Harris v. Alcock , 10 G. & J. 226 ( 1838 )

Dorsey, Judge,

delivered the opinion of the court.

The case of Harris and Chauncey vs. Alcock, and Chapman and Erskine vs. the same defendant, resting for the most part on the same questions of law and fact, and under the opinion of the court sharing the same fate, they will be considered and disposed of together, as if forming but one case, The question which, in its natural order, first presents itself, is, did the property in the merchandise mentioned in the complainants’ bill, as sold to Brady, pass out of the complainants, under the circumstances attending the sale ?

It is insisted that it did not, upon two grounds.

First, because Alcock fraudently aided and assisted Brady in making the purchase, with a view of levying an execution thereon as soon as it should arrive in the city of Baltimore.

Secondly, because Brady, at the time of the purchase, knew himself to be insolvent, concealed this fact from the complainants, and when he obtained the goods, did not intend to pay for them.

Either of these grounds, if established, would have entitled the complainants to relief. But, unfortunately for them, the proof in the record sustains neither of these, their pretensions, no such fraud as that imputed to either Alcock or Brady has been sustained by the testimony, and the right of property in the goods vested upon their sale and delivery.

The next ground upon which the appellants assert their right to relief, is, that the judgment confessed by Brady to Richard E. Alcock, is fraudulent and void, and in support of this assertion, they insist, that if the design of the judgment was as is alledged, to obtain by way of judgment, security for the debts due by Brady to Richard E. Alcock, Samuel Alcock and Co. and Cartlidge, that a separate judgment would have been confessed to each creditor for the amount due to him; and that the omission to pursue that course, is evidence of a fraudulent design.

Is the inference warranted by the facts and circumstances under which the judgment before us was rendered, is the question we are to consider ? Richard E. Alcock, we assume, was the authorized agent of Samuel Alcock and Co. and Charles Cartlidge, in obtaining the judgment designed to secure the debts due to himself, and his principals. His design doubtless was, it ought to have been, so to arrange the matter, that each of the three creditors should come in pari passu, in reaping the benefits to be derived from the security about to be taken, for the preservation of their claims. So far from the mode adopted to carry out the design, being any evidence of fraud, it is strong evidence that the agent intended to act with perfect fairness and justice in the transaction ; nay, it is the only mode in which he could have done so, consistently with his duty to himself and his principals. If, as has been suggested, he had obtained a separate judgment for each creditor, that mutuality and perfect equality of benefits, which was in the contemplation of the parties, would in all human probability have been frustrated; a field would have been opened for a race of diligence between three judgment creditors, which would have operated injuriously to Brady, and was never contemplated by him or his creditors to whom the security was to be given. In taking the one judgment instead of the three suggested, Alcock acted in good faith both towards his principals and Brady.; and their other creditors, in this respect, have no right to complain of the course which has been pursued.

It is also contended that, the judgment is fraudulent and void as against the other creditors of Brady, because the note of $20,000, on which it was rendered, was not given for a debt bona fide due from Brady to Alcock, and that this fact being established, the note is thereby impeached for fraud, and it is incompetent to oifer testimony to sustain it by showing that it was given in part for a debt to Alcock, and for the residue on account of debts due by Brady to Charles Cartlidge and to Samuel Alcock and Co. The sole object of the note as is satisfactorily shewn by the proof in the record, was to facilitate the entry of the judgment, which Brady had agreed to confess, as a security for the three debts referred to, which debts, by the testimony admitted in the cause, coupled with the confession of the judgment, we think are sufficiently established. The note upon its face, does not in terms say, that it was given for a debt due from Brady to Alcock, but simply promises to pay Richard E. Alcock the sum of $20,000 for value received; as respects its validity it is wholly immaterial whether the note was given for a debt due to Alcock alone, or was given to him as .the authorized agent of Cartlidge and Samuel Alcock and Co. (of which authority we think the record furnishes sufficient proof) for the purpose of obtaining the-judgment rendered to secure the payment of their debts. But it is insisted in behalf of the appellants, that the testimony offered by the appellee, in relation to the judgment and note on which it is founded, is inadmissible, because you cannot offer evidence to add to or contradict a deed, much less can you do so in relation to a record, which is of much greater solemnity; no evidence was adduced to add to or contradict the record. ’ It was not offered to prove that the judgment was not rendered on the promissory note, and thus impeach the verity of the record; but the appellants having offered evidence to contradict the statement in the note, that it was given for value received, and alleging that it was wholly fictitious, without consideration,.and fraudulent; the appellee, in perfect consistency with both note and judgment, offered the evidence on his part, to show that the transaction was bona fide, and not fictitious, without consideration and fraudulent, as was alleged; and to do - this, he offered proof, not contradicting the note, not showing a different consideration from that expressed in it, but showing what in point of fact was the value received, which the note upon its face alleged to have been the consideration for which it was given. There surely on this point is no analogy between the case before us and that of Betts and wife vs. the Union Bank of Maryland, 1 Har. and Gill, 175, and the other like cases which have been cited, where the testimony objected to, was. adduced to prove a consideration of an entirely different nature from that expressed in the deed.

It is further urged, that the judgment is fraudulent and void against the other creditors of Brady, because the debts, to secure the payment of which it was given, were not merged in the judgment, nor were releases or receipts given therefor. There is no weight in this objection. The judgment did operate as a merger or extinguishment of the debt due to Richard E. Alcock. After its rendition he could prosecute no suit upon his original cause of action. But as respects the claims of Cartlidge and Samuel Alcock and Co. it was no merger or extinguishment, but a mere collateral security for the payment thereof, and did not impair the rights of those creditors to prosecute any remedy at law, or in equity, which previous to the judgment they might have sustained. It is, however, wholly immaterial whether the judgment was an ex-tinguishment of those claims or not, or was a mere collateral security for their payment, in neither event should such receipts or acquittances have been given.

