Keighler v. Ward

8 Md. 254 | Md. | 1855

Mason, J.,

delivered the opinion of this court.

The questions involved upon this appeal have never before, as we are aware, arisen in any court in Maryland. They relate to the nature, office and applicability, of the writ of sequestration, as a part of our equity jurisprudence. We have no doubt that this writ is in full force in this State, both as a mesne process against a party in contempt, as well as a judicial writ to enforce the performance of a decree, and in its latter office may be said to be analogous to an execution at law. The process of sequestration came with our chancery system from England, and has since been fully recognised and adopted by our legislation, as appears from the act of 1785, ch. 72, sec. 25. The circumstance, that it has never been resorted to in practice in this State, does not, on that account, render it inoperative or powerless. In Bacon’s Abr., 8th Vol., 630, it is said of this writ that it has “become the common process in courts of equity, and may be said to be two-fold; that is, it issues either as a mesne process on the defendant’s default in not appearing, or not answering, after the whole process of contempt hath spent against him; or it issues as a judicial process in pursuance of a decree, and to enforce the performance of it; and it is the execution and life of a court of equity; and as it is the fruit of a long suit it is to be favored, and in this case it is said to be analogous to an execution at common law.”

Unless we can discover a purpose on the part of our legislature, as developed by our act- of 1785, to alter the character and office of this writ, and the practice under it, as shown by the English authorities, we must look for the general principles regulating the subject to the adjudged cases and elementary works in England. How far then have the English doctrines in regard to sequestration been affected or altered by our act of Assembly, is to be our first inquiry.

The 25th sec. of the act of 1785 requires as a condition upon which this writ, as well as all other process upon decree, shall issue, that notice shall first be served upon the defendant of the passage of the decree, by an attested copy thereof; and by the 26th section it is provided, “that in all cases in chancery the process of commission of rebellion, and sergeant-at-arms, shall be omitted as unnecessary.” These, we believe, are the only two statutory modifications made in the law which we need notice; and by the act of 1818, ch. 193, sec. 4, the demand or notice of the decree, as required by the previous act, has been dispensed with, and the party obtaining the decree is entitled to process thereon, without such demand or notice, and this embraces the process of sequestration as well as other writs.

Of one thing we are certain, that there is nothing in the provisions of either of the acts referred to which at all affect the questions involved in the present appeal. They are to be detennined therefore upon English authority.

There appears to be no objection taken to any of the proceedings in this case prior to the decree of the 13th of May 1851, against the defendant, Betts. The case stands then upon the concession that those proceedings are regular, and that Betts is justly indebted to the complainants in the amount of the decree.

Opon this decree a writ of sequestration was issued on the 22nd of April 1853, and at once laid in the hands of W. tí. Ward and the Franklin Fire Insurance Company, who, as was alleged, held certain moneys and effects of Betts, the defendant, which were subject, by this process, to be made available towards the satisfaction of the decree. Ward filed his answer, setting up a deed of trust from Betts to him, his report as trustee under said deed to the Superior Court of Baltimore, and the order of that court for notice to creditors, &c. He states that the writ of sequestration issued after the deed from Betts was executed, and he submits that he proceeded regularly in the Superior Court, and that the distribution of the trust estate ought to be made under the direction of that court; he also avers, that he has no property or effects of Betts in his hands bound by or subject to said writ. For these reasons he moved that the return of the writ be quashed. The chancellor did accordingly quash the return to- the writ of sequestration, and from that decision the present appeal was taken.

In the argument of this cause the five prominent questions discussed, were: — 1st. Did not the jurisdiction rightfully assumed by the Superior Court of Baltimore over the trusts, as set out in the deed to Ward, appropriate to that court the settlement of the questions raised on this appeal, to the exclusion of the court of chancery? 2nd. Is the process of sequestration, in any of its aspects, applicable to a case like the present? 3rd. But if so, as Ward .(femes in his answer, that the chases in action sought to be reached were Betts’, would this proceeding be effectual to test the question of title to those choses in action? 4th. Whether the deed of trust was valid and vested a good title in Ward, as against all parties claiming subsequent to its execution? And 5th. Whether by virtue of the decree and the proceedings under the sequestration, the complainants acquired any inchoate equitable priority upon the .funds in the hands of Ward, which upon a subsequent proceeding might be made available in payment of their decree, provided they cannot be reached under the present proceeding?

