Bromley Carpet Co. v. Field

Mr. Justice Windes, after making the above statement delivered the opinion of the court. The two appeals will be considered together. No claim is made that the appeals do not bring up for consideration the action of the court in sustaining the demurrer to appellant’s petition. Several matters relating to the sufficiency of the evidence to support the decrees in favor of Field, the receiver and his solicitor, and of procedure by the court, and as to priority between the petitioner and the complainant in the original bill, but it is unnecessary to consider these matters in view of our conclusion reached upon the first point made by appellant in each of the appeals, viz., that there was collusion between the parties to the • litigation and their solicitors. In re Burdick, 162 Ill. 48, 52, the court say: “ It is settled law that while a collusive or fraudulent suit is still pending the court will, at the suggestion of either a party to the record, or a person in interest, or who may be prejudiced by the judgment, or even at the instance of a stranger who appears as amicus curiae,, or upon its own motion, dismiss such suit out of court.” (Citing cases.) In McAdam v. The People, 179 Ill. 316, the Supreme Court re-affirm the doctrine of the Burdick case, supra, and say: “ Where there is no real controversy there is nothing to decide. Besides, the court receives no assistance, but is misled by the researches and labor of counsel in such cases.” To a like effect in principle is the case of People v. Gen. Elec. Ry. Co., 172 Ill. 129-146. In the light of these decisions it only remains to be considered whether there was a sufficient showing made to the court of collusion. If there was a collusive agreement between the parties litigant which resulted in the allowance of the claims of Alice M. Moore and Field and the payment of the money which the receiver was directed to pay to them respectively, to the complainant Prussing, then there was a fraud perpetrated upon the creditors of the furniture company and upon the court, and it was error for the court to proceed with their adjudication without giving the appellant an opportunity to present any legitimate defense to such claims. The appellant, after the hearing of the claim of Alice M. Moore and its allowance and payment in part by the receiver, and after thé hearing of the Field claim before the master and the consideration of exceptions to his report by the court, was allowed to file its intervening petition, which shows that appellant is a judgment creditor of the furniture company, that an execution issued upon its judgment had been returned nulla bona, and it had filed a creditor’s bill in • the Circuit Court on said judgment, in which it was alleged, among other things, that the assignments of the notes and chattel morgages to Field were fraudulent and .void, and that said notes and mortgages constituted assets of the furniture company, which were therefore subject to the payment of the claim of appellant, and that appellant had no knowledge, at the time the indebtedness on which its judgment was rendered, was incurred, that there was any fraud in the organization of the furniture company or in the conduct of its business, as set forth in the complainant’s bill. These allegations furnished a basis for a question as to whether appellant should be preferred in the payment of its claim out of the assets of the furniture company over complainant Prussing, the basis of whose claim was judgments against the Moores, individually, he alleging that the business and property of the furniture company were really the business and property of the Moores individually. This question became immaterial when appellant’s petition was dismissed out of court. In addition to the above matters appellant’s petition alleges the fact to be, though upon information and belief, that the claim of Alice M. Moore of a transfer to her of the notes and mortgages delivered to her, was fraudulent and void, and that she had no lien whatever on such notes and mortgages, and also it further alleges the fact to be, though upon information and belief, that the transfer of the notes and mortgages to Field was fraudulent and void, and without any consideration, and for the purpose of defrauding the creditors of the furniture company, and further charges the fact to be, though upon information and belief, that the complainant, through his solicitor, perfected a compromise with said William J. Moore, Field, the furniture company and Alice M. Moore, by the terms of which it was agreed that both said claims should be allowed by the court, but that no money should be paid on either of them; that the money ordered to be paid on them should be paid to the complainant, and that the receiver actually paid to Eugene Prussing, for the benefit of complainant, about $1,800, which was ordered to be paid upon the claim of Alice M. Moore, and that it was further agreed that complainant’s attorney should, for him and the receiver, make a pretended opposition to the allowance of the Field claim, and that pursuant to the same agreement no evidence was offered in opposition to the Field claim, and that what defense was made to the Field claim was for the purpose of deceiving the creditors of the furniture company by making a pretended resistance to the allowance of such claim. The petition also alleges a state of facts which, if proven, (and the name of the witness by whom it is claimed they could be proven is given and the matters to which he would testify are set out in detail,) would, in all probability, have resulted in the disallowance of the Field claim. The demurrer of the receiver, and of the complainant to this petition admits, for the purposes of its consideration by the court, all the matters of fact therein properly alleged. In view of the demurrer, the fact that the allegations as to the collusive agreement between the