Fernwood Lumber Co. v. Meehan-Rounds Lumber Co.
Fernwood Lumber Co. v. Meehan-Rounds Lumber Co.
Opinion of the Court
delivered the opinion of the court.
On February 5, 1902, the Eernwood Lumber Company, holding an unsecured debt against one J. II. Greene, a citizen of the state of Iowa, .filed a creditors’ bill in the chancery court, by virtue of the provisions of § 503, Code 1892, against said Greene and wife and one B. E. Thomas, also a non-resident, seeking to have canceled, as against its rights, a certain deed executed by said Greene and wife to Thomas, purporting to convey certain lands in Lauderdale county, this state. ' This deed, the bill of complaint averred, was fraudulent, collusive, and intended to hinder complainant in the collection of its just debt. The prayer of the bill was that complainant “have a personal decree against said J. II. Greene for the amount of the indebtedness, and that said lands pretended to be conveyed to said B. E. Thomas be condemned to be sold to pay the same, and, to this end, that proper jnocess and publication issue and be made for said defendants.” On the same day complainant filed and had
The decision of this controversy necessitates a consideration of the provisions of § 503, Code 1892, under which appellant instituted its original suit. By virtue of that statute the creditor who has or has not obtained a judgment at law may file his-bill to set aside fraudulent conveyances of property, or other-devices resorted to for the purpose of hindering or delaying or
But it is contended by counsel for appellant that, conceding this to be true, when see. 503 is considered as standing alone, the rule announced by that section is now modified, if not abrogated, by ch. 85, Code 1892. We think this position untenable. The history of sec. 503, as disclosed by the previous adjudications of this court, demonstrates that it was intended to protect creditors against the fraudulent devices of their debtors and to defeat fraudulent conveyances of property designed to prevent the collection of just debts.. This statute was enacted to render ineffective and unavailing all fraudulent and collusive conveyances made prior to the institution of a suit, and to prevent divestiture of title subsequent to the filing of the bill by which it was sought to subject the property to the payment of an existing debt, whether the. same had been reduced to judgment or not. Section 503 was designed for the protection of those creditors who have no lien upon, right to, or interest inland; while ch. 85, Code 1892, was enacted for the benefit of those entitled to such interest, lien, or right by virtue of some secret equity, some undisclosed claim, or founded upon or evidenced by some unrecorded instrument. A creditors’ bill filed under the provisions of sec. 503 is an effort to restore the title of the property involved to his debtor, who had fraudulently divested himself thereof, and which would, but for such fraud, have been subject to his debt. Successful in this, the law creates for him a lien upon the land in controversy, which relates back, as to other creditors and third persons in general, to the filing of the bill, and, as to bona fide purchasers, to the service of process upon defendant. Chapter 85 affords
As not being necessarily before the court for consideration, we intimate no opinion as to when a suit is begun, within the purview of ch. 85, or from what date a lis pendens notice properly filed thereunder takes effect.
The decree is affirmed.
Reference
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- 1. Chancery Courts. Jurisdiction. Fraudulent conveyances. Code 1893, l 503. Lis pendens. Code 1893, gg 3783-3789. The provision oí Code 1892, § 503, enlarging the chancery court jurisdiction of bills by creditors to vacate fraudulent conveyances, that the creditor shall have a lien on the property from the filing of his bill, except as against bona fide purchasers before the service of process on the defendant, is not affected by Code 1892, §§ 2782-2789, the chapter on lis pendens, the two statutes referring to different classes of litigants. 2. Same. Practice. Process. Non-resident defendants. Code 1893, § 3431. When service complete. A non-resident defendant in chancery, under Code 1892, §3421, regulating process by publication and mailing for such defendants, is not served with process so as to authorize proceedings against him as if personally served until the completion of the required publication, and, in case his postofiice be known, the proper mailing of a summons to him. 3. Same. Concrete case. Where, in a suit under Code 1892, § 503, supra, to set aside a conveyance as fraudulent, a Us pendens notice was filed, under Code 1892, §§ 2782, 2789, supra, but the grantee in the deed, a nonresident defendant, without actual notice of the suit, conveyed the property to a bona fide purchaser before the completion of the publication and mailing of process against him, under Code 1892, § 3421, supra, the purchaser will be protected in his title.