Tappan v. Evans

| Superior Court of New Hampshire | Dec 15, 1840

Pabkeb, C. J.

Upon all the case, except that part relating to the land mortgaged by the defendant Heath, to the plaintiff, and attached and levied on by the defendant Evans, the defendants contend that the plaintiff is not entitled to the relief sought, and cannot maintain his bill for any relief, because they say, that the plaintiff, having obtained a judgment on his demand against Heath, has caused him to be committed to prison on the execution, and still holds his body under that commitment.

If this fact is so, and it seems not to be denied in the argument, it would, if properly presented before the court, furnish a good bar to any proceeding upon the judgment, against the property of Heath, either at law or in equity.

It is expressly settled, in Stillwell vs. Van Epps, 1 Paige’s Ch. Rep. 615, that “while the plaintiff has the body of the defendant in execution, on a ca. sa., his right to proceed against the property of the latter is suspended. He cannot, therefore, so long as the defendant is in custody, file a bill in chancery to reach his equitable estate.” And it has been held in England, that where a creditor has the body of his debtor in execution, he cannot be a petitioning creditor for a commission of bankruptcy. 1 Strange 653, Burnaby’s case; 8 D. & E. 123, Cohen vs. Cunningham. And in New-York, that the judgment cannot be set off against a judgment in favor of the debtor. 1 Cowen’s R. 56, Cooper vs. Bigalow.

In the case Bean vs. Smith, 2 Mason’s R. 252, cited by the plaintiff’s counsel, the debtor had been discharged from his imprisonment, on taking the poor debtor’s oath, after which proceedings against his property were regular.

The rule, however, does not prevent the creditor from foreclosing any mortgage he may hold for the security of the debt; as in that case he proceeds not by virtue of, or on the foundation of, his judgment, but upon his deed; and he has the right to both remedies at the same time. It is not denied, in this case, that the plaintiff may pursue any regular remedies upon the mortgage title.

But a question arises here, whether the fact, that the body of the defendant Heath is in execution, is regularly before us, so that we can make it the foundation of a denial of any relief to which the plaintiff would be otherwise entitled.

The matter is properly in bar of the relief sought by the bill, and might form the subject of a demurrer, if it was fully set forth and apparent on the face of the bill, and there was no farther matter to control it. Story’s Eq. Pl. 346.

It has been suggested that this matter is apparent upon the face of the bill, and that the court will therefore take notice of it. But this ground of defence is one which the party may waive. The commitment of the body is not a satisfaction of the debt, but only a suspension of further remedy upon the judgment; and, at law, it would not be a bar to an action of debt on the judgment, unless brought before the court, by a plea, or brief statement. It is a good plea in bar. Cro. Jac. 595, Dyer vs. Fincham.

It may, however, well admit of some doubt, whether upon the whole matters alleged in the bill, bearing upon this point, a demurrer could be sustained here, merely because Heath had been committed. It is fully alleged, in the bill, that he was committed. It is not directly averred that he still remains a prisoner, although this may, perhaps, be inferred from the allegations that Evans became and still remains bail for Heath for the liberties of the jail; and that Evans purchased a farm within the limits of the jail yard, and Heath immediately went into possession of the same, and has lived on, and occupied it, ever since. But the bill states further, that an action has been commenced at law upon the judgment, on which Heath was committed, in which action Evans was summoned as trustee ; that he was discharged in 1836 ; and that this action is still pending in court. Whether Heath put in any plea to this last action, or whether he was defaulted, does not appear on any of these pleadings; and if the fact be that his default was entered, so that the plaintiff is,prima facie, entitled to a new judgment, it is not clear that he would not be entitled, upon the rendition of such judgment, to an execution against the property of Heath; and, upon that ground, to resort to the same remedies against his property, if there were no other objections, as if Heath had never been committed.

Where the objection is not apparent upon the face of the bill itself, if the defendant means to take advantage of it, he ought to show the matter which creates the objection, either by plea, or answer. Story's Eq. Pl. 492. And the matter of this objection, if well founded, and not obviated by the proceedings in the second suit, would seem to furnish the foundation of what is called a pure plea. Story's Eq. Pl. 504.

It seems, also, that the defendants might have insisted upon the commitment, as a bar to this part of the bill, in their answer, without pleading it in form, if the second suit has not obviated the objection. Story's Eq. Pl. 647, 8. It is not necessary to pass upon these subjects at this time.

