Paine v. Holliday ( 1890 )

Cooper, J.,

delivered the opinion of the court.

There was no error in the action of the Court below in refusing to permit Mrs. Harris, a creditor of the defendants, Gattman & Co., to intervene and defend the suit after the rendition of the judgment against the defendants.

The right to intervene at all, arises under the provisions of sections 2 and 3 of chap. 44 of the acts of 1884 (Acts, p. 76), and the privilege thereby conferred must be availed of before, and not after the termination of the suit.

The greater number of the numerous errors assigned by counsel and argued at length present questions with which neither Paine nor Mrs. Harris have any concern. The principal question is, whether the court erred in refusing to permit them to intervene. If error was committed in this respect, the judgment must be reversed ; if there was no error in this particular, it does not lie with them to assign errors for Gattman & Co,, the defendants in attachment.

The real question in the case is, whether R. Paine, receiver, was entitled to intervene in the suit and make defense for the defendants in attachment to prevent the rendition of a collusive judgment in favor of the plaintiffs. The lower court held that Paine was not himself a creditor of the defendants, and was therefore not within the terms of the act permitting intervention. So much as is material of the act referred to is as follows:—

“ Sec. 2. That any creditor of a defendant in attachment sued out under the provisions of chapter 67 of the revised code of 1880, shall have the right to intervene in any court where the same may be pending, and contest the grounds alleged for suing out the same by plea in abatement of the writ, upon making and filing in such court an affidavit setting forth that he is a creditor of the defendant, and that he believes the alleged ground or grounds of attachment to be untrue, and in such case that shall be the issue to be tried, unless the defendant has pleaded, or shall before trial plead in abatement of the writ, and in such case the creditors intervening may introduce testimony in behalf of the defendant: provided, that any person intervening as a creditor under the provisions of this act shall give bond in such penalty as the court shall prescribe, conditioned to pay the costs of the trial in case the issue shall be found against him; and provided further, that a trial shall not be allowed in the same case on more than'o’ne plea in abatement.”

“ Sec. 4. That if any person shall present to the court in which any attachment suit may be pending an -affidavit setting forth that he is a creditor of the defendant, and that he has just cause to suspect and verily believes that the debt claimed in the suit is fictitious or simulated, in whole or in part, he shall be admitted to defend the suit in the name of the defendant, upon giving bond as provided in the second section of this act.”

The record in this cause does not show how and under what circumstances Paine was appointed, receiver, or the extent of his powers; but there is an agreement of counsel by which the bill of complaint, answer thereto, agreement of the parties, and final decree thereon in the case of Carlisle v. Gunn, in this court (ante, p. 243), may be considered as a part of the record of this cause. From an examination of that record -we find that a very great number of creditors of Gattman & Co. (seventy or more) sued out attachments against them, and it became necessary that a proceeding in chancery should be instituted to settle conflicting claims and priorities of the creditors, and finally a decree by consent was rendered, whereby the entire assets of the defendants, Gattman & Co., were vested in Paine, who was directed to distribute the proceeds thereof according to the decree.

The present appellee was a party to that suit, but it was found that no agreement could be reached touching the validity of his claim. It was, therefore, ordered that the bill should stand dismissed in so far as it concerned his demand, without prejudice to his prosecuting his' attachment at law; but the fund in the hands of the garnishees in his attachment, it was agreed, should be paid over to Paine as receiver, there to remain until the right of the appellee to subject the same should be determined. It thus appears that there was a dispute between the other creditors of Gattman & Co., on the one side, and Holliday on the other, touching his right to subject the fund in controversy to his demand; that tbe estate of Gattman & Co. was placed in tbe bands of Paine, receiver, for distribution among tbe creditors other than ■ Holliday, who were parties to the chancery proceedings; and that the fund here in controversy was also paid over to him to await the result of this litigation. In view of these circumstances, we think that Paine was constituted the representative of the other creditors to such an extent as to justify his intervention in the present controversy, and consequently that he should have been permitted to intervene under the provisions of the act hereinbefore recited.

The act is of a remedial character, and its manifest purpose is to prevent collusion between a debtor and one of his creditors, to the injury of other creditors: Upon well-settled principles, it should be liberally construed in furtherance of its purpose and policy. The creditors might have intervened personally and in their own names to contest the suit of the appellee, but substantially the same thing is done by the application of their receiver, who appears for them collectively.

For the error in rejecting the application of Paine for leave to intervene and defend the suit,

The judgment must be reversed.