1. In a bill to set aside a conveyance as made without
consideration and in fraud of creditors, the alleged fraudulent
grantor is a necessary defendant in the bill, and if being made
defendant, his citizenship is not set forth on the record, the bill
must be remanded or dismissed.
2. In such cases of remandment or dismissal, costs are allowed
to a co-defendant, being the person charged with having received
the fraudulent conveyance.
The Gaylords, appellants here, had filed their bill in chancery
in the Circuit Court for the District of Indiana, against the
defendants Kelshaw and Butterworth, charging that they had an
unsatisfied judgment at law in one of the Indiana courts against
Kelshaw, and that some short time before the judgment was
recovered, Kelshaw conveyed to Butterworth a valuable piece of real
estate without any consideration, and with an intent fraudulently
to hinder and delay them, the said Gaylords, in the collection of
their debt. The bill prayed that the conveyance might be aside, and
the property sold in satisfaction of their debt.
The complainants alleged themselves to be citizens of Ohio, and
Butterworth to be a citizen of Indiana, but no allegation was
made in any part of the record as to the citizenship of
Kelshaw. The record showed, however, that he was found within
the district, and had appeared and answered. The court below
dismissed the bill
on merits.
Page 68 U. S. 82
MR. JUSTICE MILLER, after stating the case, delivered the
opinion of the Court:
It is clear that neither the court below nor this Court has
jurisdiction of the case as between plaintiffs and Kelshaw.
But as the court might, under some circumstances, proceed to
adjudicate on the rights of the parties properly before it, we must
look into the case, so far as to see if it is one in which relief
may be decreed, as between plaintiffs and Butterworth, without
regard to Kelshaw.
Without referring to the numerous cases in this Court and
others, on the necessity of having all the proper parties before
the court, in a suit in equity, and the circumstances under which
the court will proceed in some cases, without persons who might
well be made parties, it is sufficient to say that, in the present
case, we think Kelshaw is properly made a defendant to this suit.
It is a debt which he owes which is sought to be collected. It is
his insolvency which is to be established, and it is his fraudulent
conduct that requires investigation.
If the conveyance to Butterworth shall be decreed to be set
aside, and the property conveyed to him, subjected to the payment
of plaintiffs' debt, it is proper that Kelshaw should be bound by
the decree, and to that end he ought to be a party.
It is not necessary to decide in this case whether if Kelshaw
were, in the language of the Act of February 28, 1839, "not an
inhabitant of, or found within the district where the suit is
brought," the court could proceed without him, for the record shows
that he was found within the district, and served there with
process, and has answered the bill. Nor is it necessary, for the
same reason, to inquire if the court could dispense with him as a
party under the 47th rule prescribed by this Court for the courts
of equity of the United States. It is simply the case of a person
made a defendant by the bill who is also a proper defendant,
according to the principles which govern courts of chancery as to
parties, and who has been served with process within the district
and
Page 68 U. S. 83
answered the bill, but whose citizenship is not made to appear
in such a manner that the court can take jurisdiction of the case
as to him.
Under these circumstances, the Court is of opinion that instead
of a decree dismissing the bill on the merits, it should have been
dismissed without prejudice for want of jurisdiction. The case will
be remanded to the court below with leave to plaintiffs to amend
their bill generally, and if they shall fail to do this it shall be
dismissed without prejudice. Butterworth is entitled to his costs
in this Court.
Decree accordingly.
