ARNETT v. COFFEY.

27 P. 614

1 Colo.App. 34

ARNETT et al.
v.
COFFEY.

Court of Appeals of Colorado

June 23, 1891

Appeal
from district court, Boulder county; SYLVESTER S. DOWNER,
Judge.

Action
by Henry N. Coffey against Anthony Arnett and Mary G. Arnett
to cancel an alleged fraudulent conveyance. Decree for
plaintiff, and defendants appeal. Reversed.

[1
Colo.App. 35] In 1889, Henry N. Coffey brought this suit
against Anthony Arnett and Mary G., his wife, to cancel
sundry conveyances, which apparently vested the title to the
described property in the wife. The bill set up that Coffey
had obtained judgment against Arnett in the district court of
Boulder county on September 14, 1888, for $680.80, and that
prior to the rendition of judgment, and at the time when the
indebtedness was incurred upon which judgment was rendered,
Anthony Arnett was the owner of certain real property. There
was no other statement in the bill as to the date when the
indebtedness accrued, or as to the circumstances under which
it arose. The usual allegation of the issuance of a fi. fa.
and its return unsatisfied was in the bill. The plaintiff
then averred "that he had been informed and believed,
and so on information andbelief charged the truth to be, that
each, all, and every of the said above-mentioned conveyances,
and every one of them, was and were not real, but was and
were mere sham, and made with the intention of delaying and
defrauding plaintiffs," etc. He charged that no
consideration was paid by any of the grantees, who became the
grantors of the wife, who likewise obtained title without
paying anything for the property. The dates of the several
transfers were given, from which it appeared that part of the
property was conveyed to one
[27 P. 615]
Jones in July, 1877, and that the conveyance from Arnett to
Woodworth, and the conveyances by them to their grantees, and
thence to Mrs. Arnett, were executed and delivered at various
dates between that time and December, 1877. These various
deeds and their dates were admitted, though the answer
specifically denied the allegation of fraud and want of
consideration, and, in the usual form adopted in answers in
equity, made affirmative allegation [1 Colo.App. 36] that the
conveyances were made in good faith and for a valuable
consideration. To avoid the statute of limitations with
reference to bills for relief on the ground of fraud the
following allegation was made: "That he first learned
and became possessed of the information that the said various
conveyances hereinbefore charged and set forth were and are
fraudulent within the three months last passed, and that he
first learned and became possessed of the knowledge of the
facts constituting the aforesaid fraudulent transactions of
the said defendant Anthony Arnett in the aforesaid
conveyances during the month of November, 1888." No
other allegation on the subject appears in the bill. Issue
was taken upon this averment, but upon the trial no proof was
offered upon the subject. At the trial the only evidence
offered as to the time when the indebtedness put into
judgment in 1888 was incurred was the pleadings in that suit.
That was a suit of Coffey against Arnett alone. The complaint
in that case stated that in 1873 Coffey and others were
interested with Mr. Arnett in the "Big Thing" lode,
and that, in order to facilitate the procurement of the
government title to the property, he and his co-owners deeded
to Arnett, with the stipulation that Arnett should procure
the patent and then redeed to the parties their respective
interests. It averred the procurement of the patent in 1875,
and the subsequent sale, in 1883, of the particular property
to Jones and Yankee for $5,000, and sought to recover the
one-twelfth of the money paid by them therefor. It is
needless to state the defenses set up further than to say
that issue was taken upon all the averments, and that the
proceedings resulted in the judgment which is the basis of
this bill. On the trial of the present case evidence was
introduced tending to show that the transfers from Mr. Arnett
to Jones, and from him to Sweet, and from Sweet and Woodworth
to Mrs. Arnett, were without consideration, and that they
were made for the purpose of avoiding the liability supposed
to exist against Mr. Arnett upon an official bond. The
evidence offered by the plaintiff demonstrated that Woodworth
paid a consideration for the [1 Colo.App. 37] title which he
took, though the amount of it was not proven. A demurrer was
originally interposed to the bill upon various grounds, and,
among others, that it did not state facts sufficient to
constitute a cause of action. It was overruled, and this
order was followed by the answer. The decree vacated the
various conveyances from Arnett to Jones and Arnett to
Woodworth, set aside the various deeds whereby Mrs. Arnett
acquired title, and directed that the entire property should
be subjected to the payment of Coffey's judgment.

William
E. Beck and O.A.F. Greene, for appellants.

George
S. Adams, for appellee.

BISSELL,
J., (after stating the facts.)