The appellants also insist, that the judgment is fraudulent and void against the other creditors of Brady, because it adds a new debt of $20,000 to those already owing, in as much as it did not extinguish the claims on account of which it was entered, and no releases or discharges being given therefor, payment might be enforced both of the amount of the judgment and of the claims for which it was given. But the conclusion which has been drawn, is not warranted by the premises; the payment of both cannot be enforced. By satisfying the judgment, the claims are extinguished, and by discharging the claims, the judgment is satisfied. It is likewise insisted, that if the judgment was paid, neither Brady nor his creditors could have proved for what debts it vras rendered. Brady well knew for what debts the judgment was entered as a security, and his omission to take some written evidence thereof, or to provide some means of proving the same, would not make fraudulent and void a judgment, in all other respects unimpeachable.

This court must pronounce the law upon the facts as they appear in the record, and cannot set aside a judgment as fraudulent, all the facts and circumstances in relation to which being proved, shew it to be otherwise, merely because the means of obtaining such proof in some future case may not be within the reach of the party complainant. But the difficulty apprehended is not insurmountable, a bill of discovery will readily remove it.

There is no foundation for the impeachment of this judgment, on the ground that if Alcock were to receive and waste the amount due thereon, the debts due to Cartlidge and Samuel Alcock and Co. would still remain in full force against Brady, such receipt by Alcock works the immediate extinguishment of those debts, and no subsequent misapplication of it can ever revive them; nor is there more weight due to the objection raised by the appellants’ counsel, that the trust upon which Alcock holds the judgment, ought to have appeared upon the record, and cannot be proved by parol. There is no principle of law which requires such an entry upon the record, or prohibits the proof of such a trust by oral testimony. The cases referred to in the argument rest entirely on the express provision of the statute of frauds, and have no bearing upon the question on which they were cited.

From an attentive examination and consideration of all the evidence introduced into the record, we are satisfied that there was no fraud in the judgment rendered, or the means used in obtaining it.

The next point on which the appellants claim a reversal of this decree is, that the execution is fraudulent, as having been issued after the payment of Cartlidge’s debt; even supposing that the judgment is not fraudulent, execution issued for the whole amount of the judgment, the payment made of Cartlidge’s debt, not being endorsed thereon, as it should have been. The simple fact of issuing an execution for more than is due on a judgment, does not per se render the execution fraudulent and void. It is by the quo animo with which it issued, that its validity is to be tested, if issued with a fraudulent intent it is void, but if issued bona fide it is not void, and will be available to the plaintiff to the extent of the debt remaining due on the judgment. Hollingsworth's adm'r vs. Floyd, et al, 2 Har. and Gill, 87, and Rudd and Miller vs. Schlatter and Gilman, 1 Littell, 19. There is nothing in the record from which any fraudulent design could be imputed to the appellee, in issuing the execution complained of. The proof in the cause repels all idea of collusion between him and the defendant, the appellants therefore are entitled to no relief on the ground of fraud in issuing the execution.

The last point raised by the appellants is, that the property taken under the execution was not legally the property of Brady, and that equitable interests in personal property are not the subjects of an execution, and consequently, that the execution in this case ought to be set aside. With the appellants’ premises on this point as legal propositions, we see no reason to find fault, but to his consequence or conclusion as regards the exercise of the authority of a court of equity, we must be permitted to object.

It cannot be denied as a legal principle, that a debtor’s equitable estate in personal property cannot at law be seized and sold under a fieri facias. The usual mode by which a creditor pursues such interests of his debtor, and makes them available for the payment of his debt, is to issue a fi.fa. and place it in the hands of the sheriff, and cause it to be levied or returned, thus showing that his remedy at law has failed; by which acts of diligence he acquires in the eye of a court of equity, a priority of right, or preference to the debtor’s interest in the property, from the time his execution was placed in the hands of the sheriff, and upon application to a court of equity, he will be permitted to come in and redeem the prior incumbrance, and have a decree for the sale of the property thus disencumbered, for the payment as well of the amount of the incumbrance, as of the execution debt; or as is a more proper course of proceeding, he will obtain a decree without any clause of redemption for a sale of the absolute property; first to pay off the incumbrance, and then the creditors’ execution. The property levied on in the case under consideration, is wholly inadequate to pay the appellees, the preferred creditors’ debt. The appellants, therefore, have no right to ask a court of equity to set aside the proceedings under the execution; they have no interest in the subject matter; courts of equity never interfere to set aside proceedings at law, but at the instance of those whose interests are affected by them.

But there is another ground upon which such interference should be refused. A court of equity will always ratify and confirm that when done, which as a matter of course, if previously applied to, it would have ordered to be done. If after the levy and before the sale under the execution in question, the court had been called on by the appellee, to decree the sale of the property seized under the execution, the relief asked for would have been unhesitatingly granted. The sale then having been made by the appropriate legal officer, so far from setting aside the proceedings under the execution, the court if applied to for that purpose, had it been necessary, would have decreed the ratification of the sale which had been made. Upon this, the last point of the appellants, see the cases of Venable and McDonald vs. the Bank of the United States, 2 Peters, 107, and McDermott vs. Strong, 4 John’s C. R. 691.

The views which we have already expressed upon the points raised by the appellants, render it unnecessary for us to examine or decide the objections to several of those points suggested by the appellee, upon the pleadings and issues, &c. in the cause, or to determine the question as to the validity of the deed to Chapman and Erskine, under the statute of Elizabeth.

The decrees of the county court in the cases of Harris and Chauncey vs. Alcock, and Chapman and Erskine vs. Alcock and others, are affirmed with costs in this court and the court below.

DECREE AFFIRMED.