14 Or. 561 | Or. | 1887
This is a suit in equity to set aside a general assignment for the benefit of creditors, and certain other instruments executed to the defendant Sims, to the end that the property thereby conveyed and mortgaged may be made subject to a claim or indebtedness held by the plaintiff against L. J. and Gf. R. Sims, upon which an action by attachment has been commenced. A demurrer was sustained to plaintiff’s complaint, and upon refusal to plead further, judgment was rendered against him, and he has appealed to this court.
The only question raised by the demurrer is a want of juris™
In Dawson v. Coffey, 12 Or. 519, Waldo, C. J., said: “ It is exclusively in the province of a court of law to say there is a legal debt, and that it Cannot be made at law. Therefore, a creditor’s bill ‘must be preceded by a judgment at law, establishing the measure and validity of the demand of the complaint for which he seeks satisfaction in chancery.’ ” (Smith v. Railway Co., 99 U. S. 401.) “It is not amere technical objection, but goes to the very foundation of the suit, and is not waived even by a general answer. The complaint must show an execution returned unsatisfied, and no state of facts will excuse such a return.” (Freem., Ch. 806.)
Upon the strength of this decision it is claimed that a judgment at law, and the return of execution nulla bona, is a prerequisite to the maintenance of such a suit, and that no state of facts short of such an averment can obviate the defect of their omission in the complaint. Hence, the lien created by an attachment would be insufficient to authorize the jurisdiction of equity. But the language of the opinion must be read in the light of the facts to which it was applied. The case before the court was that of simple contract creditors alleging an indebtedness, seeking to maintain a suit to set aside conveyances on the ground of fraud, for the purpose of collecting their debts. Upon this state of facts the rule of law as stated is beyond dispute. No principle is better settled in equity, than that its courts are not tribunals for the collection of debts, and that before its jurisdiction can be invoked to aid creditors in obtaining payment, all legal remedies must have been exhausted, or proved inadequate. (Bump, Fraudulent Conveyances, 514-521; 3 Pom. Eq. Juris., Sec. 1415 ; Wait, Creditor’s Bill Sec. 73; Bispham’s Principles of Eq., Sec. 527.) But the question .whether the lien created by the attachment is sufficient
On the other hand, Mr. Wait regards the interference of equity to protect liens created by attachment as a violation of the rules of chancery practice, established upon the definite principle that before a creditor can maintain such a suit he must previously have established his claim by judgment in a court of law. ITe says: “ We deny that a mere attaching creditor can, under any correct theory of law, become an actor in a creditor’s suit. Indeed, the underlying principles of the cases in which it is sought to make a lien acquired by the provisional remedy of attachment the practical equivalent of a lien procured by final judgment, are subversive of the time honored policy and rule of the courts, that a creditor’s bill must be founded on a definite claim, established by a judgment at law. If the innovations of modern procedure call for the abrogation of this old chancery practice, it should not be superseded by indirection, but rather by some careful formulated legislative substitute. The requirement is neither artificial nor technical; it is a necessary protection and safeguard to the debtor.” (Wait’s Fraudulent Con. and Creditor’s Bill, Sec. 81.)
Except to satisfy a claim out of some fund accessible only in equity (Hodges v. Silver Mining Company, 9 Or. 202), the impression has heretofore remained with me that the claim must be first established at law before the equitable jurisdiction can be invoked. It is admitted that the objest of a creditor’s bill is not to ascertain or determine the amount and valid.
By analogy, it is said, the suit ought to be maintained to protect the lien acquired by the attachment. This assumes there is no intrinsic difference in principle between the lien acquired by attachment and by judgment, although the circumstances out of which they arise are essentially different. In the one case it is an unadjusted legal demand—sworn to, it is true, but requiring the security of a bond before a seizure or levy can be made on the debtor’s property. With his claim thus reinforced, the creditor in attachment may be well11 deemed ” a purchaser in good faith and for a valuable consideration as against third persons. • The attachment is merely a provisional remedy, and ancillary to the action, and always subject to the liability of being annulled or discharged. In the other case, the claim or demand has been adjusted or merged into a judgment, which is sometimes said to be the end of the law ; ” and in this state becomes a lien against real property when
In view of these circumstances, if the ends of justice require it, there should be no hesitation in making the departure—if departure it can be considered—by granting the aid of equity in such cases. The courts of other states have done it, and done it on the principle that the attaching creditor, having a lien by authority of the statute, was entitled to the aid of a court of equity as much in that case as any other to enforce his legal right. (See note to Pom. Eq. Juris., supra.) In Hahn v. Salmon, supra, the subject was very ably considered and the relief granted. There is no decision of our court to which the ■doctrine of stare decisis can apply adverse to the granting of such relief, if considerations of right and justice require it.
It is our judgment that it was error to sustain the demurrer, and that it ought to have been overuled. As the purpose of the demurrer in admitting the facts was to take the opinion of the court as to the law upon this point, it is not necessary to consider the other facts upon which the complaint was grounded. That they are sufficient, if proved, to make out a case of fraudulent disposition of property with the intent to hinder and delay creditors, and to defeat the purpose of the assignment act to secure a rateable distribution of the property of the debtor among his creditors, can hardly be questioned. They are alleged, in effect, to be without consideration and in pursuance of a scheme of fraud, and taken together to constitute one transaction designed to put their property beyond the reach of erditors, and to create unlawful preferences. Judging from the argument that the case must be tried on its merits, the decree is reversed, and the cause remanded for such further proceedings as may be just and equitable.