U.S. Supreme Court Gaylords v. Kelshaw, 68 U.S. 1 Wall. 81 81 (1863)
Gaylords v. Kelshaw
68 U.S. (1 Wall.) 81
ERROR TO THE CIRCUIT COURT
FOR THE DISTRICT OF INDIANA
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.
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
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.