Gooding v. King

Garnett, P. J. This is a creditor’s bill filed June 16,1883, by appellant against Claude B. King, Anna King, his wife,, and Homer H. Hibbard, receiver of the Montello Granite Company, based on a judgment recovered at the April term, 1883, of the Superior Court of Cook county, in favor of appellant and against said Claude B. King, for §1,076 and costs. Execution was issued and duly returned unsatisfied. The Montello Granite Company was the style of a copartnership composed of Claude B. King and James H. Anderson. In a suit to wind up the affairs of that firm, the Superior Court, on the 18th day of October, 1882, appointed H. N. Hibbard receiver of the firm assets. At the time the bill in this case was filed, the receiver was proceeding with the duties of his office, and was in possession of the partnership effects. The purpose of the creditor’s bill was to reach King’s interest in the firm assets (whatever it might appear to be on final adjustment), and other equitable assets, for the payment of said judgment. The receiver was made a defendant to the creditor’s bill without leave of the Superior Court. He demurred to the bill and his demurrer was sustained October 18,1883. King and wife answered, admitting the copartnership, and stating, among other things, that Claude B. King had no property or interest in any, except his interest as copartner in the assets of the Montello Granite Company in the hands of said receiver. Replication to the answer was filed October 25, 1883. On November 11, 1884, Claude B. King died, leaving his wife surviving. His death was suggested of record May 25, 1885. His wife having been appointed administratrix of his estate by the'Probate Court of Cook county, filed her answer as administratrix on July 8, 1885, stating the death of her husband, and her apjmintment and qualification as administratrix; that the deceased left no estate except that involved in the litigation with his partner, Anderson; that all of said property is in the custody of the law in the hands of a receiver ; that it was probable that said estate will be insolvent and that there would not be more property than enough to pay preferred claims. By her supplemental answer, filed March 12, 1888, she states that the whole personal estate of said Claude B.King had been appraised and the appraisal approved by the Probate Court of Cook county, at §277; that the estate is insolvent; that her widow’s award had been fixed at $1,975, which she claims should be allowed to her out of any funds in the receiver’s hands coming to the estate, in preference to the claim of appellant. On the 6th of November, 1885, the receiver was made a party defendant to the bill by leave of the court and filed his answer November 17,1885, alleging in substance that he was unable to determine the amount of King’s interest in the assets of the Montello Granite Company. Replications were filed to the answers. It appeared on the hearing that the amount in the receiver’s hands, coming to King’s estate, is something over $1,500 and that the widow’s award had been fixed at $1,975. The court below dismissed the bill for want of equity. The general rule is that the filing of a creditor’s bill, and service of process, creates a lien on the equitable assets of the judgment debtor. It has been aptly termed an “equitable levy.” Wait on Fraud. Con., Sec. 68; 2 Wait’s Actions and Defences, 428; First Nat. Bank v. Gage, 93 Ill. 172; Lynch v. Johnson, 48 N. Y. 27; Miller v. Sherry, 2 Wall. 237; Adist v. Butler, 87 N. Y. 585. In the case at bar no injunction was issued or receiver appointed. Was either necessary to make the “equitable levy” perfect? In Storm v. Waddell, 2 Sandf., Ch. 494, the court (p. 582) emphasizes the point that “the lien was acquired hy the commencement of the suit, and not by the order for a receiver or his appointment;” and on pages 564, 565, it is said: “ Without regard to the injunction, the property of the defendant is subjected to the suit, wherever it may be, if the receiver can lay hold of it, or the complainant cam, reach it hy the decree. * * * A receiver is a convenient hut not indispensable part of the proceeding. No voluntary assignment of the debtor can impair the complainant’s right, nor any intervening claim of other creditors. I speak in this outline of equitable interests and things in action.” In Roberts v. Albany & W. S. R. R. Co., 25 Barb. 662, the court said: “ As soon as the judgment creditor’s suit was instituted, the plaintiff in that suit obtained a lien on all the choses in action of Rutter. All the title he had was subject to that lien; all that he could pass was subject to it. When the receiver was appointed (whether' Butter assigned to him or not) he acquired the title to those choses in action which Butter had when the action was commenced. In contemplation of law the title vested in the court when the action was commenced, and passed, as from that date, to the receiver.” In Brown v. Nichols, 42 N. Y. 26, it was held that the lien upon equitable assets acquired by the commencement of an action in the nature of a creditor’s bill, is not extinguished by the death of defendant before the appointment of a receiver, but survives against such assets in the hands of the.' administrator. The Supreme Court of this State, in First National Bank v. Gage, supra, cite the cases of Storm v. Waddell and Brown v. Nichols with approval and state the law to be that the tiling of a creditor’s bill, or at least the service of process, gives the complainant a lien upon the property of the judgment debtor, by placing it under the control of the court, which will not suffer it to be withdrawn so as to defeat the object of the bill by any subsequent act or title. “As respects equitable interests and things in action, the rule appears to be that the lien is fixed by the commencement of the suit.” p. 175. Admitting that the receiver must be considered as no party to the suit at or before the death of King, still the situation is not changed. King had an equitable interest in the fund sought to be reached, and as he was a party to the suit the lien survived his death and holds good against all claiming under him. A decree against him would have been valid against his administratrix, although the receiver was not a party. Bennitt v. Star Mining Co., 119 Ill. 9. That the interest of King in the firm assets was uncertain at the time the creditor’s bill was filed is no barrier to complainant’s suit. Otherwise any undivided equitable interest whose amount or value can not be ascertained except upon an accounting or reduction of the fund to money, is secure against the attack of creditors. The widow’s claim to her award is against the estate of her deceased husband. Sec. 70, 75, Chap. 3, Rev. Stat. If there is no estate she has nothing to rely on for the payment of the award. If the estate is incumbered by a valid lien, the award does not set aside the lien. She only has a claim on so much as may be left after satisfying the lien. In this case there is no estate to pay the widow’s award until the lien acquired by the creditor’s bill is discharged. The receiver is a quasi trustee, holding the fund for the benefit of whoever may eventually establish title thereto. High on Receivers, Sec. 1. If, therefore, a creditor’s bill can only be maintained in cases of fraud and trust, as contended by appellee, the facts of this case are such that the jurisdiction attaches. The question of superior diligence only arises between creditors contending for priority of lien and has no application here. The publicity with which a debtor’s estate is surrounded by a trust which defies all the assaults of the ordinary process of law, can not be relied on as a protection against the equitable remedy of a creditor’s bill. The decree of the Superior Court is reversed and the cause remanded with directions to enter a decree in conformity with this opinion. Reversed and remanded with directions.