The first question is abundantly answered by the decision of this court, in the case of the American Exchange Bank vs. Inloes, 7 Md. Rep., 380. A court of equity cannot, by taking hold of a case for one purpose, draw to itself an exclusive jurisdiction over every other discordant question which might arise out of it. It is true that a jurisdiction once rightfully asserted by a court of equity, and which would lead to a settlement of all the questions which might arise out of the subject matter in controversy, will exclude all jurisdiction over it, by other courts, for similar purposes, and the reason of this, which is to prevent a number of conflicting proceedings about the same thing, is wise and just. But that a proceeding like this one pending in the Superior Court, which contemplated giving force and efficacy to a deed, can be said to draw within its ample folds the considerations of questions which assail the very existence of the deed itself, is a proposition not for one moment to be entertained.

The second question we have already determined, to the extent of saying, that the writ of sequestration was in force in .Maryland. But it is contended, that under no circumstances are choses in action, such as stock, debts, &c., subject to sequestration. This was, no doubt, at one time held. 8 Bacon’s Abr., 632. But a different or modified doctrine now prevails, and it may be said to be the result of the best adjudged cases in England, that choses in action, under certain circumstances, may be sequestered. The chancellor’s views upon this particular point are correct. It may be stated as a settled point, upon strict authority, that if the party in whose hands the chose is admits the debt to be due to the defendant, and is willing to pay the same over under the order of the court, it becomes thereby subject to sequestration, but not otherwise. 2 Daniell’s Chan. Prac., 1261. 1 Hoffman’s Chan. Prac., 157. White vs. Geraerdt, 1 Edw. Chan. Rep., 340. Johnson vs. Chippindall 2 Sim., 55. 1 Beavan, 369.

This then leads us to the[jhirdj inquiry, whether Ward’s tfenial of his liability to Betts defeats the writ? Clearly, by this denial, the case is made to fall within (he general principle just stated, that there can be no sequestration against a party denying his indebtedness, unless it may be shown by some further proceeding that the objection is untenable, as will be more fully explained hereafter. The appellants seek to except this case from the operations of the general rule, upon the ground, that as 'Ward has thought proper to exhibit a deed in support of his title to the property, which upon its face, as is alleged, is void for fraud, therefore the law will treat the property as if no deed had been executed. This objection simply resolves itself into the general proposition, that dioses i?i action held by fraud are subject to sequestration, notwithstanding the party holding them denies the charge and resists the proceeding, and thus resistance, resting upon such a ground, is held to be an exception to the general rule, that chases in the hands of an unwilling party cannot be sequestered. We cannot discover any authority or good reason for such a proposition. The general principle is doubtless designed to avoid such collateral proceedings and inquiries as would unavoidably result from such resistance. What questions are more fraught with difficulty or attended with more protracted controversies than questions arising out of allegations of fraud? And this is abundantly illustrated by the question of fraud raised upon this appeal. It has elicited a most able and prolonged argument, and if the zeal manifested by the counsel be any index of their real convictions upon the subject, they must have been sincere in maintaining the conflicting positions assumed by them, and thus we have a clear case of controversy presented to us, which, if we were now to decide upon this collateral inquiry, we would upturn the established doctrines and practice upon the subject. It is no answer to our objection to say, that because we can see from the case made, (if such were the fact,) that Ward has no title, therefore the sequestration must go against him. Such a view might apply to nearly every case, or would make the question depend upon the degree of difficulty which each case would present, while the law says that the resistance must defeat the proceeding, and not the grounds upon which the resistance rests. The appellants say the deed is void upon its face, and the- appellee denies it; if we were .to look into the deed for the purpose- of determining this point, we would be simply settling the question, and what more could we do in regard to any other controversy that might1 arise out of such a proceeding? The authorities seem to leave the determination of this question, whether to abide the sequestration or not, entirely with the party affected by it. If he may resist the writ without, assigning any reasons for doing so, is it not unreasonable that he should be worse off for having assigned insufficient or bad reasons?

The fourth question, as to the validity of the deed, after what has already been said, ought not to be decided upon the present appeal. To do so would be to disregard what we have laid down under the previous head as the proper rule upon the subject,

The fifth and last ground taken in argument relates to the supposed inchoate equitable lien created by this proceeding upon the funds in the hands of Ward. This is a most important proposition, and to some extent a new and unsettled one. Daniell, (2 Vol., 1262,) says, that the question, ccwhether, when the party in possession of the chose in action refuses to admit, or disputes his liability, the court will authorise the institution of proceedings, either at law or in equity, for the purpose of enforcing the sequestration against such party, is a point which still appears to remain uncertain.” See also Simmonds vs. Kinnaird, 4 Ves., 735. White vs. Geraerdt, 1 Edw. Ch. Rep., 336.

