Clark v. Douglass

The' opinion of the court was delivered, by Sharswood, J. All the assignments of error may be considered together, as they rest upon the same principle. [414] Julius Degmier was a deputy collector of Federal internal revenue for the Nineteenth Collection District of this state, appointed by John W. Douglass, the principal collector. It was found that he had embezzled a considerable sum of money, for which the principal was responsible to the government. He and his wife executed a mortgage of her estate in due form in the sum of $15,000, to secure Douglass from this liability. The'amount of the defalcation had not then been ascertained. A scire facias was .subsequently issued on this mortgage, the amount due upon it liquidated by the agreement of the parties, and judgment confessed for the sum so ascertained. A levari facias was issued, and the mortgaged property sold by the sheriff. The plaintiffs then applied to the court by petition, alleging that all that was really due on the mortgage was $3316.72, with interest, and as to the balance of the judgment, that it was fraudulent and void; and that by reason of the attempt of Douglass fraudulently to enforce the collection of the whole amount, and thereby to hinder, delay and defraud the petitioners in the collection of their several debts, he, the said'Douglass, had postponed his judgment until the petitioners were paid, and thereupon prayed an issue to try how much of the proceeds of the sheriff’s sale, if any, could be legally applied to the payment of the judgment in question. The court granted the prayer of the petition. No formal issue, however, was framed. A declaration was filed in assumpsit for goods sold and delivered, work and labor done, and the common money counts, instead of the old and approved form of a count upon a wager, in which the precise question to be tried is stated, and if the parties cannot agree, settled by the court. The loose practice adopted in this case is much to be reprobated. The declaration filed might as well have been a blank sheet of paper. We are driven, then, by necessity, to discover, if we can, from the petition and order of the court upon it, what was the issue awarded. The jury was impannelled to try and determine that issue — what it was in fact, not what it ought to have been. On a writ of error to a judgment on a feigned issue — being on an interlocutory and not a final decree — we cannot revise the order granting the issue, but have only to decide upon the rulings and charges of the court below in reference to it. Taking the petition as our guide, we think the question intended to be submitted to the jury evidently was, whether the judgment on the mortgage was fraudulently confessed for more than the amount honestly due, for the purpose of hindering, delaying and defrauding the petitioners and other creditors. No other issue could properly have been awarded; for it is clear, and now fortunately well settled, that the petitioners had no right to attack the judgment collaterally upon any other ground. It was not a void judgment, for even as to the wife, the mortgage upon which the scire facias issued had been duly exe [415] cuted and acknowledged by her according to law. It was voidable, by strangers to it, only for fraud upon them, leaving it of course still a valid judgment as between the parties. The remedy of the defendants in the judgment was a motion to open it and be let into a defence upon the merits. This creditors could not do in a collateral proceeding, unless upon the ground of collusion: Dougherty’s Estate, 9 W. & S. 189; Thompson’s Appeal, 7 P. F. Smith 175. In Gates v. Johnston, 3 Barr 52, upon a writ of error to the judgment on the feigned issue, the question was not upon its effect, nor upon whether it was rightly framed, but only whether such as it was, it was rightly tried. Gibson, C. J., however, remarks in his opinion that the form of the issue was wrong, and that it ought to have been whether the judgment was collusive. So in Greene v. Tyler, 3 Wright 361, which was also a writ of error on a judgment in a feigned issue, the only matters properly before the court were the exceptions taken below on the trial. The effect of the verdict on the distribution of the fund was a subsequent and different question. The remarks of Mr. Justice Woodward are to be construed in this light, and the syllabus of the reporter truly expresses all that was really decided by the court. Nor is Benson’s Appeal, 12 Wright 159, in conflict ; for there the only question was, whether an issue ought to have been granted on an allegation by creditors that the judgment was confessed for a larger sum than was due. No point was made as to what ought to be the form of the issue — that was to be settled by the court below. A judgment confessed voluntarily by an insolvent or indebted man for more than is due is primfl facie fraudulent within the statute of 13 Eliz. c. 5. It is somewhat remarkable that in none of these cases was Dougherty’s Estate cited or referred to by counsel or court, although Gibson, C. J., evidently had it in his mind in Gates v. Johnston. It is not necessary here to vindicate the law, as now finally settled in Thompson’s Appeal, in which, as the question arose in an appeal from the final decree of distribution, the propriety of the award of the issue, and the legal effect of the finding of the jury, were