The defendants have not demurred, nor put in a plea, nor have they in their answer stated and insisted upon the fact, that the defendant Heath has been committed, and is still held in custody, as a bar to the relief sought. They have undertaken to answer fully to the merits of the bill, without regard to this point, and have thereby waived the objection. If the defendant answers to any thing to which he may plead, he overrules his plea, for the plea is only why he should not answer; and if he answers, he waives the objection, and of course his plea. Story’s Eq. Pl. 532. In Stillwell vs. Van Epps, before cited, the objection was taken by plea. And as the debt is not extinguished, or satisfied, by taking the body in execution, the remedy against the property being thereby merely suspended, there seems to be no valid objection to the doctrine, that the party may waive that ground of defence, and shall be held to waive it if he answer without relying upon it.

Another exception taken by the defendants, is, that the discovery sought from the defendant Evans, has been met and denied by the answers, and that the bill must therefore be dismissed. Where the jurisdiction depends upon discovery, if the answer denies the matters of fact, of which discovery is sought by the bill, the latter must be dismissed, for the jurisdiction substantially fails. 1 Story’s Eq. 91.

It is true, as alleged by the defendants’ counsel, that the answers deny in terms any knowledge of the plaintiff’s mortgage, by Evans, when he made his attachment, and deny also that he has the property of Heath in his hands, to keep it from Heath’s creditors. But this is by no means a denial of all discovery in the case. The defendants have admitted divers matters charged in the bill ; have stated the time when the mortgage was executed ; the time when the attachment was made ; conveyances of property by Heath to Evans ; the consideration of those conveyances, &c. These are matters which are proper subjects of consideration, and material in the case ; and if they are of sufficient weight, and there was no other objection to the plaintiff’s case, the court might set aside the conveyances upon these admissions, notwithstanding the denial of knowledge, and of fraud. 2 Johns. Ch. R. 283, 301, Kendrick vs. Robinson. In 7 Cranch's R. 69, Russell vs. Clark's Exrs., the principle stated is that “ where the only ground of equitable jurisdiction is the discovery of facts, solely within the knowledge of the defendant, and the defendant by his answer discloses no such facts, and the plaintiff supports his claim by evidence in his own possession, unaided by the confessions of the defendant, the plaintiff should be dismissed from the court of chancery, and permitted to assert his rights in a court of law.” That does not appear to be this case ; and as the matter stands, therefore, the case is not within the rule on which the objection is founded.

It is said in Story’s Equity, treating of cases where relief is sought upon bills of discovery, that in order l! to maintain the jurisdiction for relief, it is necessary, in the first place, to allege in the bill that the facts are material to the plaintiff’s case, and that the discovery of them is indispensable as proof; for if the facts lie within the knowledge of witnesses, who may be called in a court of law, that furnishes a sufficient reason for a court of equity’s refusing its aid. The bill must therefore allege, (and, if required, it must be established,) that the plaintiff is unable to prove such facts by other testimony.” 1 Story's Eq. 91. But this is perhaps confined to bills for discovery in aid of a suit at law. The cases cited by Story, so far as I have had the means of examining them, are of that character. 1 Johns. C. R. 543; 4 Johns. C. R. 409. If these allegations were necessary, the plaintiff's bill does not contain them in the direct and specific form which the rule seems to require; but no exception has been taken on this ground. The bill alleges that the plaintiff has not an adequate remedy at law. This is believed to be the ordinary allegation in cases of fraud ; and in cases where this allegation is not sufficient, the exception ought to be regularly and specifically taken.

But this is not a case where the jurisdiction is founded on discovery merely. The general principle that complete and adequate relief cannot be had at law, in cases of fraudulent conveyances of real estate, has been recognized here. 8 N. H. Rep. 426, Dodge vs. Griswold. We have jurisdiction, therefore, in equity, by statute, independent of any alleged necessity for a discovery.

. In this case, if the levy of the defendant Evans, or any conveyance to him, is fraudulent, and the plaintiff is entitled to a remedy against the fraud, no remedy is complete, except one which gives a release, or removes the fraudulent title.

