Stone v. Anderson

Eastman, J. From an examination of the bill filed in this case, it appears that the principal controversy is betweeen the orators, as creditors of Samuel Morrison, on the one part, and Anderson & Sargent upon the other. The Morrisons, although made defendants in the bill, are passive in the matter. The first question that arises is, whether the bill can be sustained by the complainants, they being creditors only, and having simply attached the property of Samuel Morrison, without having obtained any further lien upon it, or exhausted their remedy at law. In Dodge & a. v. Griswold & a., 8 N. H. Rep. 425, it was held that a creditor who has commenced a suit against his debtor, and caused real estate to be attached by virtue of his original writ, has a title to maintain a bill to set aside a fraudulent conveyance of the real estate as soon as the debtor has been defaulted in the suit against him; and Richardson, C. J., in delivering the opinion of the court, lays much stress upon the fact, that the defendant had become defaulted. He says, also, that if nothing further appeared in the bill than that the plaintiffs had caused the land to be attached, the bill could not be sustained. But in Tappan v. Evans & a. 11 N. H. Rep. 311, the doctrine is laid down that where property is subject to execution, and a creditor seeks to have a fraudulent conveyance or obstruction to a levy or sale, removed, he may file a bill in equity as soon as he has obtained a specific lien upon the property, whether the lien be obtained by attachment, judgment, or the issuing of execution. If the property is — 517 — not subject to levy or sale, or if the creditor has obtained no lien, he must show his remedy at law exhausted by an actual return upon his execution, that no goods or estate can be found, before he can file, a bill to reach the equitable property, or ehoses in action, of his debtor. And such, says Parker, C. J., is the general doctrine deducible from the authorities. In Kittredge v. Warren, 14 N. H. Rep. 509, the effect of an attachment upon property, upon mesne process, as creating a lien upon the property, was very fully and ably discussed, and the question settled that such an attachment is a lien upon the property, valid by the laws of this State. In the course of the opinion delivered’ in the case, the very learned chief justice remarked that he had never concurred in some of the views incidentally taken in Dodge v. Griswold; that he had never been able to discover how the default gave the plaintiffs any greater title to maintain their bill than they would have had without it. That the legal right to come into chancery to have the alleged fraudulent conveyance removed out of the -way of a levy of the execution, depended upon the attachment, and that existed before the default as perfect as it did afterwards. The doctrine of Kittredge v. Warren was reexamined and affirmed in Kittredge v. Emerson, 15 N. H. Rep. 227, in the masterly opinion delivered in that ease; and the effect of our attachment laws, as creating a lien upon property has, as is well known, been fully recognized by the supreme court of the United States. Upon the authority of these cases, which appear to us to be well founded upon correct principles, there can be no doubt that the attachments made by the plaintiffs upon the property of Samuel Morrison, give them a sufficient lien upon the same to maintain their bill; their object being to remove from the property the obstructions that the defendants have caused to be placed upon it, so that it may be taken to satisfy the debts of the plaintiffs. In such a case, — 518 — there is no necessity for the.complainants to exhaust their remedy at law before proceeding in equity. Although it has been held in England and New York, and probably in other jurisdictions, that a bill cannot be filed to set aside fraudulent conveyances until the creditor has obtained a judgment, yet this doctrine is believed to be founded upon the fact, that where it prevails no attachment is made upon mesne process, as with us, and no lien obtained upon the property Until judgment. The judgment operates as a lien, and as soon as that is obtained, the bill may be filed. It is the lien upon the property which gives the party the right to his bill in equity. The attachment being a sufficient lien to entitle the complainants to proceed with their bill, there can be no doubt of the jurisdiction of this court, as a court of equity, to entertain the cause ; for this court has jurisdiction in equity, independent of any alleged necessity for discovery, in