show an outstanding debt, liquidated or unliquidated, but he must also show that he has prosecuted such debt to judgment, and that process has been regularly issued thereon and returned pulla bona; or, if the complainant would avoid the force of this rule, he should show such equitable circumstances as will relieve him from its application, and make his case an exception to the rule.

INSOLVENCY OF DEBTOR IS NO GROUND FOR EQUITABLE RELIEF AGAINST FRAUDULENT CONVEYANCE by a debtor, where the creditor has not pursued his claim to judgment and execution at law.

PURCHASER OF PROPERTY WHILE IT WAS IN SUIT and in the custody of the law is regarded as a purchaser with notice, and can not set aside a conveyance out of which the suit grew as fraudulent, although he pays full value and has no actual notice of the pendency of the suit. Such a person is neither a creditor nor a purchaser within the meaning of the statute, but stands towards the parties charged to have contracted in fraud as a mere stranger.

OBJECTION TO JURISDICTION OF EQUITY IS NOT WAIVED BY ANSWERING the bill and proceeding to a final hearing. WHERE COMPLAINANT IN EQUITY PRESENTS CASE CLEARLY COGNIZABLE AT LAW, or where the defendant answers the allegations of the bill, reserv. ing the question of law to be considered on the final hearing of the case, should the court on the final hearing be of opinion that there is not a case in equity made out, such as will entitle the complainant to relief, it should at once dismiss the bill.

INTERLOCUTORY DECREE RENDERED AGAINST DEFENDANTS NOT ANSWERING SUPPLIES NO DEFECTS in the allegations of the bill; it merely admits the truth thereof by failing to respond.

One

COMPLAINANT filed a bill in equity to set aside two mortgages of certain slaves as fraudulent and void as to creditors. mortgage was executed by Royster to Anthony to secure a note given him by Royster; and the other to secure Anthony and Percifull, as securities on his (Royster's) note to the State Bank. The complainant's claim appears from the opinion of the court. Royster and Percifull did not answer, and an interlocutory decree was taken against them. Anthony answered at length, denying the fraud; and concluded with a denial of the equity of the bill; that though he had fully answered the bill, yet he insisted that if the complainant had any remedy it was exclusively at law, and that he had not shown anything in the bill entitling him to the relief he prayed. The bill was dismissed, and the complainant appealed.

Cummins and Bertrand, for the appellant.

S. H. Hempstead, contra.

By Court, WALKER, J. The complainant's claim to the equitable interposition of the court of chancery rests: 1. Upon the ground that he is a creditor of defendant Royster, who confederated

with defendant Anthony, and fraudulently conveyed certain property to him in violation of the rights of complainant and other creditors; 2. That he has claim to the property as a purchaser from Royster for a valuable consideration, and is entitled, on that ground also, to have such alleged fraudulent sale set aside.

Our first inquiry will be whether the complainant has presented a case which entitles him to be heard in a court of equity. Whatever may be the effect of fraud upon a contract as between the parties themselves, in consideration of their infamy, or public policy, there can be no question but that creditors and others, whose rights are affected thereby, may cause such fraudulent contract to be set aside, that their rights so affected may be protected and preserved. The right to this equitable interposition is based upon three principal grounds: 1. That the party complaining has such rights; 2. That they are affected by such fraudulent contract; 3. That the contract is in fact fraudulent.

And first in regard to the rights to be affected. They must be definite, ascertained rights by the ordinary tribunals appointed for that purpose. Thus it has been held that it is not sufficient for a creditor, when he comes into a court of equity to have a fraudulent sale set aside and the property subjected to the payment of his debt, that he should simply show an outstanding debt, liquidated or unliquidated, but he must also show that he has prosecuted such claim to judgment, so that it may be judicially ascertained that he has a certain specific amount due him; nor is that sufficient. He must show that process has been regularly issued thereon and returned nulla bona; for until this is done, it is not ascertained that his rights are necessarily affected by such transfer. Or if the complainant would avoid the force of this rule he should show such equitable circumstances as will relieve him from its application, making his case an exception to the rule. Reference to a few cases in which this question has been decided, may serve to illustrate this proposition.

In the case of Halbert v. Grant, 4 T. B. Mon. 581, Grant, a creditor, filed his bill against Halbert to set aside certain conveyances of land and negroes, which he alleged were fraudulent and void. He charged in his bill that he held three unsatisfied debts against Halbert, two of which he had prosecuted in a court of law to judgment. The court, in delivering its opinion upon this point, said: "As to these two claims, it is not charged in

the bill or shown in the record, that executions were issued on the judgments or returned unsatisfied. Now this rule is so well settled that a creditor must not only obtain a judgment but issue out execution and procure its return in a case where his demand is purely legal, before he can apply to a court of equity for redress against fraudulent incumbrances on the estate of the debtor, that we need not now discuss the subject or review the cases where the principle has been adjudicated;" citing as authority for this opinion, McKinley v. Combs, 1 Id. 106; Allen v. Camp, Id. 231 [15 Am. Dec. 109]; Hendricks v. Robinson, 2 Johns. Ch. 283; Brinkerhoff v. Brown, 4 Id. 671; Williams v. Brown, Id. 682; McDermutt v. Strong, Id. 687; and concluded by saying "that the claims of complainant founded on these two judgments must fail." The third debt set up by complainant was that he had bought land of Halbert, which had been lost by paramount title in ejectment; that he had not been evicted, nor had he sued on the breach of warranty, nor obtained judgment thereon at law, because it was useless, as Halbert had protected himself by the fraudulent conveyances complained of, and had no other estate on which execution could operate. The same court, in delivering the opinion of this allegation said, page 582: It is clear, according to this statement of the case, the complainant could not maintain his bill on this claim. His remedy, if any he had, was purely legal, and he was bound to resort to a court of law to enforce it. And if on the other claims, which his assignors had pursued to judgment at law, he would not sustain his bill because they had not gone the whole length of execution, a fortiori, he could not come into equity when he had not even begun his action at law."