But upon what ground is it, that the court can grant the special prayer for relief, and order the defendants, or either of them, to pay the debt and costs due from Heath to the plaintiff ? There has been no suggestion of a desire for such a decree against Heath alone, nor of any ground upon which it could be predicated. The mere fact that he owes the debt, is no foundation for such a decree. The plaintiff had a legal remedy against him for its recovery, which he has pursued to a judgment. Nor does the fact, that he has fraudulently conveyed away his property, if that is proved, furnish the foundation for a decree ordering him to pay the debt and costs.

It has been contended, in somewhat general terms, that the plaintiff is entitled to this relief against Evans. It has been urged, that chancery will lend its aid to a creditor, to pursue an equitable fund, for the satisfaction of his debt, provided he cannot obtain satisfaction at law ; and that it has power to assist a judgment creditor to discover and reach the property of a debtor, which is beyond the reach of an execution at law. This was formerly doubted, but later authorities seem fully to have established the principle. 20 Johns. R. 554, Hadden vs. Spader; 4 Johns. Ch. Rep. 787, McDermutt vs. Strong; 2 Mason's R. 252, Bean vs. Smith. In citing this latter case, however, it may be proper to remark, that it must be considered as an extreme case, and, aside from the general principle involved, it may be regarded as standing very much upon its own merits. The creditor having pursued his remedy against his debtor, according to the laws of the state, and having exhausted all the remedies that the state laws gave him, brought his bill in chancery in the circuit court of the United States, to be relieved against a fraudulent conveyance of real estate, against which the courts of Rhode Island, either at law or in equity, could not aid him ; and the relief was granted upon the ground that in such case the debt should be held to be a charge upon the land, in the hands of the fraudulent grantee.

In the present case, there is no equitable fund in the hands of Evans. A question is put in the bill, whether Evans did not give Heath a promissory note for $936-91, on or about the 9th of July, 1830; and the answers admit a note of that date for the sum of $943, on which there was due, at the coming in of the answers, about $317. This is not properly an equitable fund, but a chose in action. It may, however, be subject to the same rule. In Hadden vs. Spader, 20 Johns. 554, choses in action are put upon the same ground as equitable property. It is there said that it makes no difference whether the property of the debtor consists in choses in action, money, or stock, for the court can compel the debtor or his trustee to pay it over to the creditor, and can direct a transfer and sale of the stock, for the benefit of the creditors. See, also, 1 Paige's R. 309, Beck vs. Burditt; 9 Cowen’s R. 722, Weed vs. Pierce. This appears to be sound in principle ; and notwithstanding the case, Donovan vs. Finn, 1 Hopkins’ Ch. R. 59, we have ho hesitation in adopting it; but it cannot avail the plaintiff. If may be doubted whether his bill is so formed as to reach this promissory note. It alleges no such indebtedness as a ground of relief. Nor does it set up that Evans is a trustee. There is merely an interrogatory relating to it. Waiving, however, any further consideration of this question—If the bill had been brought to reach the money which was thus due from Evans, the plaintiff must fail, on this part of the case, for another reason.

The general principle, dedueible from the authorities applicable to this case, is, that where property is subject to execution, and a creditor seeks to have a fraudulent conveyance or obstruction to a levy or sale removed, he may file a bill as soon as he has obtained a specific lien upon the property, whether the lien be obtained by attachment, judgment, or the issuing of an execution. But if the property is not subject to levy, or sale, or if the creditor has obtained no lien, he must show his remedy at law exhausted, by an actual return upon his execution that no goods or estate can be found, (which is pursuing his remedy at law to every available extent,) before he can file a bill to reach the equitable property of the debtor. 4 Johns. Ch. R. 687, McDermutt vs. Strong; Ditto 682, Williams vs. Brown; Ditto 676, Brinckerhoff vs. Brown; 5 Johns. Ch. R. 280, Spader vs. Davis & Hadden; 1 Paige’s C. R. 305, Beck vs. Burditt; 4 Paige 310, Child vs. Brace; 8 N. H. Rep. 425, Dodge vs. Griswold; 20 Johns. 554, Hadden vs. Spader; 9 Cowen’s R. 722, Weed vs. Pierce; 9 Wendell’s R. 548, 560, 561, 566, McElwain vs. Willis. The same principle seems to be recognized in North Carolina, and Kentucky. See cases cited 1 Bar. & Har. Dig. 348, 353.

