LANT v. MANLEY et al., 75 F. 627

TAFT, Circuit Judge, after stating the case as above, delivered the opinion of the court. Counsel for appellant upon the argument in this court abandoned that part of his appeal which challenged the action of the court below in dismissing the bill as against Lucy D. S. Parker personally, and as executrix of her husband, Franklin Parker, and in so far as it sought to subject to the judgment against Morgan anything but the real estate attached and levied upon in the suit at law in the court below. The bill is to be treated, then, as a bill in aid of complainant’s execution at law.

As attachments and executions may be levied on equitable interests in real estate in Michigan, such bills are there frequent and well-recognized equitable remedies (Lasher v. Stafford, 30 Mich. 369; Doak v. Runyan, 33 Mich. 75; Pursel v. Armstrong, 37 Mich. 326), and will be entértained in the federal courts of equity sitting in that state (Lorman v. Clarke, 2 McLean, 569, Fed. Cas. No. 8,516). 1. It is first objected that the complainant lost his lien by attachment because of the nulla bona return on his first fieri facias, and his unreasonable delay in suing out the alias writ.

The judgment was rendered in June, 1893, and the first execution issued in the same-month. The nulla bona return was made in September, 1893, and the alias writ issued in February, .1894, and was returned after levy on the attached lands in April, 1894. The second writ issued, therefore, less than nine' months after the rendition of the judgment. Was the nulla bona return an abandonment of the attachment? If not, was the failure to levy on the attached lands until more than eight months after the judgment an unreasonable delay? Both these questions must be answered in the negative.

It is true that an attachment upon personal property is ordinarily discharged by the return nulla bona on an execution issued upon the judgment. It is also true that the duty of the judgment creditor to use reasonable dispatch in levying execution upon the personal property attached before judgment is imperative. And, if the property here • seized were personal, the contention of appellees might succeed. But it is real estate, and with respect to attachments on that kind of property we conceive that a somewhat less strict rule of diligence applies.

Personal property can only be attached by actual seizure by the sheriff; marshal, or other executive officer. The lien on it can only be maintained by its manual retention in official custody. A release of it by the attaching officer for any purpose destroys the lien. The necessity for excluding the owner from beneficial enjoyment in the thing attached has justly given rise to the requirement that when his judgment is obtained the attaching creditor shall speedily satisfy it out of that which he has so long withheld from the defendant owner.

If, instead of doing so, the issue of execution is followed by a return nulla bona, it is inferred against the judgment creditor (hat he proposes to rely on other property for his debt, and that he has abandoned his lien. Or, ii' no execution is issued upon a judgment within a reasonable time, the lien is to he regarded as abandoned, because the defendant owner of the attached personally may justly complain that, if he is not to have the use of it, he ought at least to have it sold, and the proceeds of it applied to the payment of bis debts. Avery v. Stephens, 48 Mich. 249, 12 N. W. 211; Trowbridge v.

Bullard, 81 Mich. 453, 45 N. W. 1012; Butler v. White, 25 Minn. 433; Speelman v. Chaffee, 5 Colo. 256; Riekards v. Cunningham, 10 Neb. 417, 6 N. W. 475. No case lias been cited to us, however, in which it has been held that a return of nulla bona on a first execution after judgment is a surrender of the lien on real estate. The casi; of Blish v. Collins, 68 Mich. 542, 36 N. W. 731, cited for appellee, was certainly not such a case. There a levy was made on the attached land, and then withdrawn, and no claim was made under the attachment or levy.

Nor lias any case been called to our attention in which an attachment on reai estate has been held to be discharged by delay in the levy of an execution on the land attached after judgment, unless the statute expressly limits the time within which execution and sale after judgment must lake place to preserve the lien, as in Maine. Croswell v. Tufts, 76 Me. 295. There is a remark in a decision of the supreme court of Michigan, in considering the objection to the validity of a lien by attachment on real estate, that the delay in levying execution in that case — of two months — was not unreasonable.

