Tommey & Stewart v. Ellis

By the Court— BROWN, C. J., delivering the opinion. • The bill in this case shows that Hammett is insolvent and that Tommey and Stewart had purchased Orr’s interest in the partnership business, and had given him an obligation to indemnify him against all the debts of the company. Tommey and Stewart are, in fact, therefore, the real parties at interest, and the parties who must pay the judgment in favor of Ellis against the firm of Hammett, Orr '&■ Company. They averred in their bill that they held judgments against Ellis and another, for a larger sum than the amount of his judgment against them, which were dormant when the bill was filed, but as is shown by an amendment to the bill, had been revived since the original was filed. They also allege that Ellis has taken the benefit of the homestead and exemption law, which covers all his property and leaves nothing subject to the payment of their judgments against him, and that they will be remediless if he is permitted to enforce his judgment against them. And they pray that the one judgment may be set-off in equity against the other, till' the judgment Ellis holds against them is satisfied. The Judge granted an injunction, restraining Ellis from enforcing his judgment against the complainants, till further order. Ellis then filed his answer, and set up a sale of the judgment to Col. Clark, in payment of fees, etc., and denied the right of the complainants to the relief sought. A motion was then made to dissolve the injunction, and a general demurrer was filed to the bill for want of equity. On the hearing of this motion the Judge ordered the bill dismissed, and upon that ruling error is assigned. 1. While the facts do not make a case of legal set-off, we think an equity springs out of them which entitles the complainants to relief. Ellis is in effect legally insolvent when he takes the benefit of the homestead and exemption [263] law, *which covers all his property and exempts it from the payment of his debts. In such case' it would be grossly inequitable and unjust to allow him to enforce his judgment against the complainants, when he will not pay the judgment which they hold against him, and there is no legal mode of compelling such payment. 2. The bill expressly waives an answer, and as the answer in this case sets up the equities of a third person against the complainants’ right to relief, the defendant should have been held to prove his allegations on the trial. When a general demurrer to the whole bill for want of equity is filed, the Court must decide it upon the case made by the bill, and noil by an examination of the answer. Judgment reversed.