Voorhis v. Terhune , 50 N.J.L. 147 ( 1887 )

The opinion of the court was delivered by

Knapp, J.

Under this writ of error the plaintiff attacks the validity of an order made by the Supreme Court setting aside a sale of shares of stock in the Midland Railroad Company of New Jersey, belonging to Terhune. The sale was made by the sheriff of Essex county, under an execution, issued out of the Supreme Court, on a judgment recovered by the plaintiff in error against the defendant in error, in the Bergen Circuit Court, and afterwards docketed in the Supreme Court.

The chief legal question invólved in the case is whether the Supreme Court of this state has adequate power of control over its own process of execution to annul and set aside a sale made by the law officer having the writ to execute, when such process has been used for, and the sale under it accomplishes fraud, injustice or oppression, and when all the parties are before the court.

This power is denied by the plaintiffs in error, who contend that remedy can be had only by resort to a court of equity.

That courts of equity have jurisdiction to determine the validity of sales made by sheriffs and other law officers in the execution of final process of the law courts is undoubtedly true. That the exercise of such a power in the law court is of an equitable nature may be fully conceded. But this is no-new thing, for the determination of questions frequently adjudged in the law courts rests upon equitable principles and upon the exercise of equitable powers.

There are cases which, in the adjustment of all the rights of interested parties, are beyond the grasp of courts of law, and the broader range of equity jurisdiction is by the circumstances required to administer complete justice. But where the parties in interest are all before the court whose process has been irregularly used or abused, and full justice can be done by the methods and practice of such court, it would be admitting a fatal weakness in the constitution of such court to concede that it is powerless to do what indisputable justice may demand to be done. Such power would seem to be necessarily inherent in a court of as broad jurisdiction as that of our Supreme Court, and strong reasons should be found to bar the way to its exercise in proper cases, while in truth no valid reason is, or, as I think, can be urged against it.

It is true, generally, that in sales under execution the duties of the officer executing the writ are directed by statute, and title passes to a purchaser without further confirmation by the court out of which the process issued, but it may be asserted that according to the prevalent practice of the courts in the American states the negative power of setting aside such sales for cause is claimed and exercised.

In Rorer on Judicial Sales, as the result of a quite full examination of the cases, the rule is stated to be that the court upon whose judgment execution issues has full power to set aside an execution sale whenever the ends of justice and fair ■dealing require it, and to order a resale, or award a new execution at discretion. The following language of the court, in McLean County Bank v. Flagg, 31 Ill. 290, is no,ted as a correct statement of the general rule:

“ The power over its own process is possessed by all courts. Such power is a species of equitable jurisdiction that is inherent in courts of law as well as courts of equity. This court has repeatedly held, as between a purchaser and the original parties to the suit, that a court of law will not hesitate to exercise the power of setting a sale aside on account of fraud or irregularity.” Borer on Judicial Sales, § 1081.

In Herman on Executions the cases are fully collected in •support of the power of the court to set aside sales made on its own process. The writer says: “ It is the duty of all courts, when satisfied that sales made under their process is affected with fraud, irregularity or error, willful disregard of the statutory regulations by the officer, whereby the rights of either of the parties interested are seriously affected, to set aside such sale, upon a proper showing to the court under whose process the sale was made, and order a resale of the property.” Herman on Executions, p. 406, § 249, and cases.

Freeman on Executions fully recognizes this authority in all courts.

In this case all the parties were before the court below, and the action of the court was the exercise of no unusual or doubtful power. It had jurisdiction, not only to set aside the levy, but to order a rescission of the sale made by the sheriff, if sufficient ground was laid before it to call for such action.

"Was. there legal ground for the judgment of the court below ? This depends upon its finding of fact upon evidence.

This is a writ of error, and its sole office is to present legal questions for decision. Under it the court will not decide questions of fact, and will look into the evidence only to discover whether it affords, on any permissible interpretation of it, a rational support for such finding. If it be found to be of this degree of strength, the determination of fact must be accepted as conclusive. Harrison v. Allen, 11 Vroom 556; Johnson v. Arnwine, 13 Vroom 451, and cases cited.

In Johnson v. Arnwine, one, among the errors assigned, was that the proof of loss of a paper was insufficient to let in secondary evidence of its contents. This being a preliminary question, to be solved by the court upon the evidence, Justice Depue says: “ If the decision of the judge, upon the testimony offered on that subject, is liable to review on writs of error, the onus is on the plaintiff in error of showing that the result reached was erroneous, and there should be no reversal unless it clearly appears that the court below was in error, and that injustice was done by the erroneous decision.” This branch of the case exemplifies in one of its phases the rule of this court that it reverses only for errors in law injurious to the party assigning them.

