United Stores Realty Corp. v. Asea , 102 N.J. Eq. 600 ( 1928 )

The complainant, United Stores Realty Corporation, having recovered a judgment in the district court of the second judicial district of Hudson county against the defendant James J. Asea, and having caused execution to be issued thereon, which was afterward returned unsatisfied, instituted the present proceeding in the court of chancery, the purpose of which was to have decreed as null and void as against its judgment a conveyance made by him to his wife, a co-defendant, through an intermediary, for which no consideration was paid, the ground upon which this relief is sought being that the transfer of title was in fraud of its rights as an existing creditor. The hearing resulted in a decree adjudging the conveyance to be fraudulent, null and void as against the complainant judgment creditor, and directing the issuing of execution against the land described therein and the sale thereof for the purpose of satisfying that judgment and the costs of the present suit.

From this decree the defendants James Asea and his wife have appealed, upon the ground that the present suit was prematurely brought — (1) because the complainant at that time had no lien upon the land conveyed by the husband to his wife, and (2) because the complainant had not exhausted its remedy at law prior to the filing of the bill. Both of these points are discussed in the appellants' brief under a single head, the contention being that, under the provision of our statute creating district courts, a judgment entered in such court is not a lien upon land owned by the defendant in the suit; that an execution issued upon such judgment can be satisfied only out of his personal estate; that, in order to subject the land of a defendant to the lien of a judgment recovered in the district court, it must be docketed in the court of common pleas, and that, until the judgment becomes a lien upon the defendant's land, the court of chancery is without jurisdiction to entertain a suit instituted by a judgment creditor, the purpose of which is to obtain an adjudication that a conveyance of land made by his debtor to a third person without a consideration therefor is fraudulent and void as against him.

It is true, as contended on behalf of the appellants, that it has been held in our earlier decisions that the general rule was entirely settled that, in order to enable a creditor to challenge in the court of chancery a transfer of real estate made by his debtor, upon the ground of fraud, the creditor must have first obtained a lien upon the property. Haston v. Castner, 31 N.J. Eq. 697,698, and cases cited. In the year 1919, however, the legislature of this state passed an act entitled "An act concerning fraudulent conveyances and to make uniform the law relating thereto" (P.L. p. 500), by the ninth section of which it is provided that "where a conveyance is fraudulent as to a creditor, such creditor, when his claim has matured * * * may have the conveyance set aside to the extent necessary to satisfy his claim." This statutory provision, we consider, embraces, by implication, creditors whose claims have not only matured, but the validity of which has been established by a judgment in a court of law, although such judgment is not impressed as a lien upon the land of the debtor. It is hardly necessary to state that the court of chancery, under our judicial system, is the only tribunal vested with power to set aside and declare null and void a conveyance made in fraud of creditors.

It has been suggested that the section of the statute which has been referred to violates our constitution because it impairs the jurisdiction of the courts of law created by that instrument by conferring upon the court of chancery power to hear and determine actions for debt and for damages arising out of a breach of contract, that power being necessary for the ascertainment of the validity of the creditor's claim and for determining the actual amount due on such claim, if it be found to be valid. If this question was involved in the determination of the present case, we would be inclined to consider the suggestion a meritorious one to the extent indicated. But the fact that a statutory provision is, to some extent, violative of our constitution, does not justify its condemnation in toto unless the different parts of the provision are so intimately connected with and dependent upon each other as to warrant a belief that the legislature intended them as a whole, and that, if all could not be carried into effect, the legislature would not have passed the residue independently. Johnson v. State,59 N.J. Law 535; Hudspeth v. Swayze, 85 N.J. Law 592. Bearing in mind the fundamental principle that courts will not declare a statute unconstitutional in every respect where the matter is at all doubtful, we consider that we should not condemn the provision of the statute so far as it is involved in the present case, for it does not seem to us that the different parts of the act are so intimately connected with and dependent upon the other as to justify a judicial declaration that the whole provision must stand or fall. Reaching this conclusion, and considering, as we have already indicated, that the statutory provision embraces, by implication, claims of creditors, the validity and amounts of which have been established by the judgments of courts of law, but which have not been impressed as liens upon lands of their respective debtors, we conclude that, to this extent, the power conferred upon the court of chancery does not infringe upon the jurisdiction of our law courts.

We do not overlook the fact that a party who has recovered a judgment in a district court may have it impressed as a lien upon the land of his debtor by having it docketed in the court of common pleas of the county; but this fact has no relevancy in the determination of the constitutional question under consideration. The creditors right to do this is purely statutory, and does not depend upon any judicial action by a court of law. He is entitled as a matter of right to have his judgment docketed by the clerk of the court of common pleas upon filing in the office of the latter a statement signed by the clerk of the district court, under the seal of that court, containing the name of the court, the names of the parties, the amount and date of the judgment, the date of issue and return of the execution, and also an affidavit, made by himself or his attorney, that at the time of filing such statement a certain amount, not less than $10, is still due thereon. It is apparent from this recital of the statute (Comp. Stat. p. 2003 § 170) that in conferring jurisdiction upon the court of chancery to entertain a bill of the present character by a creditor who holds a judgment recovered in a district court, although such judgment has not been docketed in the court of common pleas, it does not infringe upon any of the judicial powers vested in our courts of law.

The decree under review will be affirmed.