This, it is argued by counsel for the appellees, is a recognition by implication that a longer time might be unreasonable. We are not prepared to deny that a lien on real estate, secured by attachment, might be abandoned by great delay in levying execution, especially where the rights of third parties may have intervened between attachment and execution, but there is nothing of the kind in the case at bar. The character of (he real-estate lien is such as to make delay in execution much less burdensome to the debtor, and to relax the stringency of the rule requiring spéed in execution on attachments of personalty.

Section 7993 of Howell’s Statutes provides for the attachment of real estate, and states that the levy shall be made in the manner provided by law for the seizure of such property on execution.

Section 7995 provides that the real estate attached shall he hound, and the attachment shall be a lien thereon from the time when a certified copy of the attachment, with a description of the real estate attached, shall he deposited in the office of the register of deeds in the county where the real estate! is situated.

Section 7996 provides: “Each register of deeds shall note on every such certified copy the day, hour and minute when he receives it; and shall also enter in a book to be kept by him for that purpose, the names of the parties in such writ, designating who is plaintiff and who defendant, the time when the land was attached, and the time when such copy wag deposited.”

Section 8017 provides: “That any attachment on real estate shall also be discharged upon the record thereof by the register of deeds in whose custody it shall be, wheuever there shall be presented to him a certificate executed by the plaintiff, his personal representatives or assigns, duly acknowledged specifying that such attachment has been removed or otherwise satisfied or discharged; or a certified copy of the action of the court removing the same.” It would seem to be clear enough, from these provisions that the attachment upon real estate is nothing more than a statutory mode of recording a lien on real estate, in anticipation of a judgment and sale of the same to pay the debt.

It does not interfere in the slightest with the use and enjoyment of the land by the owner, and the exigency present in the attachment of personalty, already pointed out, has no existence where realty is the subject of process. In Walkley v. Bostwick, 49 Mich. 374, 13 N. W. 780, the action was brought against the sheriff and one in whose behalf the sheriff had made an alleged wrongful levy on the lands of the plaintiff under an execution against another person, and judgment was given for plaintiff in the court below. In reversing this judgment the supreme ■ court of Michigan, by Mr.

Justice Cooley, said: ‘‘At most, the act of defendants amounted to no more than a formal assertion that the ownership of plaintiff’s land was in John Walkley, and that they proposed to maintain that assertion by legal proceedings. * * * When a-sheriff levies his execution on the personal property of one who is a stranger to the judgment, there is a positive wrong, because there is a positive interference with the owner’s possession. There might also be a trespass in the levy of execution on lands, if the officer were to go upon the lands for the purpose, but it is not pretended that he did so in this ease.

Here the plaintiff finds her injury in the bare fact of levy; in other words, in the bare fact that these two defendants, without malice, have asserted that another party owns the land. But in law this is not an actionable wrong.” Taking into consideration the real nature of the attachment, we think that, in a case where the rights of third parties do not intervene, no delay in the execution, after judgment, ought to destroy the lien, if it falls short of clearly indicating an intention to abandon the same. Does a delay for nine months in this case indicate such an intention on the part of the complainant?

We are very clear that it does not. In Speelman v. Chaffee, 5 Colo. 256, it was held that the delay of a year in issuing execution, after judgment, on an attachment on personal property, was not unreasonable, or such as to indicate abandonment. If this be a sound view in the case of personalty, then, for the. reasons stated, a delay of nine months in case of real estate ought certainly not to work an abandonment. 2. But how as to the nulla bona return?

Where that has been held to work an abandonment in case of personal property, the return has usually appeared to have been made by direction of the plaintiff or his counsel. In such a case there is little room for doubt of an intention to abandon. But, even if cases are found in which such a return without direction by plaintiff has been held to work a release of the lien on personal property, it must be remembered that the power of the officer to release the lien, dependent as it is on Ms custody, is plenary, and the only recourse of the plaintiff is against the officer.

But over the existence and maintenance of a real-estate lien the plaintiff and Ms attorney have much more control, and are much less subject to injury by the negligence or wantonness of the officer. In Peck v. Bank, 51 Mich. 353, 16 N. W. 684, the supreme court of Michigan said: "When the execution is levied upon real estate only, as in this ca.se, the sheriff has no interest in it, beyond his fees for malting the 'levy, until the money is collected or the sale made; and then he is entitled to his poundage on the amount collected, or for which it is sold.