It has been argued that the principle of these cases is not applicable here, because our writ of execution contains a command to the sheriff, in want of property on which to levy the execution, to take the body ; and that this creditor cannot, therefore, have such a return, if the body is to be found. But this argument cannot avail, because we recognize the right of the creditor to direct the officer not to commit the debtor. He may have a return of “no property,” therefore, if the facts will warrant it, notwithstanding the ca. sa. clause of the execution.

I do not understand that the principle, as stated in Beck vs. Burditt, is at all predicated upon the statutes of New-York, although it is there said, that such is the construction recently adopted by the legislature, in such cases. See 9 Wendell 560, 566. The principle, that where the party can obtain a lien, he may proceed as soon as his lien is perfected so as to give him an interest, and not before, and that when he cannot obtain a lien at law, he must exhaust the legal remedy, seems to present but a slight modification, or explanation, of the principle stated in some of the cases preceding Beck vs. Burditt, so as to permit the creditor to proceed against personal property which is subject to sale on execution, as soon as he has accpiired a lien.

The filing of the bill, or doing some other decisive act showing an intention of pursuing the fund, is said to give the lien on the equitable property. 9 Cowen's R. 722.

But the plaintiff does not show that he has pursued his remedy at law, so as to entitle him to come into equity against the choses in action of Heath, or against any equitable property of his. He shows no execution, with a return thereon that no property can be found to satisfy it. He does not show any attempt to pursue the property of Heath by execution. On the contrary, he shows, by his bill, that he caused the body of Heath to be arrested and committed. There is no allegation that Heath has escaped, or taken the poor debtor’s oath. If he is still in custody, which is not denied, the plaintiff can have no execution, on that judgment, on which to make a levy upon the property of Heath, or procure any such return. 3 Black. Com. 414; Cro. Jac. 595; Hobart's R. 59; 13 Johns. R. 535, Jackson vs. Benedict; 1 Paige's Ch. R. 615, Stillwell vs. Van Epps; 11 Mass. R. 320, Lyman vs. Lyman; 14 Mass. R. 447, Little vs. Newburyport Bank.

It has been said, that the plaintiff has carried the process of the law to every available extent. If by this it is meant that he has arrested Heath, and holds him in execution, so that he cannot proceed against his estate, that is not carrying the process of the law to every available extent, within the meaning of the authorities.

So long as the debtor is thus held in custody, the execution has not been carried to every available extent, because it still avails to hold him in custody. If the principle were applicable to such a case, the fact that the debtor was in custody would not be a good bar to a bill, which we have seen it is if pleaded. 1 Paige 615, and other authorities before cited.

It must, be recollected that we are now considering, not the defendants’ exception in bar of the plaintiff’s title to relief, that if his title was otherwise well made out, he could not recover, because he held the body of Heath in custody ; but we are now enquiring whether the plaintiff has shown a matter essential to his title to relief. If he asks to have equitable property, or choses in action, applied to the payment of his debt, he must, show an execution, pursued against the goods of his debtor, and returned !i no property.” This he has not shown, and he fails therefore of showing a matter essential to entitle himself to that species of relief. It is not equivalent, or sufficient, to show that he has taken the debtor in execution, and holds him without being able thereby to enforce payment; for that is the very matter which, if properly presented, instead of making out a case for relief, would constitute a bar to the bill.

And for similar reasons the plaintiff cannot sustain any title to relief, under the general prayer of the bill, against any of the sales and purchases set forth in the bill, even if they were fraudulent.

There is an allegation in the bill that Heath sold the greater portion of his personal property, by advice of Evans, to put it beyond the reach of the process of law, and that Evans purchased part of it. The advice is denied, but the sale of part of Heath’s personal estate is admitted, and that Evans purchased to the amount of $⅝44-27, which was afterwards included in the large note of $943.

And it is alleged that Evans took a conveyance of Heath’s homestead farm, for little or no consideration, to defraud and delay the plaintiff, thereby placing all his real estate beyond the process of law. The answers admit the conveyance, but allege that it was a purchase for an adequate consideration, and deny the fraud. Part of the consideration it is said was debts due to Evans, and for part he gave his notes, which were afterwards included in the large note before mentioned.

