and although the condemnation may operate to the advantage of the debtor, but not where there is a fraudulent arrangement between the creditor and the debtor, by which the debtor is to have the proceeds of the sale, in which case the grantee may resist such action. Where the conveyance operates to defeat the legal rights of creditors, the defense cannot be asserted against a creditor seeking to reach the property that the conveyance may have been best adapted to conserve the rights of all the creditors." That the grantee has made valuable improvements pending the action. is not a defense.18 It is not a defense that the grantor purposed to compromise with his creditors and pay them a part of the amount owing to them.19 It is no defense, in an action by a purchaser at an execution sale of property to set aside an alleged fraudulent conveyance thereof, that the plaintiff paid an inadequate consideration for the property,20 especially if such inadequacy is due to the effect of the conveyance in clouding the title.21 § 74. Impeachment of creditor's claim or judgment.—Where a creditor calls in question a conveyance made by his debtor, upon the ground of fraud, in an action between him and the grantee, the demand of the creditor must be subject to examination, in order to see whether he has a right, as such, to question the validity of the conveyance. And if a judgment has been obtained by him, still, as between him and the grantee, who is no party to it, it will not preclude the latter from examining the grounds of it. He may show that it was obtained by fraud, or that the cause of action accrued under circumstances which would not 22 16. Feagan v. Cureton, 19 Ga. 404. 17. Stewart v. Lapsley, 7 La. Ann. 456. 18. Grandin v. First Nat. Bank (Neb.), 98 N. W. 70. See Compensation for improvements, chap. XIV, § 43, supra. 19. Fox v. Webster, 46 Mo. 181. 20. Bradshaw v. Halpin, 180 Mo. 666, 79 S. W. 685; Rinehart v. Long, 95 Mo. 396, 8 S. W. 559. 21. Woodard v. Mastin, 106 Mo. 324, 17 S. W. 308. 22. See Persons who may attack conveyance, chap. V, supra. 23 give the creditor a right to impeach the conveyance. The latter fact may be shown by the grantee as well as the grantor." Parties claiming under the conveyance have not only the right to require proof of the existence of the debt to which the property conveyed would be subject, if the conveyance did not stand in the way, obstructing legal remedies to reach it, but also have the right to make, as already stated, any defense to the claim or demand pleaded which the debtor could make in an action to which he was a party, except such defenses as are personal to the debtor.25 26 875. Effect of judgment obtained by creditor.-To disturb the title of one who has received a conveyance in fraud of creditors, the fact that the party in whose favor the judgment is rendered is a creditor must be established as against the grantee, and the judgment recovered against the grantor for the debt is conclusive to show that he is entitled to protection as a creditor, when offered as against the grantee. But judgments may be fraudulent as well as deeds, and it is, therefore, open to the grantee to show that the recovery of the judgment was by covin or collusion, or that it was obtained by fraud, the general rule being that when the right of a third person may be affected collaterally by a judgment procured by fraud or collusion of the parties thereto, or where for any reason the judgment is erroneous and void and he cannot procure a reversal by appeal or a writ of error, he is not prohibited from impeaching its validity in a collateral proceeding in which it is sought to be used to his prejudice or injury. The grantee in the convey 27 23. Miller v. Miller, 10 Shep. (Me.) 22, 39 An. Dec. 597. 24. Hibben v. Sawyer, 33 Wis. 319. 25. Deposit Bank of Frankfort v. Caffee, 135 Ala. 208, 33 So. 152; Pickett v. Pipkin, 64 Ala. 520; Hibben v. Sawyer, 33 Wis. 319. 26. Inman v. Mead, 97 Mass. 310. 29 28 27. Lawson v. Alabama Warehouse Co., 73 Ala. 289; Carter v. Bennett, 4 Fla. 283; Church v. Chapin, 35 Vt. 223. 28. Faris v. Dunham, 21 Ky. 397, 17 Am. Dec. 77; Miller v. Miller, 23 Me. 22, 39 Am. Dec. 597. 29. Collinson v. Jackson, 14 Fed. 305, 8 Sawy. 357. 31 ance, being a stranger to the record, not being a party to the action in which the judgment was rendered nor in privity with a party, may, in a suit in which the validity of the conveyance is assailed, show a want of jurisdiction in the court which rendered the judgment,30 or that there was no debt or legal obligation nor any real cause of action to support the judgment, or that the cause of action accrued under such circumstances that the creditor has no right to impeach the conveyance, as, for example, where he was a mere nominal creditor. The judgment is not evidence of an indebtedness existing at any time anterior to its rendition, and if the conveyance is impeached as merely voluntary and the time of rendition is subsequent to the conveyance, there must be other evidence than the judgment affords to show the existence of the debt when the conveyance was made.33 The grantee may show that the claim upon which the judgment is based accrued after his purchase from the debtor, unless the conveyance was merely colorable, so that the beneficial interest was not intended to pass to the grantee, or unless the object appears to have been to defraud future as well as prior creditors.34 § 76. Effect of judgment in absence of fraud or collusion.