In such case, until the sale is made the sheriff incurs no risk or responsibility. He is not entitled to the possession of the property, and is constantly subject to the direction of the plaintiff in the execution as to further service in making the collection.” There is nothing in the record to show, and we cannot presume, that the return of nulla bona on the original fieri facias was by direction of counsel for the judgment creditor.

If not, certainly the marshal could not, by his negligence in failing to observe the existence of the attachment on the land, and to levy thereon, deprive the party of Ms record lien. Vroman v. Thompson, 51 Mich. 452, 16 N. W. 808; Draley v. French, 28 Vt. 546; Dawson v. Daniel, Fed. Cas. No. 3,669; Kneel.

Attachm. 300; Wade, Attachm. § 260; Drake, Attachm. § 240. in our opinion, the issuing of the original writ, and its return nulla bona, are not enough to constitute an abandonment of the lien secured by the attachment, and the alias writ was in time io perfect the lien, and to make it available to the complainant in this suit. 3. Did the fact of Morgan’s death, and the appointment of his administrator, prevent the enforcement of complainant’s remedy against the land attached by a proceeding in the court below, without regard to the settlement of Morgan’s estate in the probale court of Washtenaw county, Mich.?

It is contended that the benefit of the attachment, if any there was, must be enjoyed by application to the probate court, and that comity requires that no execution should be enforced against the land which, if (lie complainant’s claim is right, belongs now to Morgan’s administrator, and should be in his custody, and under the control of the probate court.

Section 5946 of Howell’s Annotated Statutes provides that "a claimant having a lien upon real or personal estate of the deceased, by attachment previous to Ms death, may, on obtaining judgment, have execution against such real or personal estate.” It seems to us clear that this provision of Hie statute intended that the lien secured by attachment upon real estate of the deceased debtor before Ms death should be enforced as if he were alive, and that proceedings in execution and sah; should lake place without regard to the settlement of his estate in a probate court.

Without considering, therefore, the question of comity between the courts, we think this special statutory exception is quite sufficient to justify a court of equity in aiding the execution which is expressly permitted by the written law of Michigan, Smith v. Jones, 15 Mich. 281; Hoehgraef v. Hendrie, 66 Mich. 556, 557, 34 N. W. 15. ■ 4. -Was the fact that the land attached was in the possession of the executors and trustees of Lucy W. ¡á. Morgan a reason for withholding all relief from the complainant, because these executors and trustees had taken possession of the same by virtue of Lucy W. S.

Morgan’s will, under the authority and direction of the probate court of Washtenaw county, before the attachment? The attachment, and the bill in aid of the attachment, it will be observed, were adversary proceedings against the estate of Lucy W. S. Morgan. These were proceedings to obtain possession in specie of property claimed not to belong to her estate. They were, in this respect, quite like a suit in replevin, or a suit in ejectment. The claims here depended not upon her title, and were not made under and by virtue of her will.

Complainant did not claim as a creditor of her estate, but as the owner of property which was wrongfully in the custody of her executors, and which belonged to complainant, for the purpose of satisfying his debt, because it had belonged to his debtor. This makes a case very different from that in which a person claims an interest in' property in the custody of an executor or administrator through his relation to the testator or intestate, as a distributee or creditor of his estate. The latter was the case in Byers v. McAuley, 149 U. S. 608, 13 Sup.

Ct. 906, and we should hesitate before extending the principle there laid down to adversary proceedings of the character of those here under consideration. But we are entirely relieved from discussing the distinction suggested as a matter of federal jurisdiction in equity by á specific provision of the Michigan statute with respect to the power of administrators and executors, in which the distinction is expressly made the law of Michigan.

Section 5902 of Howell’s Statutes enacts, “Ho action shall be commenced against the executor or administrator, except actions of ejectment, or other actions to recover the seizin or possession of real estate, and actions of replevin.” In Manufacturing Co. v. Benjamin, 55 Mich. 334, 21 N. W. 360, the Michigan supreme court said of this provision, “The manifest object of the statute is to permit suits to be brought against executors and administrators to try the title or right to possession of both real and personal property during the progress of the settlement of the estate.”.