There is also a statement in the bill, that Heath made a contract with Noyes, for a farm in Hopkinton, within the limits of the gaol yard, and that although Evans was then indebted to Heath in more than $900, Heath caused the deed to be made to Evans, and he executed his note for the consideration, or nearly all the consideration of the purchase ; and that Heath went into possession, and has occupied it ever since. And the bill charges that Heath paid for the farm, and that the deed was taken by Evans fraudulently, and for the purpose of defeating the plaintiff in the collection of his demand. The answers deny that Heath contracted for the farm, or ever had any interest in the purchase, and allege that he has occupied as tenant, under an agreement to pay rent.

In relation to real estate fraudulently conveyed by a debtor, one mode of relief, in equity, is to remove the fraudulent title, either before or after a levy, so as to perfect the title acquired under the proceedings at law.

And where real estate has been purchased with the money oí a debtor, and a conveyance fraudulently taken in the name of a third person, to secure it from attachment, a creditor may levy upon it, and equity decree a release.

Perhaps in these cases the fraudulent grantee might be regarded as a trustee, and held to surrender the property, or account for its value. If the fraudulent grantee has conveyed to a bona fide purchaser without notice, and the avails are in the hands of the fraudulent grantee, he may be held as trustee, and required to account for the proceeds.

If. therefore, the plaintiff appeared to have any lien upon the real or personal estate of Heath, it might be necessary to enquire, as a matter of fact, whether the purchase of the goods, or of the farm, by Evans, was fraudulent as against the plaintiff, and whether the farm of Noyes was purchased with the money of Heath, and held by Evans as trustee. The plaintiff seems to contend for all these positions. The defendants deny them, and evidence has been taken on both sides.

But upon all these points the plaintiff’s case must fail, for the reasons, and on the authorities, before stated. He not only does not show an execution returned unsatisfied, but he does not show any judgment which can operate as an equitable lien upon real estate, and on which he could now proceed against the estate of Heath, if there was no fraudulent conveyance in the way. Whether any judgment and execution, without an attachment or levy, and without a return upon the execution, can operate even as an equitable lien, in this state, may deserve consideration. A judgment and execution here constitute no lien at law. But if, waiving this question, and supposing that a judgment, without more, might constitute a lien in equity, upon the filing of a bill, it must be a judgment capable of being enforced against the property of the debtor. It must not be a judgment which is satisfied, or on which all right to proceed farther is suspended. And the plaintiff shows no such judgment. His bill states that he obtained a judgment, and that he issued an execution ; but, it goes farther, and sets forth that he caused the body of Heath to be committed on it. If there were nothing farther showing that he is still held in custody, we could not infer that he is not. We could not presume that he had escaped, or taken the poor debtor’s oath; and the bill, therefore, if it does not show explicitly that the plaintiff’s remedy against property is barred, or suspended, does not show affirmatively, as it should do, a judgment which is in force, so that the plaintiff could proceed, if fraudulent conveyances were out of the way. On his second suit he shows that he has not yet obtained a judgment. If Heath cannot now allege his commitment in bar of a judgment in that suit, because he has omitted to plead it, still, no judgment having been rendered, and no attachment having been shown to have been made in that suit, there is no lien, legal or equitable.

The case Brinckerhoff vs. Brown, before cited, shows that this objection to the relief may be taken at the hearing. It is, as before suggested, entirely distinct from the point, taken by the defendants, that the body is still in custody; although it leads to the same result. It proceeds not upon the ground that the plaintiff shows he has his debtor in custody, and is therefore barred of relief, but that he does not show a judgment in force, upon which he can proceed against the property of Heath, nor any attachment, and for that reason is not entitled to maintain his bill as a creditor.

It is not necessary, therefore, to enquire how far the evidence tends to show these conveyances fraudulent or otherwise.

The remaining matter for consideration, is that part of the bill relating to the plaintiffs mortgage, and the attachment, by the defendant Evans, of the land included in it, after the mortgage was executed, and before it was recorded. The parties are at issue upon the question whether Evans bad notice of the mortgage, when he made the attachment, and whether the attachment and levy are therefore fraudulent as against the plaintiff.

This mortgage stands independent of any judgment or execution. Its validity, or the plaintiffs right to proceed upon it, for the recovery of the land, is not affected by the question whether the plaintiff has obtained a judgment on his note. Nor is the fact that the plaintiff has Heath in execution any bar to this right.

