§ 68. Intermediate grantees. It is held, as a general rule, that an intermediate grantee through whom the title to a fraudulent conveyance passes from the debtor to the ultimate grantee, and who acts merely to promote the scheme for defrauding creditors and who has parted with his title, has no legal or equitable interest in the property fraudulently conveyed, and is not a necessary party defendant in an action to set aside such conveyances as fraudulent, although he may be a proper party.$7 Where, however, such an intermediate grantee disposes of the property by a warranty deed, he is held in some jurisdictions to be a necessary party, unless his grantee conveys by a quitclaim deed and thereby releases his liability under the warranty.

88

Md.-Brian v. Thomas, 63 Md. 476; Trego v. Skinner, 42 Md. 426. Minn.-North v. Bradway, 9 Minn.

183.

Miss.-Waller v. Shannon, 53 Miss. 500; Snodgrass v. Andrews, 30 Miss. 472, 64 Am. Dec. 169; Wright v. Shelton, Sm. & M. Ch. 399.

Mo.-Rinehart v. Long, 95 Mo. 396, 8 S. W. 559; Donovan v. Dunning, 69 Mo. 436.

N. H.-Chase v. Searles, 45 N. H. 511.

N. J.-Randolph v. Daly, 16 N. J. Eq. 313; Way v. Bragaw, 16 N. J. Eq. 213, 84 Am. Dec. 147.

N. C.-Dawson Bank v. Harris, 84 N. C. 206.

Tenn.-Harrison v. Hallum, 45 Tenn. 525; Hughes v. Tennison, 3 Tenn. Ch. 641.

Wis.-Hamlin v. Wright, 23 Wis.

491.

87. N. Y.-Sprogg v. Dichman, 28 Misc. Rep. 409, 59 N. Y. Supp. 966.

U. 8.-Pullman v. Stebbins, 51 Fed. 10.

Ala.-Williams v. Spragins, 102 Ala. 424, 15 So. 247; Sides v. Scharff, 93 Ala. 106, 9 So. 228; Tompkins v.

87

89

Levy, 87 Ala. 263, 6 So. 346, 13 Am.
St. Rep. 31.

Cal.-Blanc v. Paymaster Min. Co., 95 Cal. 524, 30 Pac. 765, 29 Am. St. Rep. 149.

Ind.-Stout v. Stout, 77 Ind. 537. Md.-Walter v. Riehl, 38 Md. 211. Minn.-Hunt v. Dean, 91 Minn. 96, 97 N. W. 574.

Mo.-Jackman v. Robinson, 64 Mo.

289.

S. C.-Bomar v. Means, 37 S. C. 520, 16 S. E. 537, 34 Am. St. Rep. 772.

Utah.-United States v. Church of Jesus Christ, etc., 5 Utah, 538, 18 Pac. 35.

Vt.-Wilson v. Spear, 68 Vt. 145, 34 Atl. 429.

W. Va.-Herzog v. Weiler, 24 W. Va. 199.

Contra.-Hyde v. Craddick, 10 Rob. (La.) 387.

88. Fraser v. Passage, 63 Mich. 551, 30 N. W. 334; Pappenheimer v. Roberts, 24 W. Va. 702.

89. Scott v. Aultman Co., 211 Ill. 612, 71 N. E. 1112, 10 Am. St. Rep. 215, aff'g 113 Ill. App. 581.

90

§ 69. Purchasers from grantee.-A purchaser from an alleged fraudulent grantee, as a general rule, is held to be a necessary party to a bill by a creditor to set aside a conveyance as fraudulent, and subject the lands to the payment of his debt,90 where he is in possession of the lands, although not shown to have paid therefor or received a conveyance." In an action to set aside a fraudulent conveyance, it is not necessary to join persons to whom the land is conveyed pendente lite as defendants. The personal representative of the deceased grantee, who is not a debtor of the plaintiff, and who has no control over the lands or the proceeds thereof, is not a necessary party to a suit seeking to set aside the conveyance to such grantee and another on the ground of fraud.

