Leroy Sims & Bros. v. Talbot ( 1854 )

Mr. Justice Handy

delivered the opinion of the court.

This was a bill filed by the defendant in error in the district chancery court at Holly Springs, to attach a debt due by the plaintiffs in error to Mclver & Palmer, non-resident debtors of the complainant, and alleging that the note, the evidence of the debt, had been fraudulently transferred by Mclver & Palmer, or one of them, to one Moore, who also fraudulently transferred it to one McNiell, Moore and McNeill being also non-residents.

The answer of the Sims admits the execution of the note to Mclver & Palmer, and the transfer of it to Moore, and by him to McNiell, but denies all knowledge of any fraud, and states that the indorsements were in due form in the name of the firm. It sets up by way of plea, that in the year 1849 McNeill sued them by attachment on the note in the State of Tennessee, and recovered judgment, which is relied upon as a bar to their liability to this proceeding. They also insist that the rights of the assignees of the note cannot be tried in this suit, as they are non-residents and have never had personal notice of the suit, and a decree against them would not prevent them from enforcing their judgment in Tennessee. Palmer, one of the defendants, also answered, admitting the facts stated by the complainant, and that the note was fraudulently assigned by his partner, Mclver, for his own benefit. Proof was also taken to the same effect, and to establish the complainant’s debt.

The chancellor decreed that Sims & Brothers pay the complainant’s debt and awarded execution, and enjoined McNeill and all the other parties connected with the transfer of the note from collecting the money under the judgment in Tennessee. To this decree this writ of error is taken.

In examining this decree, the most prominent question that presents itself is, whether the court below had the power to treat the judgment rendered in Tennessee against the plaintiffs in error as invalid, and to decree that the defendant in error was not bound by it.

It appears to us clear that no such power existed and that the decree cannot be maintained, on several grounds.

1. The judgment, as pleaded, was rendered in due form and by a competent tribunal. The right of the plaintiff to the note was the foundation on which it rested, and was necessarily involved in the' determination of the suit. The judgment was, therefore, an adjudication of the right of the plaintiff to the note, and whilst it remained in full force it was, upon principles of international law, conclusive evidence of the right of the plaintiff in this State, because such was its effect in Tennessee, and under the provisions of the federal constitution it was entitled to the same credit, validity, and 'effect here, that it had there. This judgment the defendants had a perfect right to rely upon as a protection to them, because it was an adjudication of the plaintiff’s right. Story’s Confl. Laws, § 598. If it was obtained by fraud, or even if the transfer of the note on which it was founded was fraudulent as to the creditors of the assignors, it was competent for the complainant in this suit to file his bill in equity in Tennessee, and hold McNeill liable as having received the money of Mclver & Palmer in fraud of their creditors, and to subject it to their debts. If Sims & Brothers had not paid the judgment, they might have been made defendants to the bill, and thus justice would have been done to the creditors, while the rights of Sims & Brothers would not have been prejudiced. But this could be done because the courts of Tennessee would have power to vacate the judgment by the proper proceeding, and to render it of no effect; a power which no foreign court can exercise to take effect in Tennessee. The plaintiff in the judgment, being a non-resident of this State, was not amenable to the chancery court here for the injunction, and it could not be enforced as to his person ; nor could the decree enjoining the judgment have any force upon the court in Tennessee to arrest execution. It would, therefore, be inequitable to charge a party who had done nothing wrong in the matter with the payment of the debt here when a judgment had been rendered against him for the same debt in a foreign tribunal; for this would be to compel him, when he had been guilty of no fault, to pay the debt twice.

We think, therefore, that under the circumstances here shown, and for the purposes of this suit, the indebtedness of the appellants to Mclver & Palmer must be regarded as merged in the judgment in favor of McNeill, and that the original indebtedness cannot be considered as now existing.

2. It was not competent for the chancery court in a proceeding of this nature to investigate and set aside the title of McNeill to the note and judgment rendered upon it even if it had not been sanctioned by the adjudication in Tennessee. The object of the bill, the ground of the jurisdiction, was to condemn a debt alleged to be due by Sims & Brothers to Mclver & Palmer to the payment of a debt due by them. When it appeared to the court that the real controversy was, whether the transfer to McNeill was fraudulent, and that the complainants’ recovery involved the necessity of setting aside the title- of McNeill as fraudulent, he being a non-resident and never having submitted himself to the court, the case assumed a wholly different aspect from the ground it occupied when instituted, and upon which the jurisdiction could be maintained. From an attachment in chancery, it had become transformed into a bill to set aside a fraudulent conveyance, made in another State and by parties not within the jurisdiction of the court, under a law not known to the court and which possibly might justify it, and when the decree setting aside the transfer would be utterly powerless to protect the rights of innocent parties. Such a proceeding shall not be maintained as incidental to the exercise of the jurisdiction vested by the purpose for which the bill was filed, because it involves the rights of strangers not within the jurisdiction, and is a departure from the ground upon which the jurisdiction should be exercised. Berryman v. Sullivan, 13 S. & M. 65. It would be vain and nugatory towards subjecting the fraudulently transferred property to the payment of the debt claimed against it, and would, in the present case, be efficacious only in unjustly compelling an honest debtor to pay the debt both to the party who had the judgment in Tennessee and the attaching creditor here. And such a result could never receive the sanction of a court of equity.

The decree is reversed, and the bill dismissed, with costs.