Deseret National Bank v. Little, Roundy & Co.

Bartch, J.: This action was brought November 13, 1895, to obtain judgment for an indebtedness evidenced by certain promissory notes, aggregating $21,500. At the time of bringing the suit, attachment proceedings were also instituted, and a certain stock of merchandise, belonging to the defendant corporation, was attached and taken into possession by the United States marshal on the following day. Two days thereafter said defendant corporation made a motion to dissolve the attachment, which was denied, and this appeal is from the order denying the motion. The first contention is that the attachment was irregularly and improperly issued, counsel for the appellants maintaining that the grounds upon which it was based did not conform to the statute. If this contention be correct, then the attachment must be discharged, because an attachment proceeding can be upheld only when the law which authorizes it has been complied with. It is an extraordinary remedy, severe and harsh in its nature, [271] and will not be aided by judicial interpretation. The cause for the attachment must be set forth in the affidavit, and the statute authorizing it, as is rightfully maintained by counsel for the appellant, must be strictly construed. This court so held in Jones v. McQueen, 13 Utah 178, 45 Pac. 202. Whether or not the ground on which the proceeding in this case was based conforms to the statute must be ascertained from the affidavit, which, so far as material here, states “that the said defendant, Little, Roundy & Co., has assigned and disposed of, and is about to assign and dispose of, its property, with intent to defraud its creditors.” We think this portion of the affidavit complies substantially with- the provisions of section 3308, subd. 3, Comp, laws 1888, which reads as follows: “Has assigned, disposed of, or concealed, or is about to assign, dispose of, or conceal, any of his property, with intent to defraud his creditors.” The fact that the cause for the attachment is alleged conjunctively does not render it liable to the charge of inconsistency, because it is quite possible that the defendant had disposed of a portion of its property absolutely, and was about to dispose of another portion of the same. This position is strengthened by a consideration of the fact that the seemingly different causes contained in the provision of the statute above quoted are all included in the same subdivision, as one ground for an attachment. There is therefore no inconsistency in the allegation that the defendant has assigned and disposed of, and is about to assign and dispose of, its property. Nor is it uncertain or misleading. The disposition thereof may have been complete as to a part of its property, and in contemplation as to the remainder. The allegation is pi*oper. Such, we think, is the weight of authority under like statutes. Wade, Attachm. § 93; Drake, Attachm. § 102; Mercantile Co. v. Glenn, 6 Utah 139, 21 Pac. 500; Nelson v. Munch, 23 [272] Minn. 229; Salmon v. Mills, 15 C. C. A. 356, 68 Fed. 180; Dawley v. Sherwin (S. D.) 59 N. W. 1027; Blackinton v. Rumpf 12 Wash. 279. The next — and, we tMnk, the decisive — question is whether there is any proof which will support the allegation respecting the disposition of the property by the defendant Little, Boundy & Co. with intent to defraud its creditors. It was alleged in the complaint and in the affidavit upon which the attachment proceedings were based, substantially in the language of the statute, that said defendant had assigned and disposed of, and was about to assign and dispose of, its property, with intent to defraud its creditors; but otherwise there is no other allegation of fraud. The fraudulent intent was denied by affidavit of A. Boundy, the manager of Little, Boundy & Co.; and it was also denied that any creditor had been defrauded, or was about to be defrauded. These denials cast the burden of proof upon the plaintiff, at the hearing of the motion to discharge the attachment, to show, not only the existence of such facts as justified the issuing of the writ, but also that the charge as to the fraudulent acts and purposes was true. This the plaintiff attempted to do by filing the affidavit of Hyrum S. Young, but the affidavit is so vague and indefinite that it seems impossible to conclude therefrom that the defendant, Little, Boundy & Co. made, or was about to make, a fraudulent disposition of its property; and there is no extrinsic evidence in aid of the affidavit. Nor are there any specific acts set out in the complaint which tend to establish fraud. In the affidavit, reference is made, on information and belief, to a verbal agreement between the manager of Little, Boundy & Co., and one James T. Little, to the effect that if he would loan it a certain sum of money it would prefer his claim therefor, by deed of assignment, in the event of its being unable to pay it; and affiant [273] further states that the arrangement was unknown to, plaintiff, and that if it had known thereof it would have insisted upon the payment of its claim. The date when this arrangement was made, or whether an assignment was made pursuant thereof, or whether the defendant Little, Roundy & Co. was a corporation, does not appear from the affidavit. Nor is it shown that said Little was in any way connected with said def endant, or that his claim was not a bona fide, existing demand. Without some knowledge of such material facts, it would seem difficult to determine that the transaction was fraudulent. There is another statement in the affidavit on which the respondent relies, as follows: “Affiant further says, on information and belief, that the preference made in favor of the Utah Commercial and Savings Bank is fraudulent and void for the reason that said debt was an original debt owed by the said Little, Roundy & Co., and the rest and residue of said defendants in this case were also indorsers and co-makers of said note or notes that then represented the same.” It is then stated that afterwards the'bank' held the notes against the defendant Little, Roundy & Co., and, on partial payment, renewed them, and that on such renewal the names of the other defendants were omitted from the notes. When the notes were originally given, and when renewed and the names omitted, is not shown. Such renewal may have been made in good faith, while said defendant was solvent, before any assignment was thought of, so far as appears from the proof. Nor is it shown that either one of the defendants whose names were omitted from the notes was a director or managing agent of Little, Roundy & Co. It is evident that the proof did not present facts which justified the court in denying the motion to discharge the attachment, and yet the burden was upon the [274] plaintiff to show that such a state of facts existed. Fraud will not be presumed. The general rule is that he who relies upon it as a cause of action must aver and prove it. After the defendants, by the affidavit of A. Roundy, had negatived the fraudulent intent, and the fraud which was assigned as a cause for issuing the writ, the plaintiff was bound to show the existence of such facts as established the truth of the allegations contained in the affidavit on which the attachment proceeding was founded, and that the issuance of the writ was justified. This court, in Drug Co. v. Allen, 8 Utah 117, 29 Pac. 881, speaking through Mr. Justice Miner, said: “In proceedings to discharge an attachment, it is first incumbent upon the defendant to negative the cause assigned for issuing the writ, and after this the burden is upon the plaintiff in attachment to shew cause why the attachment should not be discharged, and he must establish the existence of such facts as justified the issuing of the writ.” We intentionally and expressly refrain from expressing any opinion as to the validity of the assignment, because the pleadings and proof shown by the record are not such as to warrant it. We think the motion to dissolve ought to have been sustained, the plaintiff having failed to show by his proof a proper cause for an attachment. The case must therefore be reversed and remanded. It is so ordered. Zanb, C. J., and Miner, J., concur.