Champagne Lumber Co. v. Jahn

BAKER, Circuit Judge (after stating the facts as above). As equity looks beyond form to substance, the first thing to observe is that a corporation is an instrument by means of which individuals upon an agreed capital do an agreed business, with limited personal -liability; that Stewart and Alexander and the other stockholders were in reality Nybaek’s adversaries in the action at law; and that Stewart and Alexander, with corporate assets in their hands, are in no better position than the corporation itself to challenge appellee’s prima facie right to the action of the chancellor in aid of the execution. Appellants say that appellee, by noticing the cause for hearing on bill and answer, confessed that the judgment at law was obtained by means of perjury on the part of Nybaek. Such notice was rather an assertion by appellee that appellants were barred by the adjudication on the law side of the court from requiring appellee to relitigate the truth of the original declaration. The subject-matter of the alleged perjury as set out in the seventh paragraph of the answer was the subject-matter of Nyback’s alleged cause of action. This subject-matter had been litigated to an end on the law side. A motion for a new trial on account of newly discovered evidence had been made and overruled. In the present answer there is no disclosure of any further newly discovered evidence; there is no showing of any act on the part of Nybaek which misled appellants into not preparing to make a complete defense; in short, the answer fails to exhibit to the court on the equity side a single contention with respect to the justice of the original cause of action, or a single item of evidence in support of [514] the defense that was not considered and acted upon by the court on the law side. And so, under the authority of United States v. Throckmorton, 98 U. S. 61, 25 L. Ed. 93, appellants virtually confess that their showing would be insufficient to warrant any affirmative relief against the judgment'or against an execution thereon. But they contend that this same showing is enough to prevent a court of equity from granting any relief to appellee. If the contention is sound, a new way to defeat judgments at law would be opened. After a defendant has fully litigated an action at law, so that he cannot get a court of equity to set aside the judgment or enjoin the enforcement of an execution, let him hide his property or convey it to a trustee before a levy can be made; then, when proceedings in aid of the execution are instituted, let him answer that the judgment was obtained by means of the plaintiff’s falsely testifying in support of his claim; and thereby the judgment is rendered worthless, for if the plaintiff demurs he is beaten, and if he replies and wins he gets his money, not by virtue of the judgment, but by means of the new litigation. We are not disposed to hold that a court of equity can be so used. The averments in the eighth paragraph of the answer are insufficient to charge maintenance. The settlement with Nyback was made when he was a minor, and appellants knew that it was not binding. The action of appellee in inducing- Nyback to disregard the settlement and to bring his action is not alleged to have been taken maliciously or for his own profit. It is not averred that appellee had any financial interest in the result of the lawsuit, and nothing appears from which to question that the relation between Nyback and appellee was such that it was entirely proper for appellee to give the advice and pay the costs and expenses. Under such circumstances, “the intention of promoting and stirring,up litigation” would not be iniquitous. From 'what has been said so far, our conclusion is apparent that there would be no want of equity in requiring Stewart and Alexander to pay the judgment if it was owned by Nyback. In this view the Allegations of the fourth and fifth paragraphs of the answer with respect to the inadequacy of the consideration for the assignment become immaterial. It is enough that appellee can give a valid release. The decree is affirmed.