Page images
PDF
EPUB

to have a paramount lien upon all the lands and premises described in the bill; that the same may be ordered to be sold to satisfy the decree for the payment of money prayed therein, and for such other and further relief as shall be deemed just and equitable. The bill was demurred

to for want of equity.

Stark & Sutherland, for complainant.

E. S. Bragg, for defendants.

DYER, J. As is apparent from the foregoing statement of facts, the object of this suit is to enforce contribution between sureties, and, in aid thereof, to obtain a decree setting aside certain conveyances of property made by the defendant Robert A. Baker, which are alleged to have been fraudulent, so that such property, or its proceeds, may be applied in payment of Baker's contributive share of the judgment recovered by the city against the sureties of Pierron.

In support of the demurrer, the point is made and strenuously urged that, as to the defendant C. Estelle Baker, this is a creditors' bill, and that, as to the property conveyed to her, the complainant is not entitled to the relief he seeks, because it is not alleged in the bill that he has recovered a judgment at law against Robert A. Baker upon which execution has been returned unsatisfied. It is insisted that the complainant must first exhaust his remedy at law against Baker, before he can come into a court of equity and invoke its aid for the purpose of avoiding the alleged fraudulent conveyances; and that the allegation of Baker's insolvency does not answer the requirements of the rule on the subject, as applied to creditors' bills, or bills for relief against fraudulent transfers of property. The law is well settled that the right of a creditor to pursue specific real property alleged to have been fraudulently conveyed by the debtor, to obtain satisfaction of his debt, depends upon the fact of his having exhausted his legal remedy by the recovery of a judgment, and return of execution unsatisfied. The proposition has become so far elementary that authorities in support of it need not be cited. If, therefore, this were a creditors' bill, pure and simple, or merely a bill by a creditor at large to set aside fraudulent conveyances, the point made by the demurrer would be unanswerable. But the bill embraces other matters clearly cognizable in a court of equity. It is a bill by one surety to compel contribution by a co-surety, and, as supplementary to the main purpose of the bill, relief is sought against certain conveyances of real estate, to the end that the property conveyed may be ultimately reached to satisfy such liability to contribution by the co-surety as may be established by final decree. As is said in Mason v. Pierron, 63 Wis. 244, 23 N. W. Rep. 119:

"Actions to enforce contribution between sureties, and to subrogate a surety who has paid the debt of the principal debtor to the securities and rights of the creditor, are constantly sustained by courts of equity, and have been from the earliest times."

The enforcement of contribution between sureties is a recognized subject of equity jurisdiction. "The ground of relief does not," says Story,

(section 493, Eq. Jur.,) "stand upon any notion of mutual contract, express or implied, between the sureties to indemnify each other in proportion; but it arises from principles of equity, independent of contract." In Stirling v. Forrester, 3 Bligh, 590, Lord REDESDALE said:

66

The principle established in the case of Dering v. Lord Winchelsea, 1 Cox, 318, is universal, that the right and duty of contribution is founded in doctrines of equity. It does not depend upon contract. If several persons are indebted, and one makes the payment, the creditor is bound in conscience, if not by contract, to give to the party paying the debt all his remedies against the other debtors. The cases of averages in equity rest upon the same principle."

Where the legal remedy is adequate, a court of law has concurrent jurisdiction with that of a court of equity in cases of contribution. "But still," says Story, (section 496, Eq. Jur.,) "the jurisdiction now assumed in courts of law upon this subject in no manner affects that originally and intrinsically belonging to equity. Indeed there are many cases in which the relief is more complete and effectual in equity than it can be at law; as, for instance, where an account and discovery are wanted, or where there are numerous parties in interest, which would occasion a multiplicity of suits. In some cases the remedy at law is now utterly inadequate; as, if there are several sureties, and one is insolvent, and another pays the debt, he can, at law, recover from the other solvent sureties only the same share as he could if all were solvent. Thus, if there are four sureties, and one is insolvent, a solvent surety who pays the whole debt can recover only one-fourth part thereof (and not a third part) against the other two solvent parties. But in a court of equity he will be entitled to recover one-third part of the debt against each of them; for in equity the insolvent's share is apportioned among all the other solvent sureties. Where two are bound for the payment of a specific sum, and one pays the whole, he can, either in law or in equity, call upon the other to contribute, and thus recover a moiety of what he had paid." Will. Eq. Jur. 107. See, also, 3 Pom. Eq. Jur. §§ 1416, 1418, 1419, and notes. This being the law on the subject of jurisdiction in equity in cases of this character, it follows that the complainant could properly file his bill on the equity side of the court, to enforce contribution by his co-surety, the defendant Robert A. Baker. As the case is one, so far as it seeks to compel contribution, of which a court of equity has undoubted jurisdiction, it could be rightfully brought here in the first instance, even though it may be a case of which a court of law has concurrent jurisdiction. If, then, original relief in equity may be rightfully sought by the complainant to compel Baker to pay his contributive share of the judgment recovered by the principal creditor against all the sureties, why may not the complainant, as an incident to such relief, or as supplementary to it, and in order to satisfy a demand properly enforceable in equity in the first instance, upon averments of Baker's insolvency, reach property which it is alleged Baker has caused to be fraudulently conveyed to his wife? To hold that he cannot, for the reason that he must first exhaust his legal remedy against Baker, is in effect to deny to the com

