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2 Del. Ch. 20

Newell v. Morgan

Court of Chancery of Delaware

Decided March 15, 1836

Court of Chancery of Delaware · decided 1836-03-15

Bill bt creditors to set aside a eraudulent conveyance.—The defendant, Evan F. Morgan, purchased from Daniel Godwin a house and two lots, situated in Lewis, Sussex County, taking a conveyance of the property in fee simple to his children. The deed recited a consideration of $2000.00, as paid by Evan E. Morgan; the consideration in fact consisting of a stock of store goods which Morgan exchanged for the house and lots.

Decided 1836-03-15

Johns, Jr., Chancellor.

¶1My first impressions were in favor of the preference claimed for the complainants.

¶2I have no doubt that wherever a legal right has been established it will be recognized in equity. Wherever a party has established a j udicial preference at law, by judgment or execution,a court of chancery will recognize such preference and give effect to the right. But the term j udicial preference is not used with reference to the speed of the parties in pressing their claims at law, but with reference to their having obtained a prior legal lien upon the property. In this case no such legal lien was obtained by the complain-" ants. Their judgment never bound the property at law. *23ÍTo claim could be asserted against the property, or the fund arising from it, otherwise than through a court of equity. Considering, then, that none of the creditors have obtained a legal priority, I must treat their equities as equal, and adopt the principle of pari passu distribution.

¶3Decree accordingly.

¶4On appeal, the Court of Errors and Appeals, at the June T. 1837, affirmed the decree of the Chancellor, so far as it had declared the conveyance of the property to be fraudulent and void and had directed a sale ; but the appellate court held that the complainants had, by their superior diligence at law, gained a preference in equity, and were entitled to be first paid out of the fund—the other creditors taking the residue pari passu. 2. Harring. R. 225.

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