Smith v. United States Fire Insurance

Me. Justice Green delivered the opinion of the Court. The bill in this case was filed and sustained as a general creditors’ bill against defendant insurance company, and a receiver appointed for it. Petitions were filed by M. G. L. Roberts and Thomas & Thomas, asking that certain claims against the insurance company be awarded priority of payment in the distribution of its assets. The claims referred to are judgments obtained against the insurance company while it was a going concern. Both of these judgments were affirmed in the court of civil appeals and executions issued thereupon. One of the judgments was rendered by that court on March 11, 1909, at Jackson, and the other on July 10, 1909, at Knoxville. The Jackson judgment is known as the “Grady judgment,” and the Knoxville judgment ' is — 438 — known as the “Smith judgment.” Petitioners Roberts and Thomas & Thomas were sureties on the appeal bond in the Smith case, and petitioner Roberts was surety on the appeal bond in the Grady case. Executions were issued on both of these judgments and sent to the sheriff of Hamilton county in August, 1909, and returned by him nulla dona. Petitioners maintain that at the time of the issuance of these executions the insurance company was a going concern, with considerable property, choses in action, and other personalty. They claim that they pointed out to the sheriff of Hamilton county certain personalty of the company subject to levy. However this is, no levy was made, but there was a nulla liona return, as aforesaid, and a levy was made on certain property of petitioner Roberts, the surety on the two appeal bonds. The receiver’s report filed herein discloses that the company was possessed of considerable personal property at the time these executions issued. Some of its property was in cash and furniture and fixtures, but most of it consisted of choses in action. All the property was not located in Hamilton county, but some of it was in Davidson, some in Shelby, and some in other counties of the State. Petitioners insist that from the issuance of execution in these two cases all the personal property of the insurance company in Tennessee became charged with a lien for the satisfaction of such executions, and that they are therefore entitled to come into equity, enforce this lien, and have the proceeds of this property applied to the satisfaction of these executions in full. — 439 — This position is controverted, and it is contended for the receiver that no lien was created on any of the property of the insurance company, except that which was in Hamilton county, the county to which the executions were issued. It is further insisted that no lien was created by the issuance of these executions upon the clloses in action of the company. It is also contended that the proceeds of property located in Hamilton county and property located elsewheró in the State have become inextricably confused in the receiver’s hands, and that petitioners are therefore not able to identify such proceeds now, and have them subjected to the satisfaction of these judgments. As to the extent of the lien of an execution, we find no case in point in this State. We are of opinion, however, that the lien extends only to personalty in the county to which the execution is issued. This question has arisen in other jurisdictions and the law is thus stated: “The general rule as to the territorial extent.of the lien of an execution is that it is coextensive with the. jurisdiction of the officer to whom the writ is delivered, and attaches to all the defendant’s goods and chattels within the territory, and, as the writ'is in most cases delivered to the sheriff, or some other officer whose jurisdiction has the same limits, its lien usually extends throughout the county to which it is issued.” 11 Amer. & Eng. Enc. of Law, 677. “As a general rule, the lien of the execution is co-extensive with the writ.” 17 Cyc., 1053. — 440 — “That is to say, any property situated within a given territory, which is subject to seizure under execution, is subject to the lien thereof, and, where the writ is confined to the county where issued, the lien is likewise restricted.” 17 Cyc., 1053, note 16. Many cases are cited in support of their text by the-encyclopedias, and there is nothing- save dicta in Cecil v. Carson, 86 Tenn., 139, 5 S. W., 532, or in any of our other cases referred to, in conflict herewith. Since the lien of an execution, subject to two exceptions (Berry v. Clements, 9 Humph., 312; Cox v. Hodge, 1 Swan., 371), relates to its teste and . attaches to all the debtor’s personalty, defeating any transfer made between the teste and the levy of the execution (Cecil v. Carson, supra, and cases cited), it is proper to confine the scope of the lien to the county to which execution issues. Even so restricted, this rule may often work a hardship, and it is not desirable that it be extended. We therefore hold that the lien of an execution attaches only to property located in the county to which the execution is directed. An execution issued to one county will not fix a lien on the debtor’s personalty in another. Considering the next defense interposed by the receiver, it must be conceded that, at common law, the issu1 anee of an execution does not fix a lien upon the debtor’s choses in action. There is no- statute in Tennessee changing the common law rule, except as to corporations. Section 4765 of Shannon’s Code provides that “an — 441 — execution against a. corporation may be levied of its choses in action as well as on tbe goods and chattels, rents and tenements of such corporations, and in case of levy on choses in action, the court may appoint a receiver to collect the same.” It is entirely competent for the legislature to make choses in action subject to levy under execution, and,, as to the choses in action of corporations, the legislature has clearly so acted in the statute quoted. That such is the effect of this statute has been recognized by the courts in this State. Chancellor Cooper observes: c<Choses in action, and especially such as are evidenced by a book account, are not, by the common law, subject to seizure and sale by execution. In this State, an execution runs against the goods and chattels of the defendant, and has only its common-law effect, except where changed by statute. It may be levied upon the choses in action of a corporation, by Code (1858), sec. 3037.” Hillman v. Moore, 3 Tenn. Ch., 461. It is urged, however, that section 4713 of Shannon’s Code puts choses in action on the same plane as the equitable estate of a debtor, and exempts them from the lien of execution, unless the judgment be registered. The section is as follows: “Nor shall an execution thereon bind the debtor’s legal or equitable interest in stock, choses in action, or other personal property, not liable at law, unless a similar memorandum is registered within the same period of sixty days, in the county where the debtor resides, if he lives in the State, or, if not, then in the county where the property is.” — 442 — It is said that there was no such registration of the judgments against the insurance company as is prescribed by this statute, and that, in the absence of such registration, executions issued thereupon could not affect the company’s choses in action with a lien. It will be observed, however, that the provisions of this statute relate to “choses in action or other personal property, not liable at law,” and accordingly such provisions cannot apply to the choses in action of corporations; for, as we have just seen, by section 4765 of Shannon’s Code choses in action of corporations are rendered liable at law. We are of the opinion that the executions in question here fixed liens upon the choses in action of this corporation, by reason of the statute cited, just as if they were “goods and chattels.” Responding to the receiver’s third proposition, we perceive no insuperable difficulty in identifying the proceeds of the company’s property affected by the lien of these executions. There should be none, if the receiver has properly kept his accounts. The court of civil appeals remanded the case and directed a reference for this purpose, and we think this action was correct. Other questions are fully considered in- the opinion of the court of civil appeals, and its decree will be affirmed.