all cases of fraud, where complete and adequate relief cannot be had at law. Tappan v. Evans & a. 11 N. H. Rep. 311; Dodge v. Griswold, 8 N. H. Rep. 425. And in the former case it was held that no remedy is adequate and sufficient against a fraudulent conveyance, except one which gives a release or removes the fraudulent title. Now the ground of the complainants is this: that the property attached by them is Samuel Morrison’s, he being confessedly their debtor: that the same property has been mortgaged to William M. Morrison, to secure indirectly the payment of the fraudulent claims of Anderson & Sargent against Samuel Morrison, and that the complainants’ remedy against these claims and this mortgage is inadequate at law. And according to the views expressed and the authorities cited, the case comes within equitable principles, and the bill may be sustained, if the facts are sufficiently averred. The allegations of the bill are, in brief, that the complainants have valid claims against Samuel Morrison to an — 519 — amount exceeding $1,500, which are founded upon a good consideration, the- claims growing out of orders drawn by-Samuel Morrison upon the complainants, in favor of Joseph F. Morrison. That Anderson & Sargent, being aware of this fact, and having a large claim against Joseph F. Morrison, which he had contracted on his individual liability, concerted a scheme to induce Samuel Morrison, by fraud and misrepresentation, to charge himself with the amount of their claim against Joseph F. Morrison, he being irresponsible; that accordingly and for that purpose Anderson and one Gilbert, who was and still is the clerk and confidential agent of Anderson & Sargent, went to Plymouth, where Joseph F.. Morrison resided, and, in furtherance of their fraudulent design, Gilbert procured Joseph F. to sign a paper; stating that he was the person who had purchased goods of Anderson & Sargent for Samuel Morrison, he falsely stating that the purpose of the paper was to make Joseph F. known to Anderson & Sargent, and that Joseph F. was not aware of its import and object. That Anderson and Gilbert then went immediately to Samuel Morrison, and upon his stating that he had drawn orders on Stone & Page, but knew nothing of Anderson & Sargent, and had had no dealings with them, Gilbert falsely and fraudulently represented that Stone & Page and Anderson & Sargent were connected together in business, that the order which Samuel Morrison had drawn upon Stone & Page had come into the possession of Anderson & Sargent, and that the goods sold and delivered by them to Joseph F, were sold in the name and on the credit of Samuel. All of which representations the bill charges to be entirely false. That Gilbert, by threats of a prosecution, and of arresting and taking to Massachusetts Joseph F., to be tried for a state prison offence, induced Samuel to sign a paper, after he had refused to sign notes, containing a request that Anderson & Sargent should let Joseph F. have no more goods on his account. That soon after obtaining this paper, Anderson — 520 — and Gilbert came to Samuel Morrison again, and by threats and in consequence of the misrepresentations already made, and of the additional statement of Anderson, that it Morrison did not find every thing just as he and Gilbert had represented, they would make' it all right, Samuel Morrison was induced to sign tfie four notes, and give the same to Anderson & Sargent, and procure his son, William M. Morrison to sign, as surety with him, Samuel mortgaging all of his property to his son, (being the same attached by the complainants,) to secure him for signing the notes. The bill charges distinctly that Samuel Morrison was induced to sign the notes to Anderson & Sargent by the false and fraudulent representations and promises of Anderson & Sargent, and Gilbert, as their agent,- and that the notes .were given wholly without consideration on the part of Samuel Morrison. This is the substance of the bill, and the demurrer admits all these facts. It admits that a scheme was concerted at Boston to overreach, deceive and defraud Samuel Morrison; that that scheme was successfully carried out, and by the fraud thus perpetrated upon Samuel Morrison, the complainants, who are his creditors, will be defrauded of their just claims. The acts of Gilbert were the acts of Anderson & Sargent. What he did was by their direction and request, and they are bound by it. Bank v. Gregg, 14 N. H. Rep. 331. It is said -in argument that there is no equity in the bill, and that the complainants have a plain and adequate remedy at law. But