92

§ 70. Representative of grantee.-Where a plaintiff seeks to set aside an assignment or deed of trust on the ground of fraud, he may proceed against the fraudulent trustee, and need not join the cestui que trust. In an action by a creditor to avoid a conveyance alleged to be fraudulent and void, one who innocently accepted a deed of the property for the benefit of the alleged fraudulent grantee, and who has conveyed in accordance with the trust, is not a proper party.95 To a bill which is filed by a surety against his principal, and which seeks to subject to the payment of the debt lands alleged to have been conveyed by the principal in secret trust, the holder of the legal title to the lands

Va.-Thornton v. Gaar, 87 Va. 315, 12 S. E. 753; Henderson v. Henderson, 9 Gratt. 394.

91. Jones v. Wilson, 69 Ala. 400. 92. Schaferman v. O'Brien, 28 Md. 565, 92 Am. Dec. 708.

93. Simon v. Sabb, 56 S. C. 38, 33 S. E. 799.

94. Rogers v. Rogers, 3 Paige (N. Y.), 379; Platt v. Schreyer, 25 Fed. 83.

95. Spicer v. Hunter, 14 Abb. Prac. (N. Y.) 4.

96

is a necessary party. Where creditors claiming adversely to an assignment made by a debtor in trust, and whose demands existed prior to the execution thereof, file a bill to avoid the assignment on the ground of fraud, they need not make any of the other creditors parties to the suit. Under such circumstances it is enough to bring the assignor and the assignee before the court." The failure to join the trustee of a fraudulent mortgage, who took the bare legal title, as defendant in a creditor's bill, does not deprive the court of jurisdiction to determine the rights of the original owner and the cestui que trust and to decide that the mortgage was fraudulent as to creditors. Where an assignee after appointment receives conveyances of realty standing in the name of the wife of his insolvent as security for debts of his insolvent which he assumed for the benefit of the insolvent's wife, the assignee is a proper party defendant to a creditors' bill to set aside the conveyance as in fraud of creditors.99

71. Preferred creditors under trust deed. It is held in some jurisdictions that where a creditor's bill attacks as fraudulent an assignment in trust for the payment of a creditor, or a deed of trust made to prefer creditors, it is sufficient to make the trustee a party defendant, and that a preferred creditor is not a necessary party defendant.1 In other jurisdictions the preferred creditors are held to be necessary parties, although the trustee named in the instrument is made a defendant.2

§ 72. Intervention and change of parties. The practice of permitting judgment creditors similarly situated and so circum

96. Kimball v. Grieg, 47 Ala. 230. 97. Russell v. Lasher, 4 Barb. (N. Y.) 232.

98. Smith v. Ford, 48 Wis. 115, 2 N. W. 134, 4 N. W. 462.

99. Rankin v. Gardner (N. J. Ch. 1896), 34 Atl. 935.

1. Scudder v. Voorhis, 7 N. Y.

Supe. Ct. 271; Le Duc v. Brandt, 110
N. C. 289, 14 S. E. 778; Hancock v.
Wooten, 107 N. C. 9, 12 S. E. 199, 11
L. R. A. 466.

2. Hudson v. Eisenmayer Milling, etc., Co., 79 Tex. 401, 15 S. W. 385; Collins v. Sanger, 8 Tex. Civ. App. 69, 27 S. W. 500; Clough v. Thompson, 7 Gratt. (Va.) 26.

stanced that they could themselves have filed a similar bill to intervene in an action by a judgment creditor to set aside conveyances for fraud is well settled, and the summons and complaint need not show that it is brought in behalf of all judgment creditors similarly situated who may choose to come in and share the expense and results, to enable the court to permit them to do so. In order to make a person interested in the property a party to a suit to set aside a conveyance in fraud of creditors, however, the plaintiff must allege that such person has or claims an interest in the property, or that he seeks some relief against such person. In some jurisdictions the statutes permit any person claiming an interest in the property to become a party to the action by joining the plaintiff in his bill, or by uniting with the defendant in resisting the claim of the plaintiff, or demanding something adverse to both. A creditor, after bringing suit in behalf of himself and other creditors to subject lands fraudulently conveyed by their debtor, cannot, after the intervention of another creditor, affect his rights by a compromise with the defendant, and an interpleading creditor may prosecute the action to judgment, even where the original plaintiff has quit the suit. Notice of application to intervene must be given to

