12 Colo. App. 320 | Colo. Ct. App. | 1898
I. S. Glass, a merchant in the city of Pueblo, gave a chattel mortgage upon his stock of goods to defendant Isaac Livingston his brother-in-law, purporting to secure a debt of about $2,600. It was provided in the moi’tgage that the mortgagee should take and hold possession and dispose of the mortgaged property. Contemporaneous with this, he executed two other chattel mortgages, subject however to the first, one to Othelia Glass, his wife, purporting to secure a debt of $1,000, and another to Z. Taub, his employee and clerk, to secure $1,641.20, but in each of these it was pro
A short time after this transfer by mortgage, Glass absconded from the country, going to Europe, where he has since remained. Shortly thereafter, the plaintiff creditors, representing all of the indebtedness of Glass except about $500, commenced this action in the nature of a creditor’s bill. The com£>laint alleged that the mortgages to Mrs. Glass and Taub were void upon their face, because they purported to mortgage a stock of merchandise, and by their terms allowed the mortgagor the use and enjoyment of the same; that the Livingston mortgage was fraudulent as to these plaintiffs, because the same was given and received with intent to hinder and delay the plaintiffs in the collection of their claims, and that at the time of giving the same, Glass was not indebted to Livingston in the amount set forth therein; that the value of the property was greatly in excess of the debts secured thereby, and that since obtaining possession, Livingston had been wasting and misappropriating the proceeds ; that Livingston’s debt, if any existed, had been paid in full from the proceeds of the stock; that he refused to make any accounting as to his disposition of the stock or of its proceeds; that he was a nonresident, living in Chicago beyond the jurisdiction of the court, and had no property within the jurisdiction from which to make plaintiffs’ claims;
The first and most serious question presented for our determination is, Can this action be maintained, it being conceded that the plaintiffs are simply contract and not judgment creditors ? In Hexter v. Clifford, 5 Colo. 170, it was held by our supreme court that the remedy provided by the code for reaching money or property of a judgment debtor in the hands of other persons was designed to be an exclusive remedy, and that a bill of equity in the nature of a creditor’s bill could not be maintained in cases where said code proceedings were applicable. The opinion in this case was handed down at the December term of court, 1879, and the next legislature, presumably in consequence of this opinion, amended the code so as to provide, as it does in its present form, “Nothing in this act shall be so construed as to prevent the bringing of an action in the nature of a creditor’s bill.” Code, section 251. It is undoubtedly true that early in the history of English and American jurisprudence, the general rule was laid down that an action in the nature of creditor’s bill could be maintained by judgment creditors only, and then only after execution had issued and there had been a return of nulla bona.
It is not necessary for us to discuss or determine to what extent, if any, the rule has been abrogated in this jurisdiction. This case comes in our opinion clearly within the reason of the exceptions allowed to the rule, even by those courts which adhere to the old rule. It was early recognized as an exception that such a bill could be maintained where the debt was due by an insolvent estate, or where the debtor’ had absconded from the state. Kipper et al. v. Glancey et al., 2 Blackford, 356; Bank v. Paine, 13 R. I. 592; Steere et al. v. Hoagland et al., 39 Ill. 264.