Complainant here asserts his right by virtue of the attachment and execution upon the lands of E. W. Morgan, which, as already shown, he had the right to enforce after Morgan’s death, as against Morgan’s administrator, and, claiming through Morgan, he asserts Morgan’s right against property in the hands of the executors of Lucy W. S. Morgan, and seeks to obtain possession and seisin of that real estate for the purpose of subjecting it to the payment of his debt.

The case at bar comes clearly within the letter and spirit of the statute,.which entirely removes the necessity for our considering the nice questions which have been argued before us of comity between federal courts of equity and probate courts in the administration of estates and decedents. 5.

If the amendment to the bill explained the delay of complainant, and was an answer to the charge of laches upon which the demurrer to the original bill had been sustained, it was, in our opinion, the duty of the court to allow the complainant to file it; and, having allowed the complainant to file it, it was error in the court to strike it from the files, if it met the objection which had been found in the original bill. Riddle v. Whitehill, 185 U. S. 621, 10 Sup. Ct. 924.

Coming now to the question of laches, we are clearly of the opinion that the efforts made by the compiainart to find property of Morgan out of which to satisfy his claim were persistent and diligent. The mere fact, if it is to be inferred as a fact from the averments of the bill, .that the conveyances of land from Morgan to defendants’ predecessor in title, Lucy W. S. Morgan, were matters of public record, did not put the complainant on notice that there was no real consideration for the deeds.

Moreover, the bill avers that the defendants caused it to be understood by statements that the transfers were made for good considerations, to wit, §25,000, and that not until 1889 did the complainant, discover any evidence with which to impeach such claim.

We think that the averments of tin; amendment are fully up to the requirements of the strictest rule in regard to laches, and that, giving them their full effect, they disclose a. constant effort on the part of all the defendants to cover up and withhold from the complainant any information with respect to the actual consideration upon which such conveyances were based.

If the averments of the bill are true, it: is made sufficiently to appear that Morgan was a man with a, large amount of property and a large indebtedness, who had succeeded, by the aid of the defendants, in defeating all his creditors for years, and in withholding and secreting the evidences by which it could be proven in a judicial proceeding that the real estate and other property really belonging to him were in fact his. Rosenthal v. Walker, 111 U. S. 185, 4 Sup. Ct. 382; Traer v. Clews, 115 U. 8. 528, 6 Sup. Ct 155; Kirby v. Railroad Co., 120 U. S. 130, 7 Sup. Ct. 430; and Bailey v.

Glover, 21 Wall. 342, — are all cases laying down the principle that, where a party injured by the fraud remains in ignorance of it without any fault or want of diligence on his part:, tlir bar of the statute does not begin to run until the fraud is discovered, though there bo no special circumstances, or efforts on the part of the party commit - ing the fraud to conceal it from the knowledge of the other party.

The strictest rule on the subject of laches which the authorities will justify is that, before delay in filing a bill to rectify fraud can be excused, it must appear either that the fraud was actively concealed, or that it was of such character as to conceal itself, and that the complainant: has been diligent in his investigations. Pearsall v. Smith, 149 U. S. 231-236, 13 Sup. Ct. 833. Judged by either test, it is manifest that there is no such laches on the face of the bill, as it was proposed to amend it, as to make it demurrable.

The result is that the action of the court below in striking ft om the files the amendment to the bill was erroneous, and that the bill as amended was not demurrable, so far as it sought relief against Kinne and Johnson, executors of Lucy W. S. Morgan, and Manley, administrator of E. W. Morgan, in aid of the attachment and levy upon the lands attached In the suit, at law. The decree of the circuit.court is therefore reversed in part, with directions to permit the filing of the amendment to the bill, and to require Kinne and Johnson, executors of Lucy W. S. Morgan,- and Manley, administrator of E. W.

Morgan, to answer so much of the bill as' seeks relief in relation to the lands attached, and the lien thereon; and the remainder of thie decree is affirmed. The costs will be taxed to Johnson and Kinne, executors.