From the analogy of the case of Harris vs. Alcock, 10 Gill & John., 226, and upon general principles of equity and justice, we are disposed to believe and do so accordingly decide, that the complainants have acquired, by virtue of the sequestration, an equitable lien or priority to the funds in controversy, contingent however upon the result of the question, whether the deed of trust from Betts to Ward is void or not.

The complainants having had a valid, equitable claim against Betts sought to enforce the same in the only court having ample jurisdiction over the subject, and having done so obtained a decree in chancery for the amount due them. In order to obtain, by due course of law, the fruits of their decree, they resorted to the only legal process suited to the emergencies of their case, namely, the writ of sequestration} which was laid Upon properly or effects in the hands of Ward, which belonged, as was alleged, to Betts. The efficacy of this writ is defeated, under a well settled principle of law, by Ward, who denies that the property is Betts’, and in support of this denial relies upon the deed of trust. The complainants thus find the estate of Betts, or a large portion of it, which they consider, both in law and equity, bound for his debts, transferred beyond their reach, by means of what they allege to be a fraudulent conveyance. What is to be the consequence of this condition of things, provided the deed should turn out to be void ? Are the complainants to lose the fruits of their vigilance, which, in every court, is preserved and protected, not from any laches, delay or mistake on their part, in pursuing their proper, legal remedies, but from a technical, and perhaps untenable objection, which could not have been averted, made by one, who, at best, is but a mere third party or stranger to the proceedings? Can it be said that these parties must abandon and lose all benefit resulting from this proceeding, shown to be regular and proper, up to the time of this objection, because of the interposition of such an objection on the part of Ward? If the remedy of these complainants had been at law, and they had obtained a judgment instead of a decree, an attachment by way of execution would have reached the funds in the hands of Ward, and notwithstanding a,ny objection he might make the validity of the deed would have been inquired into, and if found void the funds would have been summarily condemned. Are we now to say that there are remedies at law in cases where there are none in eqirity ? Without this equitable lien, which is contended for by the appellants, they would be either remediless or would be driven to a slow and tedious proceeding, instituted expressly to vacate the deed, which would result equally to the benefit of all creditors, while, in the mean time, more fortunate, though not more wise or vigilant creditors, would probably, by means of attachments, or otherwise, sweep away the debtor’s whole estate.

The court of chancery could therefore properly have retained this case until such other or additional proceedings could be had, at law or in equity, as the exigencies of the case might require, by which the question of the validity of the deed could be setded. Until this was done the court ought not to have quashed the return to the sequestration, but on the contrary, we think, that the appellants had, under their process of sequestration, which, in this case, was in the nature of an execution or attachment at law, acquired, at least, an inchoate equitable lien or priority, which the court ought to have protected until the final termination of the whole controversy. If the deed should be declared void, and the funds in the hands of Ward decided to belong to Betts, they should be distributed with reference to the priority or preference acquired by the complainants by virtue of their process of sequestration.

In the foregoing opinion we have said enough to dispose of the several questions as presented upon the present appeal. All questions arising out of tire deed should be left, as we have said, open for future consideration upon proceedings hereafter to be instituted to test to validity.

Decree reversed and cause ordered to the Circuit Court of Baltimore city. The costs to he paid out of the estate.

Eccleston, J.,

delivered the following separate opinion:

Although the recent English decisions have held that a chose in action may be made subject to the payment of a decree in equity, under a writ of sequestration, yet, in my opinion, the English and American authorities show it to be true, as a general rule, that the process of sequestration will be defeated xf objected to by die person charged with being indebted to the defendant in the decree. In this case, however, the objection made by Ward is based upon the assignment or conveyance in trust, made to him bjr Betts, which instrument is alleged to be fraudulent and void.

A court of equity has long been considered the proper tribunal for deciding whether a conveyance is void for fraud. And as tire instrument on which Ward bases his objection to the sequestration has been alleged to be fraudulent, I think the chancellor should have retained the writ for the purpose of having the question of fraud settled; so that in case of a decision adverse to the validity of the conveyance the sequestration might then be available to the complainants, because of the removal of Ward’s objection by a court having competent and appropriate jurisdiction in reference to matters of fraud.

Under the English practice certain preliminary steps were necessary for putting a defendant in contempt before a writ of sequestration could be issued against him; but by our acts 1785, ch. 72, sec. 25, and 1818, ch. 193, sec. 4, these preliminary steps are dispensed with; and therefore the present writ was not irregular for want of them.

Entertaining these views I think the order of the chancellor should be reversed and the cause remanded for further proceedings.