Henderson, Terry & Co. v. Thornton

Handy, J., delivered the opinion of the court. This bill was filed by the defendants in error, for the purpose' of enjoining the payment of a fund in the hands of the sheriff of Monroe, the proceeds of the sale of property levied upon under attachments issued by the plaintiffs in error, and also by the defendants in error against one Brown, upon which judgments were rendered and executions issued, and the property sold ; the object of the bill being to prevent the payment of the proceeds of the sale to the judgment of the plaintiffs in error, and to have the money applied to the judgments of the defendants in error. The bill states, in substance, that the attachment of the plain-' tiffs in error was issued on the 9th January, 1858, and levied on the 11th day of the same month, and that the several attachments of the defendants in error were issued on the 12th, and levied on that day and on the 13th day of the same month, on the same property levied on under the attachment of the plaintiffs in error; and that judgments upon all the attachments were rendered on the 26th June, 1858 ; that executions issued upon all the judgments, upon which the money in controversy was made by the sheriff, the amount being insufficient to satisfy, the judgment of the plaintiffs' in error, to whose execution the sheriff was about to' apply the money, whereby the judgments of the defendants would remain wholly unsatisfied, their debtor, Brown, being wholly insolvent. The bill then charges that the attachment and judgment of the plaintiffs in error are void and fraudulent, because it was founded on a bill of exchange drawn by Brown and accepted by the plaintiffs in error, which did not become due until the 15th February, 1858, more than a month after thesuing'out of their attachment; and that the plaintiffs in error were, at the maturity of the bill, and before, under suspension of payment as commission merchants in New Orleans, and that there was then pending an attachment in chancery for the same debt, as that upon which the present attachment of the plaintiffs in error is founded. [452] To this bill, the plaintiffs in error demurred, assigning various grounds, of demurrer; which being overruled, they answered, denying the fraud charged, or that there was an attachment pending in chancery for the same cause of action; admitting that their acceptance was not due until 15th February, 1858, but that being an accommodation acceptance, they became the creditors of the drawer from the date of the acceptance, and upon its being put into circulation ; and alleging that they paid the acceptance at its maturity. Upon the final hearing on the pleadings and proofs, the decree being for the complainants, the case is brought here. In support of the demurrer, it is contended that, as the bill does not show that the acceptance had not been paid at the time the attachment of the plaintiffs in error was issued, the attachment is not shown to have been invalid, because the accommodation acceptors had the right to pay the bill before maturity, and thereupon to pursue their remedy against the drawer. But if it be conceded that plaintiffs in error had this right, it cannot be presumed, in the absence of all proof upon the point, that they had paid the bill before maturity; but the presumption would be to the contrary ; and this is mueh strengthened by the fact alleged in the bill, that they were in a state of suspension of payment at and before the maturity of the bill. Considering the case, then, as it is presented by the bill, answer, and proofs, it appears that the acceptance was not paid by the plaintiffs in error until its maturity, which was more than a month after their attachment was issued ; and the question is, is this such a fraud upon the rights of the defendants in error, who were then creditors of the debtor, and having debts due, as would postpone the right of the former under their attachment, to the attachments of the latter ? And we are of opinion that it is. In order to entitle a party to an attachment, it is absolutely necessary that he should have a subsisting debt against the party whose property he attaches. This is required not only with reference to the rights of the debtor, but it is a matter in which other creditors of the debtor are concerned. The debtor’s property is responsible for the debts which he owes at the time of issuing attachments against him ; and the creditors then having debts, have the right to have it applied to the payment of their debts. It [453] would be absurd to suppose that persons not then creditors had my such right at that time. If, then, a party who is not then a creditor, but is shown only to have become so afterwards, asserts his claim as a present creditor, and issues his attachment against the debtor’s property, which is not sufficient to pay that and the attachments of other creditors founded on valid debts then subsisting, it is plain that his claim would be a fraud in law, and operate to the injury of the other creditors, if his attachment was prior in time to those of the other creditors. It would be to deprive them of the right which they had by law to have their debtor’s property applied to their debts, by appropriating it to his debt, when he had no legal right to do so. How, then, is this to be prevented, if such a party issue the first attachment, and before he is in law a debtor ? Other attaching creditors might not know of the invalidity of his claim, and it is questionable whether they would be heard to make the defence against his attachment. Their rights cannot be made to depend upon the action of the defendant to be taken, and which would operate to their benefit and protection.. They must, therefore, have the right to protect themselves by appropriate legal steps to be taken by them, either by motion in the court where the attachments were pending, and whilst the proceeds of them are under the power of that court, if the evidence necessary to the assertion of their rights be available in that court; or by going into equity. Walker v. Roberts, 4 Richardson’s Rep. 562. For it is clearly,within the power of a court of equity to set aside a fraudulent judgment, at the instance of any party who is directly injured by the fraud. Upon this view, the decree awarding the proceeds of the sale under the attachments to the defendants in error, was correct, and it is affirmed.