J. H. Johnson & Co. v. Heidenheimer

Robertson, Associate Justice. A fraudulent diversion of a debtor’s property maybe as effectively, and is as frequently, accomplished by a collusive suit as by a direct transfer, and both means are denounced by the statute in the same terms. R. S., art. 2465. To prevent the illegal result of such suits, a subsequent attaching creditor is permitted in our practice to intervene in the case and protect his interest in the attached property, by showing that the plaintiff’s demand is fictitious. Kenny v. Schulter, 62 Tex. 328. This right of intervention is the form the creditor’s remedy in equity takes in our blended system. He will be entitled to intervene in the prior attachment suit whenever he would be entitled in equity to question the validity of a transfer of the goods attached, made by the debtor to the plaintiff in attachment. Of course, the intervenor must aver the existence of all the conditions entitling him to the remedy he seeks. Whether the insolvency of the debtor is one of these conditions, depends upon the intervenor’s interest in the property charged to be fraudulently attached. If he has no interest in the particular property, he has no right to interfere with his debtor’s disposition of it, unless he shows that he has no other means of satisfying his demand. His right in equity depends upon the absence of all legal remedy, and he is generally required to illustrate his situation, by an exhaustion of his legal remedies—the prosecution of his claim to judgment and the issue and return of an execution barren. But if he has a lien upon the particular property, as by subsequent attachment, the jurisdiction of equity and his right to intervene are not dependent upon the absence of a remedy at law, but upon the existence of an independent right— a lien—a favorite of chancery. The general creditor loses no right, legal or equitable, by the misappropriation of his debtor’s property as long as enough remains to satisfy his demand. But the lien creditor has a right to be satisfied out of the thing charged with his debt, and that right is improperly defeated by any wrongful diversion of the thing. The subject of the lien is his primary source of satisfaction, and, to entitle him to proceed against it, it is not necessary that he should show that no other source exists. The attachment secures to the creditor such lien as entitles him in-equity to have all obstructions to its fair fruition removed, (Ward v. McKinzie, 33 Tex. 297; note 4 to sec. 1415 of Pomeroy’s Eq.) and the creditor having a [267] lien upon the property he seeks to disencumber need not aver that the debtor is insolvent. We do not consider the case of Grabbenheimer v. Rindskoff (5 Tex. Law Bev. 263) in conflict with, these views. The issues of fraud in the prior attachment having been disposed of adversely to the intervenors in that case, the only controversy left was as to the priorities between individual and firm creditors, and it was held that the firm creditors had no superior right, unless the partnership was shown to be insolvent—that, unless insolvent, the partnership assets do not constitute an equitable fund charged with the payment of partnership debts. The omission of the averment of the debtor’s insolvency in the appellant’s petition of intervention was not a defect—the demurrer, which was sustained, should have been overruled, and the judgment dismissing the petition of intervention was error, and is reversed and the cause remanded. Beversed and Bemanded. [Opinion delivered January 15, 1886.]