Ogden Paint, Oil & Glass Co. v. Child

Smith, J.: This cause was brought and tried in the Fourth District Court upon a bill in equity brought by respondent. The facts, as shown by the bill, and the findings of the lower court and the admission of the parties, as disclosed by the record, are that on the 31st day of December, 1891, the Consolidated Lumber Company, a domestic corporation, made an assignment of all its property to one W. J. Stephens for the benefit of its creditors. At the time of this assignment, appellant Warren G. Child was a stockholder and director of said corporation, and was made a preferred creditor in the deed of assignment. As a member of the board of directors, said Child voted for said assignment. Other creditors were preferred by said deed of assignment, among which was the Ogden State Bank, which was preferred therein in the sum of $4,000. Soon — 479 — after the assignment was executed, the assignee took possession of all the property assigned. On the 25th day of January, 1892, the assignee sold all of the property mentioned in the deed of assignment at a fair valuation. The assignee applied the proceeds of the sale to the debt which the Consolidated Lumber Company owed to the Ogden State Bank. At that time the appellant Warren G. Child was surety upon a note given by the Consolidated Lumber Company to the Ogden State Bank, on which note the proceeds of sale were applied. Bespondent, Ogden Paint, Oil & Glass Company, a domestic corporation, at the time of said assignment was a creditor of the Consolidated Lumber Company, in the sum of $600. Appellant Warren G. Child was also a Iona fide and honest creditor of said Consolidated Lumber Company in the sum of $14,000. On the 13th day of June, 1892, the Ogden Paint, Oil & Glass Company brought a suit against the Consolidated Lumber Company for the amount due it, and afterwards, on the 27th day of June of the same year, recovered a judgment for the sum of $600 and costs. On July 12, 1892, the Ogden Paint, Oil & Glass Company caused an execution to be issued upon its judgment, which was returned unsatisfied. On the 12th day of January, 1893, it caused an alias execution to be issued upon the .same judgment, which was also returned, partially unsatisfied. On March 1, 1894, in two suits which had theretofore been pending in the fourth district court, in which W. J. Stephens, as assignee, was plaintiff, and Gilbert B. Belnap et al. were defendants, the court declared said ■assignment void as to certain creditors, who had, prior to that time, sued' out attachments. ~ On March 2, 1894, appellant Warren G. Child filed in the fourth district court a complaint against the Consolidated Lumber Com■pany for the sum of $14,000, for which amount said Child had been preferred in said assignment, and on the same — 480 — day summons was issued and served upon the manager of the Consolidated Lumber Company. The manager of said company, since the execution of the deed'Of assignment, had ceased to act as such. Said manager, however, was still an officer of said company. On the same day he took the summons to attorneys, who had always been acting for the Consolidated Lumber . Company since its organization. Said attorneys filed an answer in that case, and admitted the indebtedness sued for. On March 3, 1894, judgment was taken in that case in favor of Warren G. Child against the Consolidated Lumber Company for the sum of $14,000. It is admitted that said sum is an honest and Iona fide debt due and owing from said company to said Child. On the day last mentioned an execution issued at the instance of said Child, and was placed in the hands of the sheriff of Weber county, and by him levied upon certain personal property as the property of the Consolidated Lumber Company, and which had been included in the deed of assignment, and which had previously been sold by the assignee, and the proceeds applied as aforesaid. The sheriff proceeded to advertise for sale said property, by virtue of the execution which he held. At this stage of the proceedings, and on the 10th day of March, 1894, the Ogden Paint, Oil & Glass Company filed its bill against Warren G. Child and the sheriff of Weber county, appellants in this action. Upon the filing of said bill' the-court below issued a restraining order to enjoin the said Warren G. Child and sheriff from proceeding with the sale under said execution. There was no claim that plaintiff had any lien on the property, or any interest in it. Upon the facts above stated, at the hearing the court below gave judgment enjoining appellant Child and the sheriff of the county from proceeding with the sale under the execution caused to be issued by said Child, and — 481 — ordered that the personal property so-levied upon by said sheriff should be levied upon by the United States marshal under an execution on the judgment of the Ogden Paint, Oil & Glass Company against the Consolidated Lumber Company; and the United States marshal was directed, under the latter execution, to sell sufficient of said property to satisfy the debt of the Ogden Paint, Oil & Glass Company. From this judgment an appeal is taken to this court. •> Appellant assigns Several errors for reversal, among which are: First, the bill and