Flake v. Day & Co.

PHELAN, J. Two objections are taken in this case by plaintiffs in error, to the exercise of jurisdiction by the Chancery Court. The first is, that it is not competent for any one, but some one of the complainants, to make the oath required by the statute of the indebtedness of the defendants, and of their son-residence; because, the only words used in the statute as© the words, “ complainant or complainants, or some one of them.” This statute was evidently intended to extend the remedy by attachment in chancery for the recovery of simple contract debts, without putting the creditor to the necessity of first reducing his demand to a judgment at law. Its object was remedial, and it must receive a liberal construction. To hold that, in a matter merely formal and preliminary to the proceeding, the complainant cannot act by another, because he is alone expressly mentioned in the statute, would be inconsistent with the nature and design of the law. See Roster & Co. v. Walker, 2 Ala. 177; Murray v. Cone, 8 Porter 250. We have a general statutory declaration that the “ attachment law of this State shall not be rigidly construed.” Clay’s Dig. 59, § 17. The act of February 5, 1846, comes fairly within the scope of this declaration. The next objection taken is, that the facts of the case do .not bring it within the scope of the jurisdiction, that being strictly a statutory jurisdiction. The latter proposition is «©needed. Let us, then, examine what is the true construction of the statute, that we may determine whether the facts of the case set forth in the bill bring it within this statutory jurisdiction. — 146 — The object of tbis statute of February 5, 1846, (Acts of 1845-6, p. 17) beyond doubt, was to enable creditors to avail themselves of the process of attachment by suit in chancery for the recovery of debts against “ non-resident” and “ absconding” debtors, and such as were “disposing of their property with fraudulent intent,” without being subjected to the delay occasioned by the rule always enforced previously, which required that the creditor should reduce his demand to a judgment at law, when it was a demand properly cognizable by the courts of law, before he could invoke the aid of a court of chancery. This was manifestly the chief end in view at the passage of that act. The statute says: “ That when any person or persons, who are non-residents of this State, have any real or personal property of either a legal or equitable nature, or any choses in action within this State, or when any person or persons within this State, whether residents or not, are indebted to any person or persons who are non-residents as aforesaid, and the latter named non-residents shall be indebted to any citizen of this or any other State or States, it shall be lawful for such last named creditor or creditors,'without having first obtained a judgment at law, to file a bill in chancery to have said real or personal property, choses in action and debts attached.” The second section enacts, that when debts, or choses in action or effects are attached, the debtor or the person holding in his possession any chose in action shall be made a defendant to the bill. The third section extends the provisions of the act to absconding debtors, and such as are disposing of their property fraudulently. Such are the main provisions of the statute. What, we will next inquire, are the facts alleged in the bill ? They are briefly as follows: Day & Co. set forth, that Webb & Co. were indebted to them, and that judgment had been rendered in their favor in Georgia for $838 in 1847 against Webb & Oo.; that James M. Webb, one of the partners of Webb & Co., was conducting a branch of the partnership business at Grlenn-ville, Alabama, in the year 1846, and that some time in that year, (the proof shows it was after February 5, 1846,) the defendants, Flake & Freeman, by exciting the fears of said — 147 — James M. Webb, and with intent to defraud the creditors of Webb & Co., purchased out the whole of the stock of goods and the notes, accounts, &c., in his possession, for a very inadequate price; that in this way they got a stock of goods worth from §1500 to $2000, and from $500 to $800 worth of notes and accounts, for the sum of $1000, for which they gave their note payable in thirty days; that the Webbs, finding out in a short time that the representations made by Flake & Freeman, that their creditors were about to attach their goods, were false, applied to Flake & Freeman to rescind the contract. This they refused to do, but surrendered up to James M. Webb the notes and accounts and paid him $100, and they kept the goods and got back their note for $1000. The bill charges that defendants, F. &F., knew that Webb & Co. were insolvent at the time of this purchase; that James’ M. Webb, with whom they traded, was a weak-minded man, easily bent to the purposes of designing men; that the whole affair between Webb & Co. and F. & F., was a fraudulent combination to defraud the creditors of the Webbs; that F. & F. have disposed of the goods; and that Webb & Co. are non-residents. The bill prays that Flake & Freeman and Webb & Co., be made defendants and required to answer, and that process of attachment and garnishment issue agreeably to the provisions of the act of 5th February, 1846, and for general relief. Will the allegations of this bill bring the case within the statutory jurisdiction conferred on the Court of Chancery by the act of 5th February, 1846? Plaintiffs in error insist that they do not. That act, they say, will only authorize an attachment in chancery in cases where tangible property of the debtor is seized under the attachment; or where a lien is fixed on some debt due to the debtor by service of a copy of the bill or some equivalent process; that it is not pretended, that this attachment is levied on any tangible property of the Webbs; and that the facts setf orth in the bill, admitting