Jones v. Fayerweather , 46 N.J. Eq. 237 ( 1889 )

The opinion of the court was delivered by

Beasley, C. J.

In the month of January, 1885, William L. Jones, now deceased, exhibited his bill in the court of chancery as a creditor of the firm of Davenport Brothers against Maria Davenport, individually, and as executrix of James S. Davenport, deceased, who, it was alleged, at the time of his death, was a member of such firm. It being shown that James S. Davenport and the partnership of which he was a member were insolvent, the object of the procedure was to subject to the claims of creditors certain real and personal estate which it was charged had been transferred by the above-named James S. Davenport to his wife, the defendant, Maria Davenport, without consideration and in fraud of creditors.

The bill was avowedly a creditor’s bill, itself declaring that it was for the benefit of the complainant and all other creditors of the said James S. Davenport who might come in and contribute to the expense of the suit.

In the month of February following Fayerweather and Ladew, who are respondents in this appeal, filed a similar bill, seeking to set aside, on the same ground, the conveyances of the real estate described in the bill of the appellants, and again in the mouth of June, in the same year, the First National Bank of Somerville pursued the same course. These three bills were formal creditors’ bills, and with respect to object and grounds of equity, were identical.

In the last-named bill, that of the bank, there was a specific statement that a hundred shares of the capital stock of the First National Bank of Jersey City had been transferred to Maria Davenport in fraud of creditors. At the hearing, this specific statement was, by way of amendment, introduced into the bill of Fayerweather and Ladew, but that course was not pursued with respect to the bill of the appellants, but, in lieu of such particularization, there were in the. bill last mentioned the following allegations, viz.:

“ The said James S. Davenport was also, in his lifetime, possessed of sundry railroad stocks, bonds and other personal securities, to an amount exceeding $20,000, which, after the said firm of Davenport Brothers' became embarrassed, he transferred to Maria Davenport. Your orator charges that the said transfer was fraudulent and void as against your orator and the other creditors of Davenport Brothers, and that said securities and the proceeds thereof are helcl by the said Maria Davenport in trust for your orator and the other creditors of Davenport Brothers.”

In this attitude of the pleadings the argument was heard and a decree made, in each of the three cases, to the effect that the conveyances of the lands above mentioned were void, and ordering a sale and directing the proceeds to be brought into court.

With respect to the shares of bank stock above designated, the decree in the appellants’ case was silent, giving no relief with regard to them. But in the procedure by the Somerville bank and in that of Fayerweather and Ladew, the money representing this stock, for it had been sold by Maria Davenport, was ordered to be levied and made out of her property and brought into court for distribution.

This money has been raised and is now under the control of the chancellor, and is to be distributed by him.

As just stated, the decree in the suit of Jones did not- embrace this fund, and the solicitor in that case, evidently fearing that in such a posture his client would not be entitled to claim a proportionable share when the money should be distributed, resorted to the expedient of having the decree in the case amended so as to give it the operative force of the other two decrees. With this view, Jones, having obtained the consent of all the parties to his suit to such alteration of his original decree, presented a new decree, having the effect just indicated, to the chancellor, who approving it, the same was signed and enrolled. It will be observed that this emendation of the original decree assimilated or rather identified, with respect to scope of operation, these three several suits.

The step thus taken appearing to the counsel of Fayerweather and Ladew to be harmful to the equitable interests of their clients, notice was immediately given of a motion to vacate the decree last mentioned. The motion was made in behalf of Fayerweather and Ladew, and, being successful, a decree was passed in their behalf avoiding the procedure thus put in question. From this last decree this appeal has been taken.

The course thus pursued in behalf of Fayerweather and Ladew appears to this court to have been altogether abnormal. So far as is known, it is not defensible on the ground of any precedent. What has been done is this: a formal and enrolled decree in the court of chancery has been set aside and abrogated, not at the instance of a party to the suit, but on the motion of a mere intruder. The circumstances were these: These three suits were pending, having a common object; they had not been consolidated, and were consequently independent procedures; in the suit of the appellants a decree Avas taken Avhich the counsel of Fayerweather and LadeAv thought would in some measure impair the equitable rights Avhich had, as they supposed, been established by the decree which had been entered in the suit of their clients. The question was, this being so, "What was the remedy ? It is very plaih that Fayenveather and LadeAV, for the purpose of redress of this supposed invasion of their rights, could not be translated from their oavii suit into that of their adversary, and that was the step that was taken. The appropriate remedial method is pointed out in books of practice and in the adjudications. The party thus aggrieved must resort to an original bill, and in that mode, and in that mode only, can he vindicate his rights. It is not conceived that a stranger to the suit can in any Avay impeach a decree entered in such suit. This is the doctrine taught in all the treatises on the subjects of pleading and practice. Thus, Daniell, when treating of the nature of a bill of review, says:

“ It can only be filed by a person avIio Avas a party or privy to tbe former suit; and where any other person considers himself aggrieved by the decree he must proceed by original bill.” 2 Dan. Ch. Pr. 1579 ; Story Eq. Pl. § 409; Mitf. Pl. 137; Style v. Martin, 1 Ch. Cas. 150.

