L. N. Cassaday et al. v. James M. Anderson, 53 Tex. 527

Bonner, Associate Justice. If it be admitted that this, the second suit in trespass to try title to the land in controversy between the same parties, is so far a new and different suit that the former decision of this case (Anderson v. Cassaday, 36 Tex., 652) is not res adjudicata, as to the law of the particular case, it at least should be respected to the extent that it is binding upon us, unless we are fully of the opinion that it is incorrect.

We have laboriously examined numerous authorities bearing upon the points decided in that opinion, and have found none which satisfy us that it should be overruled under the facts apresented. Our system being one of blended law and equity, Veal in the same proceeding could sue upon the indebtedness due him by William W. Williamson, and also seek to set aside the conveyance of the land to John Williamson, because made in fraud of Veal’s rights as a creditor.

Such proceeding could be sustained upon the grounds that the remedy in equity would be more adequate, and that the conveyance, unless removed, would be a cloud upon the title which would prevent the sale of the property at a fair valuation, to satisfy the judgment which Veal might obtain against William W. Williamson. Bump on Fraudulent Conveyances, 508; Freeman on Executions, § 430.

Veal’s suit, however, would not have given him a new and independent right of lien on the property, unless he would have acquired such lien by reason of having brought a similar suit in a court exclusively of equity jurisdiction. , It is a well established doctrine that the jurisdiction of a court of equity will not attach when there is an adequate remedy at law.

If the property had been fraudulently conveyed, and it was feared that, pending the suit and before judgment, other rights might have intervened, Veal had an adequate remedy at law by the levy of attachment under the statute, and by which he would have acquired a specific lien. After judgment, he could proceed by levy and sale of the property under execution in the first instance. Lynn v. Le Gierse, 48 Tex., 138; Freeman on Executions, § 430. If the property, as in the case under consideration, was land, then the statutory judgment lien would attach.

Hence it would seem with us, that the aid of a court of equity would not have been required to give the lien, but only to remove the cloud caused by the fraudulent conveyance, as an obstruction to a fair sale. As a general rule, however, in such cases, the jurisdiction of a court of equity attaches by virtue of a lien created either by operation of law, as by judgment, attachment or other proceeding in the nature of a proceeding in rem, or by contract. It is said by Mr.

Bump that “a fraudulent transfer is valid against all persons except those who proceed to appropriate the property by due course of law to the satisfaction of the grantor’s debts. As it is valid against a simple contract creditor, such creditor cannot ask the aid of a court of equity to set aside the transfer, for it does not interfere with his rights. Equity has jurisdiction of fraud, but it does not collect debts. A creditor must establish his demand at law, and obtain a lien upon the property, before the transfer interferes with his rights or he has any title to claim relief in equity.

Ho creditor can be said to be delayed, hindered or defrauded by any conveyance until some property out of which he has a specific right to be satisfied is withdrawn from his reach by a fraudulent conveyance. Such specific right does not exist until he has bound the property by judgment, or by judgment and execution, as the case may be, and has shown that he is defrauded by the conveyance in consequence of not being able to procure satisfaction of his debt in a due course of law.

Then, and then only, he acquires a specific right to be satisfied out of the property conveyed, and shows that he is a creditor, and is delayed, hindered and defrauded by the conveyance.” Bump on Fraudulent Conveyances, 511; Anderson v. Cassaday, 36 Tex., 653; Halbert v. Grant, 4 Mon., 581; McKinley v. Combs, 1 Mon., 105; Jones v. Green, 1 Wall., 330; Stewart v. Fagan, 2 Woods’ (U. S.) C. C. 218; Wiggins v. Armstrong, 2 Johns. Ch., 144; Brinkerhoff v. Brown, 4 Johns. Ch., 671; Beck v. Burdett, 1 Paige, 305; Dunlevy v. Tallmadge, 32 N. Y., 460; Peyton v.

Lamar, 42 Ga., 134; High on Injunctions, secs. 25, 26, 94, 250. As between two creditors, if one has already obtained his judgment and instituted proceedings to set aside the fraudulent conveyance, this will give him priority of right to first have his debt satisfied out of the property, but it seems that this priority does not extend to a simple contract creditor who may institute such a suit. Day v. Washburn, 24 How., 356; Robinson v. Stewart, 10 N. Y., 196. Mr. Freeman says: “ Upon a bill filed by a simple contract creditor, he obtains no right of priority in the distribution of the fund reached by the bill.

Upon a bill filed by a judgment creditor to reach assets not subject to execution at law, or to remove a fraudulent transfer from property liable to execution at law, the rule is otherwise. In either of these contingencies, the judgment creditor who first institutes a suit and serves his subpoena, or otherwise entitles himself to the benefit of the law of lis pendens, obtains a lien upon the assets which his bill seeks to reach. Upon obtaining a decree, he is entitled to the fruits of his diligence irrespective of pendente lite, alienations or incumbrances.

The filing of the bill and the service of process are, in equity, equivalent to a levy upon the property. Other creditors cannot participate in the funds realized until after the complainant has been satisfied.” Freeman on Executions, § 434. Scott v. McMillen, 1 Littell (Ky.), 302, mainly relied on by counsel for appellee to show that the mere institution of a suit to set aside a fraudulent conveyance would create a lien, was a proceeding in equity by Scott, the creditor of McMillen, an absconding debtor, and against whom he had no legal remedy.

There is not a full statement of facts, but it seems to have been in the nature of a proceeding in ram, in which there was an attachment and injunction, the latter having been dissolved but subsequently reinstated.

The court in the opinion expressly states, that “when the debtor, by absenting himself from the country, renders all proceedings at law against him ineffectual, the chancellor, regardless of his practice in ordinary cases, will lay hold of the property alleged to be fraudulently conveyed, examine the fraud, inquire into the justice of the creditor’s demand, and finally, by acting on the thing, grant the appropriate relief.” 1 Littell, 306. In a subsequent part of the opinion, it is said that the property gave jurisdiction to the court.

It further seems from the statement of the case, that prior to the conveyance under which the other defendants, who were also creditors of McMillen, claimed title to the property, Scott, the plaintiff, obtained judgment at law against McMillen, who had returned to the state, and had sued out execution with a return of nulla bona, and thereby brought himself within the general rule. The other creditors did not prosecute their claims to judgment, but relied on conveyances direct from McMillen, who had obtained a reconveyance to himself of the lands which had been previously fraudulently conveyed by him.

They did not act in concert with Scott to set aside the fraudulent conveyance of the common debtor, McMillen, but claimed under him through this reconveyance which he had acquired from his fraudulent vendee, pending Scott’s suit. A careful examination of that case does not, we think, take it without the general rule, that the equitable proceeding to bind the property must be based upon a lien or legal seizure of the property, in the nature of a proceeding in rem.

We are of opinion that the right to the land in controversy, acquired under the sale by virtue of the judgment of the justices of the peace, vested prior to any lien in favor of Veal, and would consequently be superior; and that there was error in the judgment below. As the case comes before us on an agreed statement of facts, this court will here render judgment for the land in favor of appellant, and it is accordingly so ordered. Reversed and rendered. [Opinion delivered June 28, 1880.]