That the testimony taken under the rule in the court below was legally sufficient to support a state of facts, such as justified the court in its determination, admits of no serious doubt.

The levy made by the sheriff was, as to this species of property, of too doubtful a character, under our statute, to demand that it be sustained.

Shares in corporations were not, in this state, the subject of sale under execution before the passage of the act of March 9th, 1842, entitled “An act to abolish imprisonment for debt.” The fifth section provided that any share or interest in any joint stock company, incorporated in this state, belonging to a defendant in execution, may be taken and sold by virtue of such execution, in the same manner as goods and chattels. The sixth section required the clerk, cashier or other officer of the company, having custody of its books, to certify to the sheriff, on his presenting the execution, the numher of shares or amount of interest held by the defendant in the company.

In the Revision of 1846 these sections passed into the act respecting executions, as the seventh and eighth sections of that act.

It was held under this legislation that the delivery of execution to the sheriff did not bind this kind of property; that a levy made by the sheriff by mere inventory, without applying to the company, whose shares the defendant held, was not sufficient to defeat the rights of one purchasing such shares of the defendant. It was also strongly urged that actual notice to the defendant, if within the sheriff’s jurisdiction, that his stock was levied upon, was required by considerations of public policy and commercial convenience. And this where the office of the corporation was within the sheriff’s bailiwick. Princeton Bank v. Crozer, 2 Zab. 383.

The law prescribing the present mode of levy upon such property is embodied in the fourth, fifth, sixth and seventh sections of the act relating to executions. Rev., p. 390.

The earlier provisions referred to are retained substantially as first enacted, and in addition a mode is prescribed in the sixth section for effecting a levy where the custodian of the books, being the clerk, cashier or other officer of the company, is not resident in the state. In such case, the notice and requirement of certificate of the defendant’s interest may be mailed to such officer of the company having the books. In addition to notice by mail, it is made the duty of such sheriff, “ on the day of mailing such notice, to affix and set up, upon any office or place of business of such company within his county, a like notice in writing, and upon the same day to serve like notice in writing upon the president and directors of said company, or upon such of them as reside in his county, either personally or by leaving the same at their respective places of abode; and the sending, setting up and serving of such notices, in the manner aforesaid, shall constitute such levy taken a valid levy of such writ upon all shares of stock in suck company held by the defendant in execution.”

The mode thus prescribed for effecting a levy on stock was designed to and can scarcely fail of bringing notice to a defendant of the fact of levy, without direct communication with him. Notice directly to the defendant is not required to be given by the present law, nor was it by the act of 1842.

In the seizure and sale of this species of right, notice in some form to the defendant would seem indispensable to avoid loss or fraud, and in the majority of instances a faithful pursuit of the statutory mode must inform him in time to protect himself. The statutes contemplates full publicity.

All that was done in this case, in the attempt to make a levy, was notice sent to the secretary of the New York, Susquehanna and 'Western Railroad Company. He was not an officer of the Midland company, in which the defendant held the stock which was intended to be taken under execution, and the inference is fairly to be drawn from the testimony that the officer applied to was more likely to conceal from the defendant the proceeding than to inform him of it.

As to the sale, I deem it to be established in the case that the process of execution was misused to the detriment of the defendant. It was not illegal to issue execution to the sheriff of Essex, but there was nothing that legitimately called for that course. The defendant had no property there. The shares of stock were insignificant in value, and if the design was simply to reach them towards satisfaction of judgment, they were as well within the reach of the- sheriff of Bergen county, where all the parties resided, and where the defendant would have been quite certain of notice. But the court below were justified in concluding satisfaction of the debt was not the motive that caused this writ to be issued. The defendant and the New York, Susquehanna and Western Railroad Company were opposing litigants, and the ownership of this stock gave the defendant an advantage in the litigation which the loss of the stock would deprive him of. The evidence justified the belief that the plaintiffs permitted their process to be used by or in behalf of that company to get this stock from the defendant without his knowledge, and to put him at a disadvantage in their contest.

It was a use of the writ wholly foreign to its design. It was granted to the plaintiffs for just and legitimate purposes. Its control and use was placed at the disposal of a stranger in interest to the suit, whereby indirect, unjust and oppressive ends might be effected against the defendant.

This was ground for setting aside the sale, and the order of the court below should be affirmed, with costs.

For affirmance — The Chancellor, Chief Justice, Knapp, Magie, Reed, Scudder, Van Syckel, Brown, Clement, McGregor, Paterson, Whitaker. 12. For reversal — None.