It is
universally agreed that as against existing creditors a
debtor may not make a voluntary conveyance. To bring the case
within this well-recognized principle it must be shown by
both allegation and proof that the debt to which the property
is said to be subject existed at the time of the conveyance,
unless there be present an intention to defraud creditors
whose rights are shortly expected to arise, and whose rights
may thereafter supervene. Wilcoxen v. Morgan, 2 Colo. 473;
Sexton v. Wheaton, 8 Wheat. 229; Jackson v. Jackson, 91 U.S.
122. As against Anthony Arnett it is tolerably clear that
Coffey's claim did exist prior to the time of the several
conveyances which he made. While no evidence whatever was
offered upon that subject, other than what may be drawn from
the record of the case of Coffey v. Arnett, as against him
this seems to be ample for the purpose. In that suit an issue
was fairly tendered as to the time and manner in which Arnett
acquired the title to Coffey's one-twelfth interest in
the lode. From the verdict in that case it must be assumed
that Arnett took the title in trust and under an obligation
to reconvey when he received the government patent. This
obligation existed in 1873, prior to the date of the various
[1 Colo.App. 38] conveyances which he made. In cases where
the judgment is silent as to the issue upon which it was
rendered it is entirely competent to resort to the pleadings
for the purpose of determining what issue was tendered, and
which may be said to be conclusively settled by the judgment.
Hinde's Lessee v. Longworth, 11 Wheat. 199. This does not
enable the plaintiff to recover. In the absence of any other
proof than what is furnished by this judgment and the
pleadings, the complainant, as against Mrs. Arnett, still
remains a subsequent creditor. According to his own
allegations, the various deeds from Mr. Arnett and the mesne
conveyances which vested the title in Mrs. Arnett all
antedated the judgment; and, while the pleadings in that suit
may, as against Arnett, demonstrate that the plaintiff was a
creditor prior to these various transfers, they do not now
avail as against the wife, who was not a party to the record.
When, therefore, it appeared from the plaintiff's own
proof that Mrs. Arnett acquired title many years prior to the
rendition of judgment, he was bound to show, as against her,
by competent testimony, that he was a creditor before the
date on which she acquired title. Niller v. Johnson, 27 Md.
6.

The
right of a judgment creditor to come into a court of equity
to remove a fraudulent obstruction to the collection of his
judgment, and to enforce a claim against property which ought
to be subject thereto, is well established; but in a case
like the present it is requisite that the judgment shall be
made a lien upon the property which is to be subjected to it.
Where
[27 P. 616.]
the writ is thus operative, the lien may possibly be acquired
by the execution, but otherwise the judgment must be either a
lien under the statute when entered, or must be made one by
the taking of those steps which the statute points out. That
in some way the lien must be acquired and exist at the time
that the bill is filed is clearly settled. Barnes v. Beighly,
9 Colo. 475, 12 P. 906; Newman v. Willetts, 52 Ill. 98;
Miller v. Davidson, 3 Gilman 518; [1 Colo.App. 39] Cornell v.
Radway, 22 Wis. 260; Bank v. Newton, 13 Colo. 245, 22 P. 444;
Evans v. Hill, 18 Hun, 464. Under the statutes [1] existing in
this state at the time Coffey recovered his judgment in 1888
the judgment creditor could only obtain a lien on realty by
filing a transcript of the docket with the recorder of the
county. While equitable interests may undoubtedly be
subjected to execution, and the title which the purchaser
obtains may be made the subject of a bill to remove a cloud
upon his title, or to obtain a decree which shall establish
his right to the property, these proceedings seem to be
wholly unnecessary, provided the creditor makes his judgment
a lien according to the form and course of the statute.
McFarran v. Knox, 5 Colo. 217; 13 Colo. and 22 Pac.Rep.,
supra; Bobb v. Woodward, 50 Mo. 95. Since the creditor
pursued neither of these courses, and neither had the
execution levied upon the interest, and the interest sold and
the title transferred to him, nor took the necessary steps to
make the judgment a lien, he was wholly without right to the
relief which he sought.

All
bills filed for relief on the ground of fraud must, in this
state, be filed within three years of the date at which the
fraud was discovered. [2] When the time is limited by statute,
all the authorities concur in holding that the complaint must
state when the fraud was discovered, and that this averment
must be supported by sufficient proof. Pike v. Smith, 5 Colo.
146; Carr v. Hilton, 1 Curt. 390; Sublette v. Tinney, 9 Cal.
424. The averments must be distinct, full, and specific, not
only as to the time when the fraud was discovered, but also
as to the nature and character of the discovery, and the
facts which were ascertained. These allegations, and
competent proof upon the subject, are alike requisite to the
maintenance of the action. De Mares v. Gilpin, 15 Colo. 77,
24 P. 568; Wood v. Carpenter, 101 U.S. 135; Manning v Tin
Co., 7 Sawy. 418, 9 F. 726. Tested by these rules, the
plaintiff is absolutely without right of recovery. He filed
his bill to set aside the various [1 Colo.App. 40] transfers
made by Arnett on the ground of fraud, and, in order to
maintain his action at the time he brought it, alleged that
he discovered the fraud within three months of the
commencement of his case. Issue was taken upon this
allegation. The plaintiff produced no evidence in support of
it. The record is absolutely silent upon this proposition;
and since, under the law established by the foregoing
authorities, both the averment and the proof are
indispensable, it follows that the plaintiff is without right
of recovery upon the case which he made. The judgment must be
reversed.

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Notes:

[1] Code Civil Proc.Colo. § 207:
"Immediately after entering the judgment the clerk shall
make the proper entries of the judgment under appropriate
heads in the docket kept by him. From the time the judgment
is docketed, and a transcript of the docket filed with the
recorder of the county, it shall become a lien upon the real
property of the judgment debtor not exempt from execution in
the county, owned by him at the time, or which he may
afterwards acquire, until said lien expires."

[2] Gen.St.Colo1883, § 2174: "Bills for
relief on the ground of fraud shall be filed within three
years after the discovery by the aggrieved party of the facts
constituting such fraud, and not afterwards."

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