Nor does it vary the rule when the bills in the given case are creditors’ bills. It is undoubted that in the present instance Fayenveather and Ladew could have had themselves admitted as creditors in the appellants’ suitbut this they did not seek to do, for if they had taken that step, they could not have attacked this amended decree, as it AA’Ould have been beneficial to them in their character of creditor. What they desired to do, and what they did, Avas to assail the decree ab extra.

The impolicy of sanctioning such a course of practice as this is strongly exemplified in this case. William L. Jones obtained a final decree against Maria Davenport, that she was responsible to him for certain stock that her husband had transferred to her. That decree Avas assented to by Maria Davenport herself and by all the other parties to the suit. It would seem, therefore, that so far forth as such parties were concerned, the decree in question should not have been disturbed, and yet at the urgency of a stranger the entire decree has been avoided. If such stranger had pursued the established course and had filed his bill, all he could have asked was to have the decree so restrained as to be inoperative with respect to his own interests; he would not have been listened to if he had endeavored to modify the decree beyond that limit.

The course taken in this respect is anomalous. If sanctioned it would produce very great confusion in the practice of the court.

In the opinion of the court, this decree vacating the prior decree must, on the grounds indicated, be annulled in this appeal.

But it was contended, both in this court and in the court below, that the amended decree was to be treated as void on two grounds — first, that the decree in question did not relate to any matter embraced in the bill, and therefore pertained to a subject coram non judice ; and, second, that the primary decree exhausted the power of the court in the premises, and that, consequently, its jurisdiction with respect to them was at an end.

But, in the opinion of this court, neither of these positions can be maintained.

With regard to the former objection, we think it is plain that the decree was germain to the contents of the bill. It is true that the bill did not specify the stock that formed the subject of the amendment. But such stock was comprehended within the general statement of the bill. That statement undoubtedly was loosely drawn ; it was defective, not from the fact that it did not sufficiently particularize the personal property alleged to have been transferred to Maria Davenport, but from the fact that, instead of showing how such transfer was fraudulent, it merely averred it to be so. Good pleading required that the circumstances constituting the fraud should be stated, and these were wanting. The fraudulent trait omitted was that the assignment was voluntary, the design being to defraud creditors. If such fact had been stated, it is deemed that this part of the bill would have been unobjectionable. In cases of alleged fraud these comprehensive charges are very often not only serviceable, but absolutely indispensable. Bills in such instances are for discovery as well as relief, and if the doctrine were that the creditor must specify or particularly describe all the property which it is the •design of the fraud-doer to conceal, by puttipg it into the hands of an accomplice, the remedy would be conspicuously inadequate. In the present instance the objection that this statement did not fulfil the legal requirement is entirely technical; that general statement, in its connection with the previous allegation of the voluntary transfers of the real estate, in fraud of creditors, fell little short of a direct charge that a similar fraud had been perpetrated with respect to the personalty; that it was actually intelligible to the defendants in this sense cannot be questioned, for Maria Davenport, the alleged recipient of the property so transferred, answered the charge, averring that she paid, with her own money, for the stock in question, thus showing conclusively that she fully understood the nature and constituents of the fraud indicated. We think it obvious that the vagueness and generality in this clause of the bill according to our own exposition of the pertinent rule when the case of Rorback v. Dorsheimer, 10 C. E. Gr. 517, was before us, could be objected to only by a demurrer. The entire purpose of the rule that requires reason-. able certainty in the stating or other parts of a bill in equity, is to inform the defendant of the gravamen of the complaint preferred against him; and it seems to be a plain dictate of justice, that after he has answered such complaint and after evidence on both sides has been taken in its elucidation, he should not be permitted to object to any flaw in the pleading, unless in those very exceptional cases in which he can make it plainly to appear that he has been innocently misled by means of the defect. And, even in this limited class of cases, it is difficult to imagine an instance in which relief would be thus rendered without the im- . position of terms protective of the rights of the complainant.

In short, it is clear, we think, that the bill of the appellants • did embrace that part of this litigation that relates to this bank stock, and that, consequently, there was error in the original decree in this respect, and that the- amended decree, embodying the proper adjudication of the subject, is, with respect to substance, altogether unimpeachable.

But it is further urged that, even if the primary decree was defective, inasmuch as it had been duly enrolled, it was unalterable by the court. It is said in the brief of counsel ‘that the rule is well settled, that after the term at which a judgment is rendered a court has no power to alter or amend its judgment, or the record which manifests it. Many authorities were cited to fortify the position. If this principle were recognized, the unavoidable consequence would seem to be, that the vacation by the court below of the amended decree was erroneous, as that decree was enrolled.

But, in our opinion, the principle thus appealed to has no application to the problem we are required to solve. That a court of equity can, at any time, unless barred by the limitation of a statute or by paramount equities, alter its own enrolled decrees at the instance of a party to the record, in certain classes of cases, will not, it is presumed, be denied by any one. Barely to posit this proposition is to ensure its acceptance; and it is equally plain that the suit of the appellants, with respect to the emendation of the original decree, is comprehended within one of the classes of cases thus alluded to, in which alterations of enrolled decrees can be made. When this decree was remodeled an error was inherent in the record, and that error properly formed the basis for a bill of review. In truth, the juncture presented a typical case for this species of remedy, as the error to be corrected became apparent by a mere examination and consideration of the record in connection with the evidence. That such a posture of the proceedings would have warranted the use of the formula referred to, seems to be beyond all question, and it is therefore deemed superfluous to refer to authorities upon the subject.

