Symons v. . Reid

| N.C. | Jun 5, 1860

The defendants Kibbee Ball were a mercantile firm in the city of New York, and the plaintiffs bought goods of them to the amount of $1,551.22 and gave their promissory note for the same, payable six months after date (8 September, 1857). Before the expiration of the credit Kibbee Ball became insolvent, and on 19 November, 1857, made an assignment to the defendant Jehial Reid of their effects, in trust forthe creditors of the firm, by which the equitable property in this note passed to Reid, and at the same time they endorsed it to said Reid on the same consideration. This note was sued on in the county (328) court of Rowan, and judgment obtained at February Term, 1859, of that court, from which the defendants in that suit (plaintiffs in this) appealed to the Superior Court of that county; and in the latter court a final judgment was taken at Spring Term, 1859, for the full amount of the said note, interest, and costs ($1,767.18). Subsequently to the assignment to Reid, the plaintiffs purchased three notes on Kibbee Ball, amounting, together, to something more than their note to the firm, and took an endorsement on the same without recourse on the endorsers. The plaintiff Symons requested that these should be allowed as a credit on the judgment, which was refused, and this suit was brought to restrain the collection of the judgment, alleging that these being debts secured in the deed of assignment, and the trustee having funds enough in his hands to pay them ought not to be allowed to enforce the collection of the judgment; that he is a citizen of the State of New York, and would, if permitted to collect this money, take it out of the reach of the court. The creditors of Kibbee Ball were not named in the deed of assignment made by them to the defendant Reid, and the plaintiffs in their bill call on the defendants to state in their answer who these are, and what amount is due to each.

The answers of the defendants state that these notes were purchased by the plaintiffs long after the suit on the note to defendants was begun and while pending in the Superior Court; that the endorsements are without date, and that the plaintiffs fraudulently pretended that they were made before the assignment to defendant Reid, and endeavored to use them as set-offs in the action at law, and that being balked in this nefarious design they had come into this Court to effectuate their purpose; that the firm of Kibbee Ball being hopelessly insolvent, they were able to buy up these notes for a mere trifle, and paid for them in worthless stocks; that the percentage coming to the plaintiffs out of the fund in the hands of Reid is small. The answer does not state the names of the creditors entitled to participate in the fund, nor the amount due to each, nor the sum to which the plaintiffs would be (329) entitled, but avers that all this information had been given to the plaintiffs.

On the coming in of the answer, the following exceptions were filed:

1. That the trustee failed to set forth the amount in his hands.

2. That he failed to set forth the amount applicable to the debt of the plaintiffs.

3. That the defendants failed to answer whether the debts exhibited by the plaintiff are owing by Kibbee Ball to the plaintiffs.

The motion to dissolve the injunction and to allow the exceptions were argued and considered together in the court below, and both were decided against the plaintiffs, from which they appealed to this Court.

In this Court, the counsel for the defendants brought to the notice of the Court the following allegation in the plaintiffs' bill: "Yours orators further show to your Honor that on 19 November, 1857, the said Kibbee Ball, in fraud of their creditors and in fraud of the debts which they owe to your orators, made a fraudulent assignment of all their debts, accounts, property, and estates to one Jehial Reid," and insisted that the bill was repugnant and inconsistent, and that, according to the course of the Court, no relief could be given upon it. We were at first inclined to the opinion that the bill was fatally defective, as being repugnant and inconsistent with itself on its face in this: it alleges that the assignment by the defendants Kibbee Ball was in fraud of their creditors and "in fraud of the debts which they owe to your orators," and then it alleges that the plaintiffs are entitled, as the assignees of three certain notes of Kibbee Ball, to a part of the fund in the hands of Reid, which, by virtue of the (330) assignment to him, he collected and holds in trust for distribution among the creditors, thus in one breath assailing the assignment as fraudulent and void as to creditors and in another seeking to set up the assignment as valid, and under which the plaintiffs and other creditors are entitled to a dividend of the fund.

Upon an examination of the whole bill, and particularly the relief prayed for, we are of opinion that the allegation of fraud must be rejected as surplusage and impertinent — inserted by the draftsmen of the bill without intending to make it the ground of relief and as merely expletive, and to be ascribed to the loose manner in which gentlemen of the bar will indulge themselves in framing equity pleadings under the excuse of the pressure of business on the circuits, but which always embarrasses the court and frequently operates to the prejudice of clients. Stripped of surplusage, the bill sets out a plain equity — i.e., to have an account of the trust fund, and the dividend to which the plaintiffs are entitled as assignees of the notes mentioned in the bill applied in payment of the judgment which the defendant Reid has obtained against them at law, and in the meantime for an injunction on the allegation that Reid is a nonresident, and if he collects the judgment will take the fund beyond the reach of the Court; and the defendant Reid is interrogated particularly and required to state the sum to which the plaintiffs are entitled, as a dividend, in the distribution among the creditors of Kibbee Ball, and also to set out the names of the creditors.

The answer is as obnoxious to the charge of "looseness of statement" as the bill. It makes the impression that Kibbee Ball are largely insolvent, and that the dividend to which the plaintiffs are entitled is very trifling, and, in fact, that they bought up the notes which they hold for little or nothing, with an intention to defeat a recovery at law, and at all events to embarrass the proceeding.

It is certain that the plaintiffs are entitled, as the holders of the notes in question, to a dividend of the fund — be it large or small — and to have it applied as a payment on the judgment at law, (331) and the answer is defective in not setting out what the dividend or the "percentage," as it is termed, amounts to, and who are the creditors entitled to the fund.

Under ordinary circumstances, in consequence of this evasion in the answer, the plaintiffs would have been entitled to have the injunction continued until the hearing, but it is evident that, as the bill now stands, the plaintiffs are not in a condition to bring the cause on for a hearing, for an account cannot be taken until all the creditors interested in the fund are made parties. On this account it was material that the answer should have set forth the names of the creditors, for although the fact of their not being named in the deed of assignment made it proper to entertain the bill in the first instance, so as to enable the plaintiffs to get a discovery, it would then have been necessary to amend by making them parties, because, manifestly, there can be no decree for an account until all the parties interested in the fund are before the court, so that they may be bound by the final decree. If this were not so, there might be as many suits as there are creditors and a different balance struck in each.

If the defendants had set out the dividend, or percentage, to which the notes held by the plaintiffs are entitled, according to the present state of the fund, the proper order would have been to dissolve the injunction, except for the amount stated, for which, of course, the plaintiffs would be entitled to a credit on the judgment. As the answer is evasive in this respect, it was error to dissolve the injunction, for that was permitting the defendant to take advantage of his own default, for it is certain the plaintiffs are entitled to some part of the fund, and cannot be made to forfeit it by a general recrimination to the charge of fraud which the plaintiffs made against them, "that they went on to New York and purchased the notes for a mere trifle," and "must come into court with clean hands," etc.

Upon the whole, this Court is of opinion that the decretal order dissolving the injunction should be reversed and the exceptions to the answers allowed, so that upon the coming in of full answers the plaintiffs may amend by making the creditors parties. And (332) although the amendment will supersede the ex parte injunction heretofore granted, yet the plaintiffs may then move for an injunction upon the equity confessed by the answers, to wit, the amount of the dividend to which they are entitled. This will be certified.

PER CURIAM. Decretal order reversed.