G. H. & San Antonio R. R. Co. v. McDonald

Bonner, Associate Justice. This appeal is prosecuted by the Galveston, Harrisburg & San Antonio Railway Company only. The other defendants below, the trustees of the sold out Buffalo Bayou, Brazos & Colorado Railroad Company, do not complain of the judgment below; and it does not appear that there are any other creditors of this last named company whose rights can be affected, than Mrs. Louisa McDonald, the appellee. The case as thus presented does not demand that we pass upon a question raised in the briefs of counsel, that the interest of the sold out company in the lands sought to be subjected to the judgment lien of Mrs. McDonald, being held in trust for the benefit of the creditors and stockholders generally of the sold out company, is not subject to such lien. It will not be questioned but that the rights of Mrs. McDonald have priority over those of the stockholders. Good v. Sherman, 37 Tex., 660. The ground upon which the reversal of the judgment below is sought, arises upon the overruling of the general demurrer of appellant, the defendant company, to the petition of Mrs. McDonald; and as stated by counsel for appellant, presents but this simple question: Was any cause of action shown against the company? This question will be considered in two aspects: first, the right of Mrs. McDonald to recover a monied judgment against the defendant company; second, her right to join this company with the trustees of the sold out company in a proceeding to subject the lands to sale for the payment of her judgment against these trustees. I. Equity will, in a proper case, aid a judgment creditor, when he cannot otherwise obtain satisfaction of his debt by the ordinary legal remedies. Freeman on Executions, §§ 424-5. [516] As a general rule, where a third party is indebted to the judgment debtor, or has in his possession property or effects of the debtor, the law affords an adequate remedy by garnishment. The statutory remedy by garnishment, however, is a legal one, and ordinarily contemplates only such rights, credits and effects as are of a legal nature, and which are not incumbered with the embarrassments thrown around trust estates; and when they are thus involved, as in this ease, a proceeding in equity would be the more appropriate remedy. Lackland v. Garesche, 56 Mo., 267; Thomas v. Hopper, 5 Ala., 442. There was no direct privity of contract between Mrs. McDonald and the defendant company, and she could not, in a court strictly of common law jurisdiction, have recovered judgment in suit against the company alone. The proceeding in this case is substantially an appeal to the equity power of the court to aid her to subject the assets of the sold out company, represented by the trustees, in the hands of the defendant company, to the payment and satisfaction of her original judgment. Both the trustees of the sold out company and the defendant company were made parties. The record does not disclose that there are other creditors of the sold out company, or but that all the necessary parties were before the court. As said on this subject in Hendricks v. Robinson, 2 Johns. Ch., 297: “The bill here was not only silent, but there was no plea or answer in the original suit setting up any other subsisting judgment.” To the same effect is Good v. Sherman, 37 Tex., 660. On the trial, the defendant company admitted that it was indebted to the trustees of the sold out company, for the benefit of its creditors, an amount sufficient to pay Mrs. McDonald; and the rights of the defendant company were protected by the decree itself, in which it is adjudged that any amount paid by it should be a credit upon this indebtedness. These trustees, whom it is proper to presume are desirous [517] to discharge their duties as such, do not complain at the judgment; no creditor complains, and it is not believed, under the facts as presented by the record, that the defendant company has any legal ground to complain of this monied judgment against it. II. As to the right of Mrs. McDonald to join the defendant company with the trustees of the sold out company, in a proceeding to subject the land to the payment of her judgment. As before stated, it does not become necessary, as between the parties to this appeal, to determine whether Mrs. McDonald had, or could have, a judgment lien on this land, as this part of the judgment is not properly before us for revision. It is a sufficient answer to any alleged error therein, urged by appellant, to say that as presented it does not appear that the rights of appellant are in any way affected. Mrs. McDonald’s original judgment in terms simply adjudged in her favor the amount of the indebtedness, without ordering execution to issue, upon the ground, we presume, that in the opinion of the learned judge presiding, payment could only be made in the regular administration by the trustees of the trust estate. Execution seems, however, to have been issued and returned nulla bona. Years pass away. The debt is not paid, and it does not appear that the trustees have instituted any proceedings or used any diligence to discharge the trust. As thus presented, we are of opinion that this suit could be maintained as one in the nature of a bill in equity to compel the trustees to proceed by subjecting the trust property to the payment of Mrs. McDonald’s judgment, the same being trust indebtedness, and to which the defendant company, being in the possession of the land and having the legal title thereto, would be a necessary party. Freeman on Ex., §§ 424-5; Edgell v. Haywood, 3 Atkyn, 357; Edmonson v. Lyde, 1 Paige, 637; Adm’r of Bigelow v. Cong. Society, 11 Vt., 286; Haden v. Spader, 20 Johns., 554; Hendricks v. Robinson, 2 Johns. Ch., [518] 383; Hopkins v. Carey, 23 Miss., 59; Beck v. Burdett, 1 Paige, 308. There is another ground upon which the jurisdiction of a court of equity could be sustained,— that of removing impediments to the sale of the property at a fair valuation. Freeman on Ex., § 424; Dargan v. Waring, 11 Ala., 993; Holt v. Bancroft, 30 Ala., 205. The legal title to the lands was in the defendant company, and the equitable title to the half in the trustees had been so incumbered with trusts for the benefit of creditors generally and stockholders of the sold out company, that the sale for the benefit of Mrs. McDonald only, unless made under order of court, might not have brought the full value of the lands. Affirmed. [Opinion delivered June 22, 1880.]