Cornelius v. Albertson

93 S.E.2d 147 (1956) 244 N.C. 265

Mrs. U. S. CORNELIUS
v.
W. H. ALBERTSON.

No. 595.

Supreme Court of North Carolina.

June 6, 1956.

Thomas Turner and J. J. Shields, Greensboro, for plaintiff-appellant.

D. C. MacRae, High Point, for defendant-appellee.

PARKER, Justice.

At common law no property but that to which the debtor has a legal title is liable to be taken under execution against him. Rowland Hardware & Supply Co. v. Lewis, 173 N.C. 290, 92 S.E. 13.

However, in this State G.S. § 1-315 states the property of the judgment debtor, not exempted from sale under the Constitution and laws of this State, may be levied on and sold under execution as hereinafter prescribed, and subsection 4 of this statute makes it apply to "Real property or goods and chattels of which any person is seized or possessed in trust for him." G.S. § 1-316 provides that upon the sale under execution of trust estates whereof the judgment debtor is beneficiary the sheriff shall execute a deed to the purchaser, who shall hold the same free from all encumbrances of the trustee. We have held that the provisions of G.S. § 1-315(4) and § 1-316 do not apply to an active trust. Mayo v. Staton, 137 N.C. 670, 50 S.E. 331; Rowland Hardware & Supply Co. v. Lewis, supra; Chinnis v. Cobb, 210 N.C. 104, 185 S.E. 638.

The writ of execution commands the sheriff to satisfy plaintiff's judgment for $22,050 against the defendant out of the property "held in trust for the defendant by J. R. Albertson, Trustee under the Will of T. R. (sic) Albertson, deceased," though J. R. Albertson is not a party to the suit either individually or as executor or trustee. Since an execution must conform to the judgment, it follows that it can be issued only against the judgment debtor, and may not be issued against a stranger to the judgment. 33 C.J.S., Executions, § 15; 21 Am.Jur., Executions, sec. 31.

G.S. § 1-360 et seq. provides a procedure when a new person is to be charged by the execution of a judgment on the ground that he has property of the judgment debtor. G.S. § 1-360 states that after the issuing or return of an execution against property of the judgment debtor, and upon affidavit that any person or corporation has property of said judgment debtor, the court or judge may, by order, require such person or corporation, or any officer or members thereof, to appear at a specified time and place, and answer concerning the same. The purpose of such appearance and answer is to ascertain whether he is seized or possessed of any real property or goods, and chattels in trust for the judgment debtor. Rice v. Jones, 103 N.C. 226, 9 S.E. 571. The order of the court or judge requiring such person to appear and answer is sufficient to bring him before the court, and to make him subject to its jurisdiction for the purpose of securing the judgment debtor's property—not for the purpose of contesting any right of such person having the same. Bank v. Burns, 109 N.C. 105, 13 S.E. 871. G.S. § 1-360 provides for the order of examination. G.S. § 1-362 provides for the order of condemnation, and reads: "The court or judge may order any property, whether subject or not to be sold under execution (except the homestead and personal property exemptions of the judgment debtor), in the hands of the judgment debtor or of any other person, or due to the judgment debtor, to be applied towards the satisfaction of the judgment". The exception to the statute is not relevant here. When these statutes are read singly, or as an integral part of Article 31, Supplemental Proceedings, Chapter 1, Civil Procedure, of the General Statutes, it is manifest that a supplemental proceeding against a third person is designed to reach and apply to the satisfaction of the judgment property of the judgment debtor in the hands of the third person at the time of the issuance and service of the order for the examination of the third person, which could not be reached by an execution at law.

A supplemental proceeding under Article 31, of Chapter 1, of the General Statutes is equitable in its nature, Johnson Cotton Co., Inc., v. Reaves, 225 N.C. 436, 35 S.E.2d 408, and the provisions of this article are intended to supply the place of a proceeding in equity, where relief was given after a creditor has determined his debt by a judgment at law, and was unable to obtain satisfaction by process of law, Carson v. Oates, 64 N.C. 115.

In McIntosh's N. C. Practice and Procedure, p. 864, it is written: "All the debtor's property is liable for his debts except as exempted by law, but only legal interests in tangible personalty and in realty could be reached by execution at law until the right was extended to include equities of redemption and interests under a passive trust * * *."

The plaintiff cannot reach by the execution she had issued the property held in trust for defendant by J. R. Albertson, executor of the will of T. W. Albertson, deceased, who is a stranger to the suit, but must endeavor to reach it, if she can, by a supplementary proceeding as set forth in Article 31, Supplementary Proceedings, Chapter 1, Civil Procedure, of the General Statutes.

The general rule is that where an injunction is sought to prevent the enforcement of a judgment by execution grounds for equitable jurisdiction must be shown. As a general proposition, where relief sought by an applicant for an injunction against levy or execution can be obtained by motion in the cause, wherein the judgment was obtained, to recall or withdraw the execution, or stay an execution by granting a supersedeas, an injunction will be refused, since the legal remedy cannot be considered inadequate. Abernethy Land & Finance Co. v. First Security Trust Co., 213 N.C. 369, 196 S.E. 340; Scott Register Co. v. Holton, 200 N.C. 478, 157 S.E. 433; Coward v. Chastain, 99 N.C. 443, 6 S.E. 703; Parker v. Bledsoe, 87 N.C. 221; Parker v. Jones, 58 N.C. 276; Annotation 171 A.L.R., p. 224; 21 Am.Jur., Executions, p. 268. See the interesting discussion of the novel proposition of asking a court of equity to enjoin the enforcement of one of its own decrees in Greenlee v. McDowell, 39 N.C. 481.

The lower court should have refused defendant's motion in the cause for an injunction to restrain the plaintiff from levying upon and selling under the execution the property held in trust for the defendant on the ground that defendant had an adequate remedy at law by a motion in the cause before the Clerk of the Superior Court of Guilford County to recall or withdraw the execution, which commanded the sheriff to levy upon and sell property held in trust for defendant by a stranger to the suit. Such being the case, the question as to whether the trust was active or passive was not before the court below for decision and should not have been passed on, and its finding of fact that the trust created by the will of T. W. Albertson for the benefit of defendant is an active trust is not before us for review.

This proceeding is remanded to the lower court with the direction that it strike out of its order all its findings of fact as to the trust created for the benefit of the defendant, and that it vacate the injunction, and enter an order denying defendant's motion for an injunction.

The defendant can then make a motion in the cause before the Clerk of the Superior Court to recall or withdraw the present execution, which should be allowed.

The plaintiff then, if she so desires, can have the Clerk issue an execution to satisfy her judgment out of the property of the judgment debtor, and after the issuance of such execution she can by supplementary proceedings, pursuant to G.S. § 1-360 et seq., bring J. R. Albertson, holder of the trust estate, before the court and make him subject to its jurisdiction, and present to the court or judge the question as to whether or not the trust estate held by J. R. Albertson for the benefit of defendant, judgment debtor, should be applied to the satisfaction of her judgment.

Error and remanded.