Brown v. Long , 22 N.C. 138 ( 1838 )

The plaintiff Brown subsequently made a satisfactory arrangement with Campbell for the debt, and took an assignment of the judgment to the other plaintiff, Cowan, in trust for Brown.

The defendant Long was also indebted to the plaintiff Brown on another account in the sum of $463.74, for which judgment was (139) rendered, and Long arrested in 1883 and discharged as in the other case.

The bill was filed by Brown, Campbell and Cowan, against Long, Josiah Huie, Robert Huie, John H. Hardie, William Chambers, and Samuel Hargrove. It set forth the foregoing facts, and then alleged that Long had no visible estate out of which any part of those debts could be satisfied, but that since his discharge from imprisonment he had been engaged in certain profitable speculations, upon which Josiah Huie became indebted to him in the sum of $1,115, for which he executed his bond, dated 30 December, 1836, and payable to Long; and Robert Huie became indebted to him in the sum of $1,300, for which he also executed his bonds, payable to Long. The bill further stated that Long endorsed the bond of Josiah Huie in blank, and delivered it to Hardie, and he then delivered it to Chambers; and that Long also endorsed the bonds of Robert Huie to Hargrove, and delivered the same to him. The bill charged that those assignments were wholly without consideration and merely colorable, the same being in secret trust for Long, and intended to enable the assignee to collect the moneys for the use of Long, and to avoid the payment of the judgments against him and elude any process that could be legally issued thereon.

The bill then charged that the plaintiffs had no remedy at law in the premises, and could not find any estate liable to their debts, unless in this Court the debts belonging to Long as aforesaid could be applied thereto; and the plaintiffs thereupon prayed that Long might be enjoined from receiving those moneys from any of the said parties in whose hands they might be, that all the parties might be restrained from further negotiating the securities, that a receiver might be appointed, and that the debts to the plaintiffs might be decreed to be paid thereout.

To this bill the defendants all appeared and put in a general demurrer, for want of equity; and upon the argument of the demurrer, his Honor sustained it and dismissed the bill, with costs; whereupon the plaintiffs appealed. The counsel for the plaintiffs, as a ground for reversing the decree, has endeavored to maintain the general proposition, that equity will, on behalf of any judgment creditor, lay hold of the stock or choses in action of the debtor, and apply them in satisfaction of the debt, if execution cannot be done on visible and tangible estate.

With respect to the equitable property of a debtor, there seems to be no doubt of the correctness of the rule as laid down, provided the thing would be subject to execution if the equitable interest of the debtor were the legal interest in possession. But we believe the courts in this State have never yet carried the principle far enough to embrace legal choses in action. In Harrison v. Battle, 16 N.C. 537, Henderson, C. J., observed, when the question of a pure debt arises it will be time enough to consider whether it cannot be reached. We think, with him, that the question is too important to be determined until it shall so arise that its decision will be essential to the decision of the cause. The decisions of the courts of New York in the affirmative would receive the utmost consideration, both from the respect due to the learning of the judges and to the intrinsic force of their reasons. It must, however, be observed that the opinion of Lord Thurlow was explicitly given the other way, and seems to have been approved more than once by Lord Eldon. Moreover, it has been found necessary, or at least useful, to sanction and regulate the doctrine in New York by statute. Upon this occasion, however, the Court leaves the question as it is found, since the state of this case enables and requires the court to overrule the demurrer upon a principle much less extensive than the one urged by the counsel, and for which we have the authority of a decision in point by Lord Hardwicke. We think there is a strong and evident equity for the plaintiff arising out of the discharge of Mr. Long as an insolvent debtor, which operates as a complete protection of his person under the statutes. That circumstance distinguishes this from ordinary cases of judgment debts, in which the creditor can, by taking the body in execution, compel (141) satisfaction by an assignment of the choses in action of the debtor. Although a creditor may not, therefore, have the right generally to come into this Court for satisfaction out of his debtor's debts, because the Court must take notice that the law gives him the capias ad satisfaciendum, and gives it as an adequate remedy, and therefore equity cannot say it is inadequate: yet for that very reason this Court must interpose in a case in which the party has lost the capias ad satisfaciendum and the law gives no other remedy in its stead, although at the same time the plain intent of the Legislature was that the creditor should be paid. From necessity, therefore, lest there should be a defect of the justice meant to be provided for the creditor, the plaintiff is entitled to be relieved by force of the act of 1793. Rev. Stat., ch. 58, sec. 16. Section 7 of the act of 1773 not only exonerated the person of the debtor, but enacted that the judgment shall be held to be satisfied, and that no execution shall issue against any estate which the debtor may afterwards acquire. This provision, taken in connection with other parts of the act for the assignment and distribution of the debtor's estate, made this a statute of bankruptcy in substance. Then comes the act of 1793, "to alter and amend" the act of 1773. It begins by reciting the former enactments respecting the judgment being satisfied, and the denial of execution, and then proceeds to recite further, that it had been experienced that those sections had been frequently productive of fraudulent conveyances to the injury of creditors, and appeared to the Assembly against good morals; and then it repeals those provisions of the former law and enacts that after the passing of that act execution may issue against any estate afterwards acquired by the insolvent debtor. We think it plain that the Legislature meant the act of 1793 to be substantially beneficial to creditors, and that while it gives an execution on which tangible property afterwards acquired can be taken and sold, it follows, in a case in which an interest of the debtor equally valuable with tangible property exists, but which cannot be reached directly for the want of any suitable process against it, nor indirectly for the reason of the exemption of the debtor's person, (142) that the court of equity must see that the statute is executed in those points in which the courts of law are inefficient.