parties litigant and their solicitors are upon information and belief, is not sufficient to justify the court in sustaining the demurrer. In Campbell v. P. & D. R. R. Co., 71 Ill. 611, a temporary injunction, upon a bill, the allegations of which were similar to the allegations in this petition, ivas, upon demurrer to the bill, dissolved, the demurrer being sustained and the bill dismissed. The court say: “It is a general rule that, where facts are within the knowledge of a party, he must state them positively in his pleadings. Story, in his work on Equity Pleadings, Section 255, says the claims of a defendant may be stated in general terms, ‘ and if matter essential to the determination of the claims of the plaintiff is charged to rest in the knowledge of the defendant, or must, of necessity, be within the knowledge of the defendant, and is consequently a part of the discovery sought by the bill, a precise allegation thereof is not required.’ Had this allegation related to a fact in the knowledge of complainants, it is clear that it' would have been insufficient; but where the fact lies alone in the knowledge of the defendant, and discovery is sought, we are not prepared to hold that it may not be stated that the plaintiff is informed and believes the fact to be true, followed by a statement that he therefore, charges the fact to be true.” In the.case of Coryell v. Klehm, 157 Ill. 462-76, where a demurrer to the bill'had been sustained by the chancellor, the court, after referring to the Campbell case, supra, say: “Where the allegations are made in the form of direct and positive statements of facts, with the additional words, ‘ as your oratrix is informed and believes,’ it would seem that there is more than a simple averment of the complainant’s confidence in the truth of the representations, and they may be regarded as averments of the facts, together Avith a statement of the source from which knowledge of those facts was derived.” If there Avas a collusive agreement, as charged, it was Avithin the knowledge of the parties to such agreement, and we. are of opinion that the chancellor should have required answers to the petition, and investigated as to Avhether in fact there was a collusive agreement which resulted in the allowance of the Moore and Field claims, and in the payment of part of the Moore claim to complainant, and that it was error for the court to proceed further in the cause until it had ascertained, upon a full hearing, whether or not such collusive agreement existed, and if it did exist, and complainant had received $1,800, or any amount of the Moore claim, then it was the duty of the court to order such amount refunded to the receiver and require a rehearing as to both claims. It is claimed that the transcript of the record in both the appeals is insufficient, but we regard it as entirely sufficient for a disposition of the matter of the alleged collusion, whatever may be said as to its sufficiency upon the other points raised and argued, which we have thought it unnecessary to consider. The claim of appellees that the petition is insufficient in that it came too late, and that it does not show an exercise of ordinary diligence on the part of petitioner as to the discovery of the new evidence, is not tenable. We think the allegations of the petition are sufficient, but if it could be said they were insufficient in these respects, still the court should have investigated the charge of collusion without determining, in the first instance, whether or not it would grant a rehearing of the claims. If there was collusion, then there was no proper adjudication of the claims. The contention of the appellee Trussing, that appellant did not become a party to the proceeding, and that he was therefore not entitled to be heard, is not well taken. It showed an interest and asked to be heard, and by the"filing of its petition it became a quasi party. Williams v. Morgan, 111 U. S. 684-93-98, and cases cited; South Tark Commissioners v. Phillips, 27 Ill. App. 380; Marsh v. Green, 79 Ill. 385; Reid v. Sheffy, 75 Ill. App. 136; Louisville Trust Co. v. R. R. Co., 19 Sup. Ct. Repr. 827. In the Marsh case, supra, the court seems to have contemplated that the intervenor should become a party, but in the cases in this court the practice is recognized without question, and in the Williams case, supra, it is held that by intervening, the intervenors become quasi parties and were entitled to appeal. The claim of appellee Trussing, that the consequence of the court’s arriving at a conclusion that there was collusion would be a dismissal of the proceeding, is, in our opinion, not tenable. It is true that in most cases such is the result, when it is shown that there was collusion, but it does not necessarily follow. In the Louisville Trust Co. case, supra, where a collusive agreement was charged by way of petition, the decree of the court was reversed and the cause remanded, with instructions to the trial court to set aside the confirmation of a sale made pursuant to the decree, and to inquire as to the truth of the charge of collusion. In the first of the above entitled causes the order allowing the Field claim and the master’s fee is reversed, and the order sustaining the demurrer to appellant’s petition is also reversed, and the cause remanded, and the Superior Court is directed to overrule the demurrer to appellant’s petition and to inquire as to the truth of the charges of collusion set forth in said petition, and to take such other and further proceedings in said case as shall be in conformity to law. In the second of the above entitled causes, the decree of May 19,1899, is reversed, and the order,of the court sustaining the demurrer to appellant’s petition is also reversed and the cause remanded, and the Superior Court is directed to take such further.proceedings as are above directed-in the first of said appeals. Keversed and remanded with directions.