them to be true, as they are forced to do on demurrer or motion to dismiss for want of equity, show of themselves' that no debt is due from F. & F. to the Webbs; that whatever may have been the nature of the transaction between them and James M. Webb, touching the purchase and sale — 148 — of the goods, as between them they were paid for, and left nothing behind for which debt or indebitatus assumpsit would lie. Every part of this argument may be conceded; but the question remains, cannot money or effects of the debtor in the hands of third persons, not liable to seizure from their nature, be attached under this act ? We cannot doubt but that they may. The terms of that act, already quoted, clearly show that it was the intention of the legislature to bring every thing within the scope of the attaching process in chancery by this act, that was liable to attachment at law. The words of the act are broader and more comprehensive than the words of the general attachment laws, for “ equitable ” estates in property both real and personal are made subject to attachment, which is not the case at law to a certain extent. We take it to be a j ust construction of this statute to say, that it intended that whatever could be attached at law, could likewise, in a proper case, be attached in chancery; and that the plaintiff might proceed without first reducing his demand to a judgment at law. In fact, there are very material extensions of the remedy by attachment growing out of this act, in the right to attach equitable estates; to include debtors and garnishees in one suit; and to sue in chancery on a simple contract debt. It is remedial, and should be so construed. Suppose Day & Co. had sued out an attachment against Webb & Co. at law, and garnisheed Flake & Freeman to answer what debts they owed, and what property or effects they had in their hands belonging to Webb & Go. Bring it to an issue: F. & F. being garnisheed, come in and deny, upon oath, that they owe or have effects, &c. This the plaintiffs, Day & Co., controvert upon oath, and an issue is formed under the direction of the court, in the simple way authorized by our decisions. Upon the trial of such issue, Day & Co. establish by proof the material allegations of this bill, namely: that F. & F. with intent “to hinder, delay and defraud ” the creditors of Webb & Co., purchased their stock of goods worth $1500 to $2000 for $100, and resold them and pocketed the money. Can it be questioned that, under. such allegations, if sustained by proof, the jury would be — 149 — instructed to find tbe issue for tbe plaintiffs, and ascertain the amount of money in their hands from the resale, as money or effects of Webb & Co. ? It has been decided, that the trustee in a deed void as to creditors for fraud, could be garnisheed, and money or effects in his hands arising from the sale of the trust property subjected to the payment of the debts of the grantor in the deed. Hazard v. Franklin, 2 Ala. 349. In that case Judge Ormond says, “It is the practice every day to try the validity of a deed by levying an execution on the property conveyed by it; and we see no reason why the same object should not be accomplished by a garnishment.” See also, Richards v. Hazard, 1 S. & Port. 139. If the purchase of the goods by F. & F. of AVebb & Co. was fraudulent, the law makes it void as to the creditors of the vendors; and so likewise with any subsequent vendee of the same goods with notice: no title passes. Powell v. Wragg, 13 Ala. 161. If the goods are afterwards sold to a tona fide purchaser, the law will pass the title for the sake of the innocent, but in that case will make the seller accountable to the creditors of the first vendor. Abney v. Kingsland, 10 Ala. 355. Upon what principle? Upon the principle that a fraudulent vendee, who sells the property acquired by a fraudulent purchase, is held to be a trustee of the proceeds of the sale, for the creditors of the fraudulent vendor; it is money of the vendor in his hands for their benefit. If this be true, he can be garnisheed like any other trustee holding property or funds of the debtor in attachment, as was the trustee in the case of Abney v. Kingsland, supra. If subject to garnishment at law, it follows from what has been said, that he is subject to attachment by bill in chancery under this act, which, as has been shown, was designed to extend, and not to abridge this remedy, and as such is to receive a liberal interpretation. Pollard v. Taylor, 18 Ala. 604. But it might be safely conceded, that a garnishment at law' would not lie in this case, and yet, we should hold, that the averments of this bill would uphold the jurisdiction of the Chancery Court, when we consider the ample field which is opened for such jurisdiction, in the words which declare, that all “property, real and personal,” and — 150 — whether of a “legal or equitable nature,”shall be subject to attachment in chancery under this act. Coming to the consideration of the case, we find the allegations of the bill sustained, and such as would warrant a decree in favor of the complainants, with one exception. The bill alleges, that the property purchased by Flake & Freeman of James M. Webb, was the partnership property of James M. Webb & Co. This is denied by the answer of F. & F., and the answer avers that they were the goods, &c., of James M. Webb individually. The proof of the defendants tends to establish this averment on their part, and there is not any proof at all on the part of the complainants going to show the truth of their averment, that the property was partnership property. As every complainant must recover on the case made by his bill, or not at all, the decree of the Chancellor will have to be reversed on this ground. Scott v. Dunsby, 12 Ala. 714. For the error we have noticed, the decree below is reversed. Let a decree be here rendered dismissing the bill without prejudice to defendants in error, and at their costs.