The fund out of which the plaintiffs ask satisfaction, it is admitted by the demurrer, belongs to the debtor Long, and also that the securities have been transferred without consideration and in trust for him, and collusively kept on foot to elude the payment of those debts. It is an interest acquired subsequently to the discharge of Long; and the case is within the mischief the act was intended to remedy, and therefore within the remedial power of some court, and not being within that of a court of law, falls into that class of the duties of the chancellor which forbids him to allow a right to fail for want of an adequate legal remedy.

Upon views like these the case of Edgell v. Haywood, 3 Atk., 352, was determined by Lord Hardwicke, upon one of the insolvent debtors' acts, called the Lords' acts, passed 10 Geo. II., ch. 26, in which, after discharging the person, "it was provided that creditors might take out a new execution against the lands and goods, etc., as they might have done had the prisoner never been taken in execution." Upon the bill of the creditor against the debtor and the executor of a will in which a legacy was bequeathed to the debtor, it was decreed that an account should be taken of the debt to the plaintiff for principal, interest, and costs, at law and in equity, and also an account of what was due for the legacy, and that the latter should be applied in satisfaction of the former. It is argued on the part of the defendants that our act gives no more countenance to the jurisdiction than the principles of general equity did before the act. It is said that under the former law the debt was declared to be satisfied, and that this must be taken liberally in favor of poor debtors, and that, therefore, although this was altered by the subsequent act of 1793, the alteration cannot be extended beyond the words of the latter act, which are "that execution may issue against any estate," etc. But we think the spirit of the act is inconsistent with the literal interpretation insisted on.

The same argument was urged in the case before Lord Hardwicke, (143) upon the words of the statute which have already been quoted, and gives much more color to the argument than those of our act. But he held the act to be beneficial to the creditor, and therefore not confining him to the same remedy for execution as before the statute; and relief was given because the court looked upon the legacy "as a part of the property of the debtor which the creditor could not come at without the aid of the court."

The judgment is put distinctly upon the loss of the ca. sa.; for although the remedy, through the grace of the crown, upon an outlawry, is also mentioned, yet that does not alter the principle, which is not that the remedy at law was more or less efficacious, but that when the right of the creditor to demand the person of the debtor ceases, there is in regard to property thus situated no remedy at law.

If that was so upon those words which were put into that act by way of proviso, much more plainly correct is such a construction of the act. It passed twenty years after that which it alters and amends, and professes as the reasons for altering the previous provisions that they were against good morals and led to fraudulent conveyances. To what is allusion here made? We think very clearly to the bad morality of a debtor, whose person the law had benignantly delivered, keeping back anything in any form from the satisfaction of his just creditor. Therefore, when the act gives an execution against the debtor's estate, the provision is not to be so construed as to be illusory, or so as to put it in the power of the debtor to elude it, "against good morals." On the contrary, an effectual execution is meant; and as that cannot be had at law, this Court, in conformity to the purposes of the Legislature, must give it.

The act not only repeals parts of the previous law, but upon its face is affirmative and remedial in its enactments; and in that spirit this Court must give effect to it by decreeing relief to creditors here, upon the ground (if no other) that the law intended they should be satisfied, and that they cannot be satisfied by any other means than those in the power of this Court.

The decree must, therefore, be reversed with costs, and the cause remanded, that the defendant may answer and other proceedings be had according to the course of the court.

PER CURIAM. Reversed and remanded.

Cited: Doak v. Bank, 28 N.C. 336.

Dist.: Dove v. Bowen, 55 N.C. 50; Hough v. Cress, 57 N.C. 297; Phillips v. Trezevant, 70 N.C. 177.

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