to entitle him to an execution, so that he could not levy, even if the assets were legal, and not subject to any fraudulent encumbrance, equity will not exert itself to subject equitable property to the payment of his judgment. And it is further argued, that, according to the local law of Alabama, governing these proceedings at law, the judgment-creditors had lost their lien on the personal estate of the debtor, because they had suffered more than one term to elapse without issuing an alias execution; and upon the real estate, because more than ten years elapsed after the return of their last execution, and before this bill was filed; and that the lien, both upon the personal and real estate, was destroyed by the death of Leroy Pope, which suspended the right to issue an exécution. That, by reason of his death and the lapse of more than ten years, the right to issue an execution being suspended, equity would not subject equitable assets to the payment of this judgment.

It does not distinctly appear whether the property sought to be reached by this bill is equitable or legal. There is reason to suppose, from some allegations in the bill, that a part or the whole of the property was conveyed by Leroy Pope, in 1831, to Louis McLane, as Secretary of the Treasury, to secure a debt due to the United States by a deed of trust, and this conveyance is not impeached. If it embraced the whole or any part of the property now in question, only an equitable estate therein was left in Leroy Pope. The bill is not distinct in its allegations on this subject; but we do not deem it necessary that it should be; because we are of opinion that this case is not to be treated as an application by a judgment-creditor for the exercise of the ancillary jurisdiction of the court, to aid him in executing legal process, but comes under a head of original jurisdiction in eruity. It is a bill by a creditor of a deceased debtor, against the administrator and a party who is fraudulently holding all the property of the deceased, which in equity should be applied to the payment of this debt, and the bill prays that the debt may be paid out of this fund. That a single creditor may maintain a bill against an administrator of a deceased

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