directly involved. That law is the logical and inevitable consequence of the conclusive effect of the judgment of a court of competent jurisdiction. In distributing the estate of an insolvent, no doubt, creditors may take any objection against the claims of other creditors which the debtor himself could, and even as against a judgment, may show whatever the defendant could set up in debt, or scire facias upon it. There is no difference in legal effect between a judgment confessed, or for want of appearance or plea, and a judgment on the verdict of a jury. The court in which the judgment is rendered will indeed open one of the former kind, and let the defendant into a defence in a proper case, and upon equitable terms. Even as to a judgment upon a verdict, no doubt [416] creditors could attack it collaterally by evidence that it was taken by consent or default, or that the defence set up was a sham. That of course could only be on the ground of collusion. Now if Degmier and wife in this instance had pleaded, and gone to trial on the question of how much was due on the mortgage, and the verdict of the jury had been for the full amount, no one, I think, would pretend that the creditors would have any right, in law or equity, to have that question tried over again, unless on the ground that the first trial was collusive and fraudulent, as to them. The statute 13 Eliz. c. 5, has been said to have been declaratory, and to have done nothing which the common law would not have done without it, but we must at least receive it as a true and accurate declaration of what the law was. It declares void “ feigned, covinous and fraudulent judgments when devised and contrived of malice, fraud, covin, collusion or guile, to the end, purpose and intent to delay, hinder and defraud creditors.” No doubt, creditors might showjhat a debtor, who had a good defence and ground for opening a judgment confessed, or by default, pertinaciously and wilfully refused to make application or allow his name to be used for that purpose; for it would be very cogent evidence that if the original judgment was not collusive, it was kept on foot for the purpose of defrauding them. Indeed, I am not sure that a court, in the exercise of their equitable powers, would not, in such a case, allow the creditors to come in, open the judgment and take defence in the name of the defendant. Such appears to have been the opinion of Chief Justice G-ibson. “ Creditors,” says he, “ can attack a judgment collaterally only for collusion, not for matter of defence, original or subsequent. A debtor or his representative may have a judgment against him opened on ground laid, and when let into a defence on the merits reduce or discharge it; nor will I say that if he were to refuse to move for the benefit of his creditors they would not be permitted to move in his name. An insolvent man is not suffered to give away his property by means of a judgment, which, though proper at first, has become a security for less than the amount of it; but, while it - stands as a debt of record, unabated in whole or part, neither the sheriff nor an antagonist creditor - can resist the enforcement of it as a lien:” Lewis v. Rogers, 4 Harris 21. Nothing can be more just, consistent and symmetrical than the system of administering the law here indicated; for while it gives a remedy for every wrong, it saves the records of the court from the strange anomaly of a judgment found by the verdict of a jury to be a fraud upon the defendant, and yet standing as a perfectly valid security, which can be enforced against him. Besides this, I may mention that, according to the rules of evidence which existed before the passage of the late Act of Assembly making parties competent witnesses in their own favor, gross injustice [417] might be done if issues were awarded to try whether judgments were valid as against the defendants themselves, in which the creditors, and not the defendants, are made the parties. To allow a judgment to. be attacked collaterally, on the ground that the defendant, himself had been defrauded, would be to permit him, under the wing of a favored creditor, to set it aside by his own testimony, when the mouth of the plaintiff was closed. For even upon that collateral issue it was held, in Ferree v. Thompson, 2 P. F. Smith 353, that the debtor was a competent witness for the contesting creditors, although the contesting judgments might not take the debtor’s property. Considering, then, the issue in the court below to have been in form such as it ought to have been on the petition and order, if it had been regularly framed, it is clear that no error was committed by the learned judge below, either in the rulings, answers or charge, of which the plaintiffs have any right to complain. The jury were instructed that if they believed that Degmier confessed the judgment for ipore than was due, with the corrupt intention of encumbering the property in order to hinder, delay or defraud his other creditors, then their verdict should be for the plaintiffs. As the -verdict was for the defendant generally, it is unnecessary to consider whether the court was right in charging that if they found that the judgment had been fraudulently confessed for too much, they should, nevertheless, find for the defendant in the issue, and plaintiff in the judgment, the amount which was actually and honestly due to him. Judgment affirmed.