plainant the right in the first instance to bring his suit in a court of equity to compel Baker, as a co-surety, to pay his contributive share of the indebtedness of all the sureties to the city. If the complainant, without having brought a suit at law against Baker, has the right to institute an original proceeding in a court of equity to enforce the payment by Baker of his alleged contributive share of the liability which all the sureties have incurred, then it must follow that he has the right in the same proceeding, upon alleging and showing that he cannot otherwise collect his demand against his co-surety, to pursue the property of that co-surety which it is alleged has been fraudulently conveyed to a third party, who is made a defendant in the suit. That part of the relief sought which relates to the application of certain property to the satisfaction of the complainant's demand because of the alleged insolvency of Baker, may be said to be incidental to the principal recovery prayed in the bill; and, as a court of equity has jurisdiction to grant the principal relief asked, without reference to the fact that a court of law may have concurrent jurisdiction, it may proceed, upon suitable allegations made, to dispose of the whole controversy.

From what has been said, it seems to the court quite apparent that there is a well-founded distinction between a suit of the nature of thiswhich is one to determine the sum which the defendant Robert A. Baker ought to pay his co-surety, and to enforce the payment thereof-and a creditors' bill brought to enforce a liability already established in a suit at law. As bearing on the question decided, see Mason v. Pierron, 63 Wis. 239, 23 N. W. Rep. 119, and Smith v. Rumsey, 33 Mich. 183. Demurrer overruled, with leave to the defendants to answer the bill.

FRANKENTHAL et al. v. GILBERT et al.

(Circuit Court, S. D. Mississippi, W. D. January Term, 1888.)

1. FRAUDULENT CONVEYANCES-TAKING TITLE IN WIFE'S NAME-AGREEMENT WITH CREDITORS.

An insolvent trader sold the whole of his estate to certain of his creditors for the amount of their debts, and certain others which they assumed, the total exceeding the value of the estate. The creditors immediately took possession, and managed the business for a few days, after which one of their num ber bought out the others, and sold the estate to the insolvent's wife, for cash and promissory notes. She then went into possession, under her own sign, employed her husband, but without salary, with others as assistants, and eventually paid off the notes. Held, that although the wife was not shown to have any separate estate prior to the purchase by her, there was no fraud. 2. HUSBAND AND WIFE-LIABILITY OF WIFE'S ESTATE - DEBTS OF HUSBANDDECLARATIONS TO COMMERCIAL AGENCY.

In a creditors' suit against an insolvent's wife to subject property in her hands to the payment of their debts, statements of the husband as to his financial condition made at periods antecedent to his insolvency, to a commercial agency, cannot defeat the rights of the wife, unless participated in by her.

In Equity. Creditors' bill.

Shelton & Crutcher, for complainants.

Miller, Smith, & Hirsch, for defendants.