we cannot so regard it. Admitting the statements in the bill to be true, the claim, -which Anderson & Sargenthaveupon Samuel Morrison, and which stands in the way of the collection of the complainants’ demands, by reason of the mortgages upon Morrison’s property, placed there on account of that claim, was brought about by gross fraud, and is entirely without consideration; and should this be made to appear in a suit at law, and the complainants sue — 521 — ceed in collecting their debts ont of the property, still there Would remain upon the records, uncancelled, the mortgages to William M. Morrison, and the complainants’ title to the property would lack that completeness which, in good conscience, they ought to have. A court of equity will interfere in such a case. It has jurisdiction in all cases of fraud, if the remedy at law is-not perfect and complete, and where a fraudulent incumbrance upon property cannot be removed by process of law, equity will interfere. Tappan v. Earns & a. 11 N. H. Rep. 311; Dodge v. Griswold, 8 N. H. Rep. 425; Bean v. Smith, 2 Mason 252; Mountford v. Taylor, 6 Vesey 788; Hadden v. Spader, 20 Johns. 554; McDurmutt v. Strong, 4 Johns. Ch. Rep. 787. The remedy, by obtaining from the common pleas leave to appear and defend the suits of Anderson & Sargent upon the notes, is far from being complete. The appearance in such cases is not a legal right, but rests in the sound discretion of the court where the actions are pending; and is usually where there is collusion between the parties to the suits in which the first attachments are made. Should the complainants obtain leave to appear, and should they defeat the actions of Anderson & Sargent, there would still remain, upon the property, uncancelled, the mortgages to Morrison.. The position of the defendants, that there .was no confederacy between Anderson & Sargent ■ and the Morrisons, to defraud the complainants, and that the complainants cannot maintain a bill which Samuel Morrison could not, cannot be sustained. The. allegation of confederacy in a bill is not essential, except where it is intended to charge fraud and combination specifically. Story’s Eq. PI. §29; Coop. Eq.. PL 14 ; 1 Daniel Ch. Prac. 426. The bill does not go upon the ground that there has been fraud and combination between the defendants to injure the orators, but that there has been fraud practised by Anderson & Sargent upon Morrison, by which the orators are as effectually injured as if there had been an actual combination against them. And: — 522 — according to the view which we take of the case, it is unnecessary to consider whether Samuel Morrison could maintain a bill against Anderson & Sargent or not. If the complainants can show that, by the fraud of Anderson & Sargent, the property of Morrison, which should be honestly appropriated to the satisfaction of the complainants’ demands, is about to be sacrificed to the payment of fraudulent claims, and they thereby lose their debts, and that they have no adequate, remedy at law to prevent it, they make out a case for the interference of chancery. All this appears by the bill, and we think it should be answered. The necessity of making Joseph F. Morrison a party to this proceeding is not perceived. He is not to be affected by the result one way or the other, and was no party to the fraud. Whether the decree in favor of the complainants, in case they should ultimately prevail, would be precisely in accordance with their specific prayer, need not be investigated at this time. Under the general prayer for relief, the complainants may pray at the b.ar for such specific relief as the statements of the bill will warrant, provided it does not conflict with that specifically prayed for. 1 Danl. Ch. Pr. 434,435,and notes; Story’s Eq. Pl. §41; Coop. Eq. PI. 13,14. In Bailey & a. v. Burton, 8. Wend. 339, the rule was carried further, and it was there held that under the general prayer, the complainant is entitled to any relief consistent with the case made, though inconsistent with the specific relief prayed for; and that under the prayer for general relief, it was competent for a court of equity , to set aside a mortgage as fraudulent, the facts warranting such conclusion, although the specific relief prayed for was permission to redeem. But this question can be settled when it shall be necessary so to do. So far as at present appears, the bill is well enough drawn to answer the object of the complainants, — 523 — which is to remove the obstructions interposed by Anderson & Sargent to the collection of the complainants’ demands. Demurrer overruled.