findings of «fact fail to show any ground for equitable relief; second, that appellant and respondent were each honest creditors of the 'Consolidated Lumber Company, standing upon an equal footing, and that each were entitled to pursue the ordinary remedies at law for the collection of their claims; third, that the undisputed facts show that the property in question had been sold by the assignee at a fair valuation, and the proceeds applied upon the debt owing the Ogden State Bank; and, fourth, that for the purposes of the case, considering the assignment to be void, respondent had an adequate remedy at law, by attachment, judgment, and execution. Other errors are assigned, which we do not think it necessary, in this decision, to consider. A number of these assignments of errors, if not all, might properly be discussed together. It will be observed that the Consolidated Lumber Company, on the 31st day of December, 1891, made an assignment for the benefit of its creditors; that the deed of assignment, among others, preferred appellant Warren G. Child; that afterwards, on the 25th day of January, 1892, the assignee, who had taken possession under the assignment, sold, for a fair valuation, all the property levied upon, and the proceeds of the sale were applied to the payment of a note of the — 482 — Consolidated Lumber Company in favor of the Ogden State Bank, on which appellant was surety. It is unnecessary for the decision in this case to discuss or decide whether the assignment was void. It is true it had been declared void in a suit wherein other creditors had attached the property subsequent to the making of the assignment; but it appears that long prior to the beginning of the action brought by the Ogden Paint, Oil & Glass Company, the property had been sold by the assignee at a fair valuation, and applied upon a debt of a creditor of the Consolidated Lumber Company. Such a sale, under an assignment not void upon its face, to an innocent purchaser, in the absence of fraud, is valid, and the title to the property passes to the purchaser. Burrill, Assignm. 417; Pine v. Rikert, 21 Barb. 469; Frazer v. Western, 1 Barb. Ch. 220. It is, however, urged by respondent that appellant is not in a position to insist upon the validity of the sale by the assignee. It must be remembered, however, that respondent is the person who brought this bill in equity for the purpose of subjecting the property assigned to the payment of its debt; and, unless the facts in the record disclose some equity, respondent is not entitled to relief simply because appellant levied his execution upon property, the title of which had already passed by the assignee's sale. The question is not whether appellant has any right, but is, has the respondent any right? A person seeking relief in a court of equity must show affirmatively facts sufficient to entitle him to relief. Appellant did not bring his action in equity to subject the property in dispute to the payment of his debt. He was simply proceeding according to the ordinary remedies at law, in levying his execution upon certain property pursuant • to a judgment regularly obtained. If, as matter of law, the property upon which appellant levied his execution was not subject 'to levy, by reason of the fact that title had passed to another person — 483 — under the assignee’s sale, yet snch fact furnishes no reason why respondent is entitled to bring its action, and insist that a court of equity give it the relief sought, when in fact no right to equitable relief has been shown. It will also be observed that appellant and respondent were each bona fide creditors of the Consolidated Lumber Company; that in June, 1892, respondent brought its suit against the Consolidated Lumber Company, and secured a judgment, upon which an execution issued in July of the same year, which was returned unsatisfied; that on March 1, 1894, at the suit of other parties, the court below declared the assignment void. Thereupon, appellant' brought his action, and recovered judgment against the Consolidated Lumber Company for the sum of $14,000. On the latter judgment execution issued, and was, by the sheriff of Weber county, levied upon the property previously sold by the assignee.’ The sheriff of Weber county had advertised the property for sale at the judgment of appellant, when, on the 10th day of March of the same year, respondent brought this action against appellant and the sheriff to enjoin them from selling said property upon that execution. Upon the hearing the court granted an injunction restraining appellant and the sheriff from selling the same, and ordered a sale of the property under the execution of respondent. The effect of such a judgment is to say that the execution of one honest creditor can be made to supersede the execution of the other. It is equivalent to saying that honest creditors do not stand upon an equal footing. This is at variance with well-established principles. Bank of Montreal v. Potts Salt & Lumber Co., 90 Mich. 346, 51 N. W. 512; Catlin v. Bank, 6 Conn. 233; Day v. Washburn, 24 How. 352, 357. Eespondent, for a period of about two years, had failed to levy its execution upon the property in question. It did nothing until after appellant had