3. Honegger v. Wettstein, 94 N. Y. 252; Lallman v. Hovey, 92 Hun (N. Y.), 419, 36 N. Y. Supp. 662; Parmelee v. Egan, 7 Paige (N. Y.), 610; Edmeston v. Lyde, 1 Paige (N. Y.), 637, 19 Am. Dec. 454; Myers v. Fenn, 5 Wall. (U. S.) 205, 18 L. Ed. 604; Strike v. McDonald, 2 Harr. & G. (Md.) 291.

4. Constable v. Weser, 8 Ohio Dec. 247, 6 Wkly. L. Bul. 666. See Hinkle v. Gale, 11 Ky. L. Rep. 126, 11 S. W. 664.

5. Ark. Senter v. Williams, 61 Ark. 189, 32 S. W. 490, 54 Am. St. Rep. 200.

Iowa.-Corn Exch. Bank v. Apple

gate, 91 Iowa, 411, 59 N. W. 268; Des Moines Ins. Co. v. Lent, 75 Iowa, 522, 39 N. W. 826.

Kan. Miller v. Wilkinson, 10 Kan. App. 576, 62 Pac. 253.

Ky.-Sawyers v. Langford, 68 Ky.

539.

Va.-Anderson V. Mossy Creek Woolen Mills Co., 100 Va. 420, 41 S. E. 854.

W. Va.-Cox v. Horner, 43 W. Va. 786, 28 S. E. 780.

6. Nix v. Dukes, 58 Tex. 96.

7. Slusher v. Simpkinson, 101 Ky. 594, 40 S. W. 570, 43 S. W. 692, 19 Ky. L. Rep. 1184.

both the claimant and the grantee under the New Jersey statute. After a judgment creditor has filed a bill to reach property fraudulently assigned, the debtor's bail may pay the judgment debt, and by agreement with the creditor be allowed, on petition, to prosecute the bill himself, being substituted for the judgment creditor."

13

§ 73. Defenses in general.-The grantee in an alleged fraudulent conveyance must have an opportunity to dispute it, and may plead any defense, not merely personal, which the debtor could have made.10 That the plaintiff is indebted upon simple contract to the judgment debtor in an amount equal to plaintiff's judgment is a defense." Defendant may show that the cause of action has been extinguished by lapse of time within which it might be brought,12 or that the judgment has been paid and has therefore been extinguished and become inoperative as a basis of a suit in equity. As already shown, a creditor who seeks relief in equity should come with clean hands, but in an action by a judgment creditor to set aside a conveyance as in fraud of creditors, a defense that the deed under which the plaintiff claims title to the property for the rent of which his judgment was recovered has itself been set aside as fraudulent is not available, since the defendant, not being a creditor of the plaintiff, cannot complain of such conveyance. Where a debtor transfers property to defraud a creditor, the creditor may condemn such property, though such transfer would be good as against the debtor,

15

8. Perrine v. Perrine, 63 N. J. Eq. 483, 52 Atl. 627.

9. Harris v. Carlisle, 12 Ohio, 169. 10. Deposit Bank of Frankfort v. Caffee, 135 Ala. 208, 33 So. 152.

It is no defense to an equitable action to allege that plaintiff has an adequate remedy at law; it being a conclusion only. Holland v. Grote, 56 Misc. Rep. (N. Y.) 370, 107 N. Y. Supp. 667.

14

11. Lashmett v. Prall, 2 Neb. (Unoff.) 284, 96 N. W. 152.

12. See Limitations and laches, §§ 78-82, infra.

13. Nichols v. Nichols, 40 Misc. Rep. (N. Y.) 9, 81 N. Y. Supp. 156; The Minneapolis Threshing Mach. Co. v. Jones, 89 Minn. 184, 94 N. W. 551. 14. See § 58, supra.

15. Yetzer v. Yetzer, 112 Iowa, 162, 83 N. W. 889.