HILL, J. The bill, in substance, charges that the complainants were, before January, 1885, creditors of said Phil Gilbert; that at that time said Gilbert was the owner of two stores in the city of Vicksburg, in which were $24,000 worth of goods and merchandise, besides the onehalf owner of a stock of goods at Fitler's landing, in Issaquena county; that on the 21st day of January, 1885, said Gilbert, for the expressed consideration of $8,739.45, and the agreement to pay certain taxes due by said Gilbert, and other indebtedness, amounting to the sum of $358.45, by an instrument in writing, purporting to be a bill of sale, conveyed all of said goods, and the interest of said Gilbert in the store at Fitler's landing, to Baer & Bro. and others; that on the 10th day of February thereafter said Baer & Bro., and others made a pretended sale of said stock of goods and merchandise, and the interest of said Gilbert in the stock of goods at Fitler's landing, to the defendant, Cecilia Gilbert, wife of said Phil Gilbert, for the pretended sum of about $6,000; that said Phil Gilbert remained all the time, and is still, in the possession of said stocks of goods and merchandise unsold, and is carrying on said business in the name of his wife, but in fact for his own benefit; and that said sales and transfers were made with a fraudulent purpose to defeat the complainants, and other creditors of said Phil Gilbert, in the collection of their debts, and are therefore void; and prays that the defendant be declared a trustee for the complainants, and other creditors of said Phil Gilbert, as to said stocks of goods, and their proceeds, and for a decree against said Phil Gilbert and wife for the amounts due them. The answers deny all the fraud charged in the bill, which throws the burden upon complainants to prove the same. I have considered the evidence, and from it find that the sale made to Baer & Bro. and others, on the 21st of January, 1885, was in payment of debts due these creditors, and the debts assumed by them, which amounted to more than the value of the goods and merchandise in Vicksburg. The proof also shows that the stock of merchandise in the store at Fitler's landing was not of sufficient value to pay the debts owing by that firm. I further find from the evidence that when the purchase was made by Baer & Bro. and others, on the 21st of January, the purchasers went into immediate possession, and by their agent continued to sell off the stock until the 10th of February, when the sale was made to Mrs. Gilbert by the agent for one of the creditor firms, who had before that time purchased the interest of the others at a large discount; and that Phil Gilbert had had nothing to do with the business after his sale until the purchase in the name of his wife, so that I am satisfied that the sale from Phil Gilbert to these creditors was a valid sale, and passed to them a good title, and there is no evidence that there was any fraud on their part in the sale to Mrs. Gilbert. It is contended, however, on the part of complainants, that the sale to Mrs. Gilbert was really a sale to Mr. Gilbert, and that the title was taken in her name to defraud his creditors, and to prevent them from

subjecting these goods to the payment of their debts, and this question is the only point in the case that need be considered. The proof shows that the contract of purchase was that Mrs. Gilbert was to pay $400 in · cash, give her note for $2,907, indorsed by a solvent indorser, and give her 12 notes, without indorsement, for equal amounts, and falling due at the end of each month, the payment of the indorsed note to be secured by a trust deed on the stock which was consummated by the payment of the money, which Mrs. Gilbert borrowed, and the execution and delivery of the notes and trust deed, according to the contract. Mrs. Gilbert immediately went into possession of the goods, under her own sign, and by her husband, son, and daughter, and other clerks employed, has since continued the business, and, though not promptly, has paid off the notes.

It is contended for complainants that as Mrs. Gilbert is not shown to have had any means of her own with which to make the purchase, that she could not borrow the money, or buy on credit, and that Gilbert, being employed in the business without any contract for wages, the proof showing there was not any agreement for wages, or any paid, other than that he obtained his support, and the contribution to the support of his family, by his services. Our statute completely emancipates married women from all marital disabilities as to their personal rights and liabilities as though they were unmarried, enables them to borrow money, purchase property on a credit, and carry on in their own names any lawful business, and makes them liable for all their contracts, and subject to a personal judgment as though unmarried. It often happens that friends of the wife are willing to aid her in procuring the means of support for herself and family in case of the inability of her husband to do so, from any cause, to loan her money, sell on a credit, or indorse her paper, and this with the expectation that she will be aided in the management of her business by her husband, whose first duty is to provide for the support of his wife and children, including the education of his children. This may well be done without any fraud or injury to the husband's creditors, provided the husband does not reserve to himself any interest in the property, or the income of the business, beyond his own support and necessary personal expenses. There is no obligation upon his wife to support and maintain him so long as he is able, by his own labor, to support himself. Applying these rules, sanctioned by the laws of this state, I am unable to find, from the evidence, the fraud charged in the bill sufficient to declare Mrs. Gilbert to be the trustee for the creditors of her husband, as prayed for in the bill. Counsel for complainants rely very much upon statements made by Phil Gilbert to the commercial agency as to his financial condition, some time before the sale to his creditors, for the relief prayed for in the bill. While this evidence might be of weight, upon an attachment issue, as grounds therefor, it cannot defeat the rights of Mrs. Gilbert, unless participated in by her. The purchasers from Gilbert, having obtained a good title, could convey it to another, although that other knew that the sale upon the part of Gilbert was made with the design to defeat his creditors, had such been the case; but the

« PreviousContinue »