2 Wash. 172 | Wash. | 1891
Lead Opinion
The opinion of the court was delivered by
— This is a suit in equity in the nature of a creditors’ bill, brought by the plaintiffs in error in their own behalf against the defendants to obtain relief by having various conveyances, executed by the individual defendants E. D. Yan Wagenen, C. E. Sackett, and William Page to their wives, set aside, canceled, and decreed to be fraudulent and void as against creditors. To this bill certain of the defendants, among them E. D. Yan Wagenen and wife, C. E. Sackett and wife, and William Page and wife, demurred. It appears by the bill of complaint demurred to that the defendants E. D. Yan Wagenen, C. E. Sackett, and William Page were copartners in trade under the firm name of the Buckley Lumber & Shingle Manufacturing Company, and as such copartners had become indebted by notes and accounts at different times to the plaintiffs, respectively, in different amounts. That said copartners owned property, both real and personal, as co-partners, on the 22d day of January, 1890, at which time they executed and filed application to the superior court of Pierce county as “insolvent debtors” for a discharge from their debts, and made and delivered therewith an assignment of all their property; and an order staying all proceedings upon the part of their creditors was thereupon duly made by the court, and the usual order to show cause was made by the court and published, and a receiver to take charge of the property was duly appointed. After-wards, upon application of the plaintiffs severally applying, said superior court set aside the stay of proceedings pre
The grounds of demurrer alleged were “that the court had no jurisdiction of the persons of defendants or the subject-matter of the action; that there was another action pending between the same parties for the same cause ; that several causes of action were improperly united in said complaint; that the plaintiffs had no legal capacity to sue ; that there was a defect of parties defendant; that the complaint did not state facts sufficient to constitute a cause of
The constitutionality of the insolvent act is questioned in appellant’s brief, but was practically abandoned in the oral argument of the case. No sufficient reason appears for pronouncing the law unconstitutional.
It is contended by appellees that an attachment lien before judgment is not a sufficient basis for an action in the nature of a creditors’ bill. On the other hand, while it is conceded by appellants that formerly it was the generally recognized rule that a creditors’ bill to set aside fraudulent conveyances could not be obtained until after judgment, the issuing of execution, and the return of nulla bona, yet it is contended that the current of authorities is to the effect that a creditor having an attachment lien may maintain a creditors’ bill, especially where it is shown that he has exhausted all legal remedies; and many authorities are cited in support of both contentions. Whatever may be the law as to the general proposition, there is one element in this case that is not reached by the cases cited by the appellants; that is the question whether or not, conceding that a creditors’ bill can be maintained by virtue of an attachment lien, it can be maintained against a defendant who has surrendered his estate for the benefit of his creditors under an insolvency law similar to the insolvency law of the Code of Washington, and especially by virtue of an attachment issued in an action commenced after proceedings in insolvency have been instituted. Several cases have
’ In this state no proof is required, and no presumption obtains that the claim of the attaching creditor is a valid one, but the writ issues by the clerk upon the filing of' the affidavit and bond. It is admitted by the appellants that their only basis of action is their attachment lien, and they bring their action for the benefit of themselves and all other creditors who will join them in the action and share the expenses of the suit. Under this theory of the case, if the creditors not having attachment liens were to join them, there would certainly be a misjoinder of parties plaintiff| for those not having the attachment liens would have no legal capacity to sue in this action. On the other hand, if the creditors not having liens cannot come in, the result would be that the action of the court in allowing appellants’ attachment proceedings would result in a discrimination against all other creditors, and that, when the assets were marshaled according to the prayer of the petitioner, the divison could only he made between the creditors who were parties to the writ; and this is a result the obtaining of which the appellants in their argument disclaim. And this brings us to the investigation of a proposition lying at
Section 2033 provides that, in case after the appointment of said assignees any one of the creditors of the insolvent debtors should deem it necessary to oppose it on the ground of some fraud having been committed by the said insolvent debtor, or of the appointment not having been legally made, he shall, within ten days next following the appointment of said assignee, lay before the court or judge which has already taken cognizance of the case his written opposition, stating especially the several facts of nullity of the said appointment, or of fraud by him alleged against the insolvent debtor; whereupon, in case of accusation of fraud after having received said insolvent debtor’s answer, the court or judge shall order a jury of not less than six men to be summoned in the same manner as jurors are summoned in the district court, for the purpose of deciding on the said accusation. Section 2034 provides for the proof of the notice. Section 2035 provides that, where the accusation is fraud, the creditor shall have a chance to interrogate the insolvent debtor on his oath concerning the state of affairs, and the several transactions in which he may have been engaged anterior to his failure, as he shall think proper, and the insolvent shall answer such interrogations,
The last contention of the appellant is, that the insolvency law furnishes no remedy for the creditors, because, if
“From and after the surrender of the property of the insolvent debtor, all property of such insolvent shall be fully vested in his assignee or assignees for the benefit of his creditors, and shall not be liable to be seized, attached, taken or levied on by virtue of any execution issued against the property of said insolvent; and the assignees who may be appointed shall take possession of and be entitled to claim and recover all tbe said property.”
Language could not well be made stronger than this. When property once becomes fully vested for the benefit of the creditors, that vested right in it cannot be destroyed or affected by tbe subsequent determination of the question of the debtor’s discharge. There is no reason why it should be. He owes these debts. His exempt property has already beeu set aside by the court. He is iu no worse position than be was before the proceedings commenced; for this identical property would then have been liable to an execution of his creditors. The first thing he must do under this law is to make the assignment for the benefit of his creditors. When that is d<3ne the property is fully
Concurrence Opinion
(concurring). — I concur in the decision, and desire to say further that the bill in this case clearly set forth that the property sought to be affected by it was purchased by the partners with money fraudulently diverted by them from the partnership funds. If that is the fact, it is still, in equity, partnership property, although the legal title may have been taken in the name of the partners’ wives; and, although it was not included in the partnership schedules, the assignee can sue for and recover it for the benefit of all creditors. If the assignee, upon being put in possession of the facts, neglects or refuses to proceed, he can be compelled to proceed by the court upon the motion of any creditor. The question of discharge cannot affect the case in any way. It is very difficult to see how there can be a discharge in a case of partnership insolvency where the partners do not schedule their individual property and liabilities.