All of these decisions rest upon the ground that the circumstances were such that the securing of judgment and issuance of execution would be of no avail, and that therefore the reason for the rule having ceased, the rule itself ceased. It has also been frequently held that attaching creditors having a specific lien by virtue of an attachment levy, could before judgment maintain a creditor’s suit against an insolvent debtor to set aside a fraudulent transfer. The
The earliest case reported in Colorado in which this question was considered is Burdsall v. Waggoner et al., 4 Colo. 256. It was there said by our supreme court that to entitle a complainant to maintain a bill in the nature of a creditor’s bill, he is usually required to show not only a judgment obtained, but an execution sued out with the return of nulla bona, or that the writ is unsatisfied in whole or in part. To this general rule, however, the court expressly said that there were some exceptions, and in support of this proposition cited Steere v. Hoagland, supra. In Neuman v. Dreifurst, 9 Colo. 233, it is true that the supreme court said: “ A further objection to the complaint lies in the fact that it seeks to set aside the conveyance by the defendant ISTeuman to the defendant Schueler. In this respect the complaint is in the nature of a creditor’s bill, which cannot be maintained before judgment.” This case involved an alleged fraudulent conveyance of real estate, and without discussing the difference between that and the case at bar, which involves only a transfer of personal property, it is sufficient to say that the court as authority for its proposition cited Burdsall v. Waggoner, supra, and it is therefore to be conclusively presumed that it affirmed the doctrine there announced, to wit, that whilst this was the general rule, there were exceptions to it. The same maybe said of Hood v. Saunders, 11 Colo. 108. We conclude therefore that it is fully settled as the law of this state, that even if this general rule is in force in its entiretj-, it is subject to the exceptions which have been heretofore recognized. The rule as it exists with tire exceptions and the reasons in support of it and them, are clearly laid down by our highest judicial authority, the supreme court of the United States, in Case v. Beauregard, 101 U. S. 690. “But, after all, the judgment and fruitless execution are only evidence that his legal remedies have been exhausted, or that he is without remedy at law. They are not the only possible means
“ So it has been held that a creditor, without having first obtained a judgment at law, may come into a court of equity to set aside fraudulent conveyances of his debtor, made for the purpose of hindering and delaying creditors, and to subject the property to the payment of the debt due him. Thurmond and Others v. Reese, 3 Ga. 449; Cornell v. Radway, 22 Wis. 260; Sanderson v. Stockdale, 11 Md. 563.
“In Brisay v. Hogan, (53 Me. 554), it was ruled that when a creditor seeks by his bill to obtain payment of Ms debt from land paid for by the debtor, but conveyed to his wife, a levy of an execution is unnecessary, if the debtor never had legal title to the land. See also Day et al. v. Washburne, 24 How. 352.
“ The foundation upon which these and many other similar cases rest is that judgments and fruitless executions are not necessary to show that the creditor has no adequate legal remedy. When the debtor’s estate is a mere equitable one, which cannot be reached by any proceeding at law, there is no reason for requiring attempts to reach it by legal processes.”
The case at bar comes clearly within the reason of the rule there announced. It is evident that a judgment and execution in favor of the plaintiffs herein would have been fruitless, and would have been a useless and unnecessary expense to have entailed upon the estate of the insolvent debtor if the claims had been collected from such estate, and upon the
Defendants insist, however, that in no event was the court justified in granting an injunction and appointing a receiver. Code, section 163, after specifying two instances in which it is proper to appoint a receiver, provides also, thirdly, that an appointment maybe made “in such other cases as are in accordance with the'practice of courts of equity jurisdiction.” It follows, therefore, it being held that this equitable proceeding could be maintained, that the court had jurisdiction to appoint a receiver. Indeed, it is very generally held that where equity will sustain a creditor’s bill, it will also grant the aid of the ancillary remedies of injunction and receiver. Cohen v. Meyers, 42 Ga. 46 ; Beach on Receivers, §621; 1 Cobbey, Chattel Mortgages, § 490; Haggarty v. Pitman, 1
As to the fraudulent acts and intention of Glass, and the participation by defendants in the fraud intentionally, to aid Glass in defeating his other creditors, and not merely to secure their own claims, these were questions of fact which were found by the court in favor of the plaintiffs. In such case under the well settled rule, such findings would not be disturbed by this court unless manifestly against the weight of the evidence. Such is not the case, but on the contrary, they are strongly supported by the proofs. It is possible that in the course of the trial, the court may have admitted, over the objections of defendants, some evidence which was not strictly competent. There was sufficient competent evidence however to sustain the findings, and in such case it will he presumed that the trial court based its findings upon this, and not upon the incompetent evidence. In any event, the evidence being sufficient to sustain them, the defendants were not prejudiced.
There were a few other questions raised, and very briefly alluded to in the briefs of counsel, but we deem it unnecessary to discuss them. The questions which we have considered and determined were the most material ones, and being decisive of the case according to pur views, we deem it unnecessary to further extend this opinion. The decree was proper, and it will be affirmed.
Affirmed.