And from the postulate thus assumed the conclusion necessarily results, that the court of chancery had jurisdiction to alter its original decree • it could plainly have done so through the instrumentality of a bill of review at the instance of the complainant. An alteration of the decree effected in that mode would have been technically correct. This being so, the objection of the counsel of the respondents which is now under consideration is left without support; for if the chancellor possessed the power to alter his decree in a certain mode, his adjudication cannot be impeached collaterally. We have already seen that it could not be impugned by a mere volunteer who had thrust himself into the suit. It is true that, in this instance, a bill of review was not used, the decree being altered by the consent of all the parties to the suit. But the bill of review is not a jurisdictional proceeding; it is the technical form whereby the chancellor exercises the prerogative inherent in him of modifying, in the permitted cases, his decrees. That such an authority, in particular cases, continues in the chancellor, has been attested by many judicial decisions, some of which have been rendered by the courts of this State. Carpenter v. Moorhouse, 2 Mc art. 123; Clark v. Hall, 7 Paige 382: Sprague v. Jones, 9 Paige 395; 2 Hoffm. Ch. Pr. 2.

The result therefore is, that the claim that, in altering the decree in question, the chancellor went beyond his jurisdiction, so that the matter was coram non judice, cannot be reasonably predicated.

It seems proper to add, in order to avoid misconstruction of the views entertained by the court in regard to the practice in equity, in this particular, that this court does not intend to intimate that the decree in the present instance was not corrected in an unexceptionable mode. Why a pure procedure that is not in any sense jurisdictional, and is of no concern to any persons who are not parties to the suit, cannot be waived, in any case, by such parties, is not apparent. Parties to a suit who assent to a decree lose their right of appeal with respect to it, and, consequently, it is not perceived on what ground this amended decree could be challenged by any of the litigants comprehended by the bill of the appellants.

This question, however, is not before us in such a form as to call for decision.

The last subject involved in this appeal which it is necessary to consider, is the rule relating to the time within which persons who are entitled to come in as participants in the distribution of the funds in court must present their claims. The theory adopted in the court of chancery was this: That a creditor, in order to be entitled to a proportionable share of the assets of the common debtor, must put in his claim under one of the suits and thus become a party thereto prior to the final decree, and that by so doing he acquired the right only of sharing in the assets embraced in the decree in that particular case. The effect of this exposition of the principle of distribution was to deprive the complainant, and the creditors who had become parties to that suit, of all claim to participate in the proceeds of the bank stock; and as the debt due to the Somerville bank had been paid, the effect of the rule thus defined was to assign the fund in dispute, primarily, to Eayerweather and Ladew and to such creditors as had been joined as parties to that particular bill. The several suits were treated as separate and independent, so that after decree the rights of creditors to the moneys raised under the several executions were definitely and definitively settled. If this court were to sanction this view, it would seem necessarily to follow that the appellants and their associated parties would be entitled to the whole of these moneys, at least to the extent due them; for as this court has concluded that the amended decree is entitled to stand, and that it embraced the bank stock, on that basis it becomes plain that the appellants’ bill imposes the first lien on such stock, as it was the first one in point of time that was exhibited, for it is the filing of the.bill that constitutes the lien on ■equitable assets.

But the view of the equitable rule thus expressed by the vice-chancellor cannot receive the sanction of this court. There were but two judicial decisions referred to in its support, those of McDermutt v. Strong, 4 Johns. Ch. 691, and Edmeston v. Lyde, 1 Paige 639, but neither of these cases is pertinent. They were not creditors’ bills; each was a pursuit by a creditor of the property of his debtor in his own behalf alone, and, having obtained a self-serving decree, the common and well-known rule was applied, that such advantage would not be disturbed in behalf of other creditors who had been less diligent. Such procedures have no affinity with bills exhibited by complainants not only for the benefit of themselves but equally for that of all other creditors who may be made parties; for the very form of such bills excludes the idea that any creditor, or any class of creditors, is to obtain any preference over the others. When, therefore, the question arises with respect to the marshalling the rights of those entitled to share in the division of the property which has been realized through such instrumentalities, the matter is not open to speculation, for the equitable rule is entirely settled, that until the fund in court has been actually dispensed, a creditor presenting his claim cannot be refused a participation in the distribution. This we regard to have been the established practice from time immemorial. Many cases demonstrative of such practice are cited in the learned and well-considered brief of the counsel of the appellants. None have been referred to, and none are known, having a different aspect. Under such circumstances, it appears to be unnecessary to refer to the books or to discuss the subject.

The decree must be reversed.

For affirmance — None.

For reversal — The Chief-Justice, Dixon, Garrison, Knapp, Mague, Yan Syckel, Brown, Clement, Cole, McGregor, Whitaker — 11.