Lee v. Brown

By the Court —

Warner, J.

delivering the opinion.

[1.] The deed of assignment from Brown to Clark, we have already decided during the present term, was within the Act of 1818, and void as to creditors. The contest for the money is now between the mortgage creditors of Brown and the attachment creditors. The mortgage bears date prior to the levy of the attachments. In Davis vs. Anderson, (1 Kelly, 192,) this Court held that a debtor in insolvent circumstances, had the right to execute a mortgage to a creditor, to secure the payment of a bona fide preexisting debt; and that the execution of such mortgage would not per se, be fraudulent, as against creditors, within the intent and meaning of the Act of 1818; so there, was no trust reserved for the benefit of the mortgagor. The argument against the right of the mortgagees to the money here is, that Brown, the mortgagor, before he executed the mortgage, had conveyed all his title and interest in the property mortgaged to Clark, for the benefit of cer ■ tain creditors who had assented to the same, and therefore, the mortgagees acquired no lien on the property mortgaged; that Biown had no title to the property in him, to convey to the mortgagees, at the time the mortgage was executed.

*277 This argument proves too much; for if it is conclusive as to the fact, that Brown had no title to the properly at the time the mortgage was executed, upon what principle is it, that the attaching creditors, whose attachments were subsequently levied, seek to subject the property to their attachment liens, as the property of Brown1 The conveyance from Brown to Clark, executed on the 31st December, 1847, being within the provisions of the Act of 1818, was, in the language of that Act, null and void, and fraudulent, as against creditor's. Prince, 165. Phillips & Dearing are admitted to have been bona fide creditors of Brown. On the 1st January, 1848, the mortgage of the property is executed to them. They did not assent to the assignment made to Clark, but so far as we may judge from their acts, repudiated it. On the 3d January, 1848, the attachments were levied. Phillips & Dearing being creditors of Brown, the conveyance to Clark of the property, by Brown, was, as to them, a nullity, according to the provisions of the Act of 1818, and they had the legal right to treat it as such. Will any one doubt, that if Phillips & Dearing had proceeded to foreclose their mortgage, and levied upon the property conveyed to Clark, by Brown, and it had been claimed by Clark under the conveyance, that it would not have been found subject to the mortgage? It was said, on the argument, that the conveyance was good as against Brown himself, and that to give the mortgage effect, would be to enable Brown to avoid his conveyance to Clark, by his own act. The answer is, that the conveyance to Clark, by Brown, was fraudulent and void in law, as against Phillips & Dearing, Ms creditors. The mortgage was a conveyance authorized and protected by law. The law avoided the one conveyance, and protects the other. In Anderson vs. Roberts, (18 John. Rep. 527,) it was held, that as against the grantor, the fraudulent conveyance is effectual under the Statute of 13 Elizabeth, that the title to the property vested in the fraudulent grantee, subject to be divested, if the creditors see fit to call in question the fraudulent conveyance. Phillips & Dearing, as the creditors of Brown, now see fit to call in question the conveyance from Brown to Clark, which the Act of 1818 declares is null and void, and fraudulent, as against them. The mortgage being of prior date to the attachment liens, is entitled to be first satisfied.

Let the judgment of the Court below be affirmed.