The case of McKinley et al. v. Combs et al., 1 T. B. Mon. 106, is a still stronger case and comes fully up to the point at issue. The court in that case said: "The doctrine is incontrovertibly established, that a creditor whose claim is of a purely legal character and therefore cognizable in a court of law, must, in order to place himself in an attitude to take advantage of the deed on the ground of its being fraudulent, sue at law and recover judgment and issue execution thereon. One of the claims set up by complainant, is for a considerable sum upon a note and open account upon which no suit had been prosecuted at law. These were claims of a purely legal character and cognizable in a court of law, and there is no fact alleged which conduces to show that there was anything to hinder or obstruct a recovery thereon of a

judgment at law. The decree, so far as relates to these claims, was therefore clearly erroneous.

These authorities to the fullest extent sustain us in the opinion, that, in a case like that before us, where the creditor seeks to set aside a contract as fraudulent against creditors, such creditor should not only show a certain and adjudicated claim, placing his claim to the character of creditor beyond controversy, but he should not even then capriciously disturb the contracts between third persons be they never so fraudulent; but shall pursue his remedy upon such judgment to final satisfaction, if there be property of the defendants found sufficient to pay said debt, which is free from such fraudulent incumbrance.

The reason and propriety of this rule are obvious. It is altogether premature on his part to ask of the chancellor to set aside a contract for the purpose of enabling him to procure satisfaction of a debt, until he has first had his claim adjudicated by a competent tribunal. So that, should the prayer of his bill be granted, he would have a right at once to avail himself of the benefits conferred by the decree. Until his claim is so adjudicated, however, even admitting the transfer of the property to have been fraudulent, he has no right to complain of wrong done to him. The injury, if any, is conditional upon an event which may never happen. He may never obtain such judgment. Ordinarily there is no reason why he should desert the commonlaw courts and ask a court of chancery first to pass upon a preliminary question, upon which his equitable rights are made to depend, and if extraordinary circumstances exist which make his an exception to the general rule, they should be set forth in the bill. Nor is it less obvious that the purchaser as between himself and the vendor has a perfect right to retain his purchase unmolested, unless it shall become necessary to rescind the contract for the benefit of creditors or others whose rights have been affected by such fraudulent contract.

It is therefore but just that the creditor should show also that he has failed in the ordinary mode of collection to make his debt and that independent of the property so conveyed in fraud of his rights there is not sufficient to satisfy such debt. For if there is other property sufficient for that purpose it is an act of capricious intermeddling with the contracts of others to permit him to interfere and set it aside. As between the vendee and the vendor, as we have already remarked, the contract is valid: and he who comes to rescind it and take from the possession of the

vendee the property so purchased, on the ground that he is a creditor whose rights are affected by such transfer, must show that he has a debt adjudged to be due him, and that, after having resorted to the ordinary process for that purpose, he has failed to make his debt; or he must by distinct averments and allegations, show such circumstances as will excuse him for having failed to do so. This, it will be perceived, the complainant in this instance has failed to do. The debt, which he claims, has never been adjudicated upon, nor have any steps been taken to ascertain whether there is or not other property out of which this debt might be made, nor is any reason shown for his having failed to do so. It is true the bill charges that Royster is insolvent, but this, we have said, is not sufficient.

The complainant also relies upon his purchase of the property from Royster, and insists that upon the ground of his being a purchaser for a valuable consideration he has a right to maintain this suit to have the alleged fraudulent conveyance set aside and his title to the property confirmed. The purchase thus relied upon, as shown from the complainant's bill, appears to have been made after defendants Anthony and Percifull had instituted suit against defendant Royster, upon their prior deeds, for the purpose of subjecting the property to the payment of their debts, and after process had been served and the slaves taken by virtue of an order of the chancellor and placed in the hands of a receiver; of all which as well as of the existence of the registered deeds the complainant was bound to take notice.

This, then, was a purchase made whilst the property was in suit and actually in custody of the law. Under these circumstances the doctrine applicable to purchasers pendente lite applies, and under it there can be no doubt that the purchaser takes nothing by his contract, not even in a case where he pays full value and has no actual notice of the pendency of the suit -as in the case of Sorrell v. Carpenter, 2 P. Wms. 482, where the defendant purchased an estate pendente lite from one Ligo after subpoena served on Ligo and before answer for full value, and without any notice of the complainant's title or actual notice of the suit. Lord Chancellor King, in delivering his opinion, said "that it was a very hard case to set such a purchase aside, yet such was the rule." Lord Hardwicke, in the case of Garth v. Ward, 2 Atk. 174, held, "that a purchaser pendente lite was bound by the decree in the suit: the pendency of the suit was itself notice." Lord Camden afterwards enforced the same rule in the case of Walker v. Smalwood, 2 Amb. 676. He said: "I