— A judgment obtained without fraud or collusion, and which concludes the debtor, whether rendered upon default, confession, or after contestation, is upon all questions affecting the title to his property, conclusive evidence to establish the relation of creditor and debtor between the parties to the record and the amount of the indebtedness, and cannot be collaterally impeached by third parties in a subsequent suit in which such relation and 30. Lawson v. Alabama Warehouse Co., 73 Ala. 289. 31. Lawson v. Alabama Warehouse Co., 73 Ala. 289. 32. Esty v. Long, 41 N. H. 103. 33. Thomson v. Crane, 73 Fed. 327; Lawson v. Alabama Warehouse Co., 73 Ala. 289. In Louisiana the grantee may controvert the demand of plaintiff, although liquidated by judgment, in the same manner that the debtor might have done before the judgment. Lopez v. Bergel, 12 La. 197. 34. Miller v. Miller, 23 Me. 22, 39 Am. Dec. 597. indebtedness are called in question.35 The grantee cannot show error or irregularity in the rendition of the judgment," or laches in making defense against it," or that the court was mistaken as to the law and the rights of the parties, in the absence of fraud or collusion.38 The grantee may not show that the person in whose name the judgment was recovered was not the real party in interest,39 or that the claim was barred by limitation at the time of the transfer where the bar was not pleaded by the debtor.40 § 77. Alternative defenses.-Where a debtor conveys land, all or a part of which is his homestead, and the conveyance is attacked as fraudulent, he may defend against the alleged fraud, and, in the alternative, claim and select his homestead to guard against the event of it being adjudged a fraudulent conveyance," and he cannot be required to elect between the defenses." § 78. Limitation of actions generally.--The time within which an action to set aside an alleged fraudulent conveyance or transfer may be brought is governed by the provisions of the various statutes in the different jurisdictions.43 In some jurisdictions the statutory provisions limit the time within which the suit may be brought to avoid a conveyance, assignment, or transfer of the property of a debtor on the ground that it is without consideration deemed valuable in law," but these statutes are held to impose no limitation upon the right of a creditor to institute a suit to attack a transfer as fraudulent in fact.45 Special statutes have been passed in some jurisdictions limiting the time within which suit may be brought to avoid perferential transfers. If creditors do not by proper judicial process effect the cancellation of the fraudulent grantor's title within the statutory period it becomes final and conclusive." An action to subject land conveyed in fraud of creditors to the payment of 43. U. S.-Sheldon V. Keokuk Northern Line Packet Co., 8 Fed. 769, 10 Biss. 470, Wisconsin statute. Ala.-Washington v. Norwood, 128 Ala. 383, 30 So. 405; Stoutz v. Huger, 107 Ala. 248, 18 So. 126. Ark. James v. Mallory (1905), 89 S. W. 472, there must be an actual adverse holding of the property for the statutory period to bar action. Ind.-State v. Osborn, 143 Ind. 671, 42 N. E. 921; De Armond v. Ballou, 122 Ind. 398, 23 N. E. 766; Vestal v. Allen, 94 Ind. 268; Duncan v. Cravens, 55 Ind. 525. Ky.-Dorsey v. Phillips, 84 Ky. 420, 1 S. W. 667; Phillips v. Shipp, 81 Ky. 436; Green v. Salmon, 23 Ky. L. Rep. 517, 63 S. W. 270; Poynter v. Mallory, 20 Ky. L. Rep. 284, 45 S. W. 1042. La.-Gladney v. Manning, 48 La. Ann. 316, 19 So. 276; Mossop v. His Creditors, 41 La. Ann. 296, 6 So. 134; St. Germain v. Landry, 28 La. Ann. 652. Mich.-Daniel v. Palmer, 124 Mich. 335, 82 N. W. 1067. Ohio.-Stivens V. Summers, 68 Tex.-Grumbles v. Sneed, 22 Tex. 565; Rutherford v. Carr (Civ. App. 1905), 84 S. W. 659. 44. Kinney v. Craig, 103 Va. 158, 48 S. E. 864; Vashon v. Barrett, 99 Va. 344, 38 S. E. 200; Scraggs v. Hill, 43 W. Va. 162, 27 S. E. 310; McCue V. McCue, 41 W. Va. 151, 23 S. E. 689. 45. Flook v. Armentrout, 100 Va. 638, 42 S. E. 686; Boggess v. Richards, 39 W. Va. 567, 20 S. E. 599, 45 Am. St. Rep. 938, 26 L. R. A. 537. 46. Downer v. Porter, 116 Ky. 422, 76 S. W. 135; Morris v. Cain, 39 La. Ann. 712, 1 So. 797, 2 So. 418; Maas v. Miller, 58 Ohio St. 483, 51 N. E. 158; Nuzum v. Herron, 52 W. Va. 499, 44 S. E. 257. 47. Brasie v. Minneapolis Brewing Co., 87 Minn. 456, 92 N. W. 340, 94 Am. St. Rep. 709, 67 L. R. A. 865. |