William Egan, Respondent, v. James J. Hagan, Appellant, Impleaded with David McKown, and Anna H. McKown, His Wife, Defendants

William Egan, Respondent, v. James J. Hagan, Appellant, Impleaded with David McKown, and Anna H. McKown, His Wife, Defendants. First Department, May 10, 1907. Debtor and creditor — pleading — complaint to set aside transfers by one of two judgment debtors—when execution against both prerequisite to action. In a creditor’s action on a judgment obtained against joint defendants, where it. is sought to set aside an alleged fraudulent transfer .by one debtor, the complaint must show that the execution was issued against both judgment debtors and returned unsatisfied, otherwise it does not appear that the creditor has exhausted his remedy at law. It is only where one'judgment debtor occupies the relation of surety to the other that execution against both is not required. Appeal by the defendant, James J. Hagan, from an interlocutory judgment of the Supreme Court in favor of the plaintiff,' entered in the office of the clerk of the county of New York on the 16th day of Hovember, 1906, upon the decision of the court, rendered after a trial at the New York Special Term, overruling the said defendant’s demurrer to the complaint. The complaint alleges the recovery of a judgment by the plaintiff" against the defendant David McKown and one James F. Leary for the sum of $468.11; that a transcript of the judgment was duly, filed" in the county of New York, in which county the defendant McKown then and still resides; that an execution was duly issued upon said judgment against the'personal and real property of the defendant McKown, which execution was returned unsatisfied and remains wholly unpaid; that “ the said judgment was recovered upon debts of the said defendant David McKown, contracted previous to the making of the transfer hereinafter mentioned ; ” that on or about the 17th day. of June, 1905, the defendant McKown and his wife assigned to the defendant James J. Hagan all their right, title and interest of, in and to their undivided oné-fifth interest in the estate, both real and personal, of James-E. McKown,- as well as their interest in the-proceeds-of the sale of certain real estate then in the hands of a referee in a partition action; that this assignment was not recorded as-required.by chapter 692 of the Laws of 1904 ; that “ the said assignment was made by the-said defendants David' McKown and .Anna H. McKown, his wife, and accepted by the defendant James J. Hagan with intent to delay, hinder and defraud the creditors of the defendant David McKown, and thereby the defendant David McKown became and still continues to be insolvent; ’’ that “ the" pretended consideration set forth in said assignment as .paid by the defendant James J. Hagan to the defendants David McKown and Anna H. McKown, his wife, is wholly fictitious; that in fact there was-no consideration, but.that the same is therein, inserted for the purpose.of■ enabling the defendant James J. Hagan,to obtain possession of the assigned property and money, that he may"pay over the same to the defendants David McKown and Anna H. McKown and other persons designated by them; ”■ that the defendant David McKown. has no other property and that there are other judgments outstanding against the defendant David McKown. The defendant James H. Hagan demurs to the complaint: First, that there is a defect of parties defendant, in. that James F.;Leary, a joint judgment debtor with the defendant David McKown in the judgment on which said action is founded, is not made a party to this action. Second, that the complaint does not state facts sufficient to constitute a cause of action. The learned court at Special Term has overruled the demurrer. The defendant Hagan alone appeals from the interlocutory judgment. James F. Swanick, for the appellant. Lawrence F. Brown, for the respondent. [MAJORITY — Lambert, J.:] Lambert, J.: If the situation so permitted we would follow the rule laid down in Baker v. Potts (73 App. Div. 29), wherein it is held that it is not of universal application that an execution must be issued and returned as against all the judgment debtors as a condition precedent to an action in equity to reach property fraudulently transferred. The exception to the rule, as there pointed out, is based upon the conclusion of. fact that the debt which was the foundation of the judgment was that of the defendant, whose property is sought to be reached, while his codefendant occupied the relation- thereto of surety. Conceding the rule sound and to be followed in a proper case, it has no application here. It is in the complaint alleged “ that the said' judgment was recovered upon debts of the said defendant David McKown, contracted previous to the making of the transfer hereinafter mentioned.” It is from tliis allegation that we are asked to draw the inference that Leary sustained the relation of surety to McKown in contracting the debts mentioned. If Leary and McKown were partners at the time the debts were contracted, and the same were incurred for the benefit of the partnership, it would justify the allegation as a basis óf this action. that “the said judgment was recovered upon debts of the said defendant David McKown.” It would in that case be their joint or several debt. One test of the soundness of this-conclusion would result from an attempt to convict the defendant McKown for perjury upon the assignment of a false statement “ that the said judgment was recovered upon debts of the said defendant David McKown.” It is clear that á conviction could not be had. The verified statement, as a . matter of fact, would be true that the debts recovered upon were those of the defendant David McKown, The plaintiff is seeking to-have the benefit of an exception to a general rule; he is seeking to-be permitted to follow the property in equity Of one of two joint, judgment debtors without exhausting’ his legal .remedies. This h& cannot do in the absence of requisite allegations bringing his case-within the exception,. In this he has failed. This conclusion makes-it - unnecessary to pass upon the first ground of the, demurrér, except 'to say that, we sanction the rule applied by the learned court below-respecting the non-j.oinder of parties. The judgment should be reversed, with costs, ¡and the’ demurrer sustained, with costs,’with leave to plaintiff to amend on payment ’ of costs in this court and in the court below. Patterson, P. J., Houghton and Scott, JJ., concurred McLaughlin, J., concurred in result. ■ Judgment reversed, with costs, and demurrer sustained, with. ■ costs,, with leave to plaintiff to amend on payment of costs.