secured his judg — 484 — ment, and levied his execution upon the property. Even conceding — which is not necessary for the purposes of the decision — that the sale by the assignee of the property in question is void, yet the facts do not show that respondent has any equitable right to subject the property to the payment of its debt, as against the execution of Child, which had been levied upon the property prior to the time respondent brought its bill in this action. The courts of law were open to respondent. It had the right to pursue the ordinary remedies at law for the collection of its debt and the payment of its judgment. Appellant also had the right to pursue the ordinary processes in a court of law to reduce his claims to judgment, and to secure satisfaction of the same. There is no reason shown in the bill of respondent why a court of equity should interpose and aid either respondent or appellant in the collection or satisfaction of their judgment. Each had the right to pursue the ordinary remedies at law, and neither had any lien upon or interest in the property levied upon, until after levy. If one were more diligent than the other in making any discovery of property belonging to the Consolidated Lumber Company, which might be lawfully levied upon and subjected to the payment of the judgment, it was his legal right to do so without interference from a court of equity to prevent or obstruct such diligence. The bill of respondent was not a creditors’ bill, brought to declare the assignment void, or to subject the property of the Consolidated Lumber Company, pro rata, to the payment of all creditors alike, who might come in and be made parties to the action. It was a bill brought simply for the purpose of subordinating the execution sued out by appellant to the execution of respondent. Equity will not interfere where there is a plain, speedy, and adequate remedy at law. So far as the facts of this case show, it is clear that respondent had such a remedy, which it — 485 — was its province and right to follow. And, again, no fraud is charged or shown in making the assignment, or in the sale of the property by the assignee, except that the court, in a case in which other creditors were interested, had declared the assignment void. No averment appears as to when any fraud, mistake, concealment, or misrepresentation was discovered, nor is there any averment of what the discovery was, or what particular discoveries had ever been made, or when they were made, or by what inquiries, or by what manner, or at what time. Such a bill does not state equitable ground for relief, and shows laches on the part of respondent sufficient to defeat a recovery. Hardt v. Heidweyer, 152 U. S. 547 (38 L. ed. 548); 14 Sup. Ct. 671; Stearns v. Page, 1 Story, 204, 215, 217, Fed. Cas. No. 13,339, which was affirmed by the supreme court of the United States (7 How. 819); Badger v. Badger, 2 Wall. 87; Wood v. Carpenter, 101 U. S. 135, 140. For aught that appears in the bill, respondent knew all the facts and circumstances connected with the assignment, and of the disposition of the property by the assignee; and yef'no steps were taken by it to subject any of the property to the payment of its debt until after the execution was levied by appellant. Attorneys for respondent contend that appellant is estopped from impeaching the assignment in which he had acquiesced by accepting the benefit of having the note on which he was surety paid out of the proceeds of the sale •of the assignee to the Ogden State Bank. The well recognized principle that a person making, acquiescing, or accepting benefits under an assignment which is void, cannot' impeach its validity, is invoked. This doctrine has no .application in this case. It can hardly be claimed that .appellant’s prosecuting his claim against the Consolidated Lumber Company to judgment, and issuing an execution — 486 — for the collection of such judgment, is an impeachment of the assignment. An assignment for the benefit of creditors is not such a proceeding in bankruptcy as prohibits a creditor from proceeding at law against his debtor in the ordinary way. If the assignment is valid, it simply removes the assigned property from the reach of legal process. If invalid, it has no effect. Any creditor has the right to pursue the ordinary course at law for the collection of a debt honestly due him. The court, in another action, declared the assignment void. Surely, under these circumstances, it cannot be doubted that appellant, as an honest creditor, would have the right to reduce his claim to judgment; and, having reduced it to judgment, he has. an equal right to request an execution upon it. But. counsel misapply the rule which he invokes. Even if' appellant had impeached the assignment, respondent could, not complain. The Consolidated Lumber Company would be the only party affected, and the Ogden Paint, Oil &■ Glass Company, as a creditor, could not collaterally attack such impeachment for its own benefit. We are of opinion that respondent’s bill, and the facts shown in the-record, do not entitle respondent to any relief. The-judgment of the court below is therefore reversed, with costs, with directions to dismiss respondent’s bill. Hebbitt, C. J., concurs.