It has been objected that the plaintiff has elected to proceed at law, in relation to this mortgage. But the principle does not seem to apply. The plaintiff elected to proceed at law, and obtained a judgment against Evans, who commenced, and is prosecuting, a review, for the purpose of defeating that judgment. The principle of the authorities cited is, that after a verdict at law, a party comes too late with a bill of discovery. 3 Johns. C. R. 355. To this rule, however, there are exceptions. 1 Vernon, by Raithby, 177, note; 2 Story’s Eq. 180. If Evans had obtained a verdict in the first action, and the plaintiff had then come into chancery to prevent him from entering a judgment on that, and thus to procure a re-hearing of what had been tried at law, the authorities cited by the defendant would seem to be more applicable. But as the case now stands, it is as if the plaintiff had obtained possession without suit, and Evans was seeking to oust him.

But the fact that an action at law is pending between the plaintiff and Evans, may have some bearing upon the disposition which ought to be made of this case, upon this point. The review is now pending in the C. C. Pleas, the further prosecution of it having been delayed by this case. If in truth the plaintiff has obtained, by his bill, no admission of facts, that he could not otherwise prove, bearing upon the question of notice, this part of the controversy may as well be tried at law as in equity ; and the relief which could there be granted, if not as complete as that administered in equity, might perhaps answer the purpose. The matter in controversy is a mere matter of fact, and one peculiarly proper for the consideration of a jury. .

Mr. Justice Story, in considering the jurisdiction of courts of equity, states three propositions*—first, that in bills of discovery seeking relief, if any part of the relief sought be of an equitable nature, the court will retain the bill for complete relief; secondly, that in matters of account, fraud, mistake and accident, the jurisdiction for relief will generally, but not universally, be retained and favored; and thirdly, that in cases where the remedy at law is more appropriate than the remedy in equity, or the verdict of a jury is indispensable to the relief sought, the jurisdiction will be declined ; or if retained, will be so subject to a trial at law. 1 Story’s Eq. 90.

Perhaps a verdict is not indispensable in this case. This court might find the fact. But there is evidence on both sides to be weighed. Aside from the denials, in the answers, of the fact of notice, and the admissions of certain facts which may bear upon that question, there is evidence on both sides from witnesses. The case at law, turning upon this point, has been tried once or more by a jury, and there seems to be no propriety in withdrawing a question of this nature from the consideration of the jury, to have it determined by the court.

If there is discovery material to the plaintiff’s case, it is not by direct admission of notice, but of other facts which may bear upon the matter in controversy.

In a controversy about matter of fact, the court of chancery, if it have jurisdiction, may direct an issue, to try the fact by a jury. The court directs an issue for the better information of its conscience. If fully satisfied as to the evidence, they will not send it to a trial at law. Issues are frequently directed, when matters of law are mixed with matters of fact. Fonb., B. 6, ch. 3, § 6 & 7. The awarding an issue rests in sound discretion. 6 Johns. C. R. 257, Dale vs. Roosevelt; 1 Johns. Cas. 436. Where the uncertainty as to the validity of a title arises from questions of fact, it is most proper they should be tried by a jury. 1 Hopkins 449, Seymour vs. DeLancey.

We are of opinion that this is a very proper matter to be so tried. If the plaintiff has obtained any discovery, which, taken in connection with the general denial, he deems material, the court will retain the bill and direct an issue.

But if no such discovery is in fact had. the bill may be dismissed, and the parties left to their remedy at law in the suit now pending.

We will give the plaintiff his election upon this point.

The following decree was entered :

The plaintiff in this case having elected to take an issue to be tried by the jury—It is thereupon ordered and decreed, that an issue be framed upon the question, whether said Evans, at the time he made an attachment of the lands included in the mortgage from said Heath to the plaintiff, as set forth in the plaintiff’s bill, had notice that the mortgage had been executed by Heath to the plaintiff; that the issue be sent to the court of common pleas for trial, to be tried by a jury ; and that the verdict thereon be certified to this court. And it is further ordered, that the parties upon the trial of the issue may use the bill and answer, and any evidence legally taken to be used on the hearing in chancery, and also such other and further evidence as may be legally offered upon the trial of said issue at law ; and that the plaintiff’s bill be retained for further proceedings in the premises.