First Nat. Bank v. Davis

HAIGHT, J.

The complaint, among other things, alleges that the plaintiff the First National Bank of Salem began an action against the defendant Joseph-Davis, a nonresident of this state, by the personal service of a summons and complaint upon him without the state on the 14th day of September, 1893, pursuant to chapter 5 of the Code of Civil Procedure, to recover a balance of $10,311.49 upon three promissory notes. The complaint further alleges that the defendant Joseph Davis has not appeared in said action, and that final judgment has not been entered therein; that in that action an attachment has been-duly issued to the sheriff of Erie county in this state directing him to attach-the property of Joseph Davis; that the defendant Joseph Davis was on the 15th day of May, 1891, seised as owner in fee of an undivided two-thirds of a parcel of land situate in the city of Buffalo, county of Erie (particularly describing the same); and that on that day the defendant Davis executed and delivered a deed of conveyance thereof to the defendant Miles M. Martin, of the state-of Virginia; and that the consideration named in such deed was the sum of $50,000. The complaint contains other allegations, to the effect that this conveyance was made in fraud of the rights of creditors and is void, and, as relief, demands judgment that such conveyance be adjudged fraudulent and void as against the attachment issued in the action brought by the plaintiff the First National Bank of Salem against Davis, and that the premises be subjected to-the levy of the plaintiff’s attachment, etc.

This action, as commonly understood, is in aid of such attachment. The demurrers interposed are upon the ground that the complaint does not state facts sufficient to constitute a cause of action, and the particular defect relied upon, as pointed out upon the trial, is that the complaint fails to allege that the defendant Davis had made default in the action brought against him upon the notes, and in which action the attachment was issued. The second subdivision of section 655-of the Code of Civil Procedure provides as follows: “Where the summons was served without the state, or by publication pursuant to an order obtained for that purpose, as prescribed in chapter fifth of this act, and where the defendant has not appeared in the action (otherwise than specially), but has made default, and before entering final judgment, the sheriff may, in aid of said attachment, * * * maintain any * * * action against the attachment debtor and any other person" or persons * * * which may now be maintained by a judgment creditor in a court of equity either before the return of an execution in aid thereof or after the return of an execution unsatisfied.” There are other provisions to the effect, that the judgment in such an action shall provide and direct that the property shall be applied to the satisfaction of any judgment which may be obtained in the attachment action (section 655. subd. 2); and that in such action the plaintiff, by leave of the court or a judge thereof, may bzing and maintain the action in the name of himself and the sheriff jointly, by his own attorney, and at his own expense (sections 677, 678).

It will be observed that the complaint herein alleges that the summons in the action in which the attachment was issued was served without the state, pursuant to an order obtained for that purpose; that the defendant has not appeared in the action; and that judgment has not been entered therein; but it does not allege that the defendant has made default therein. The defendant Davis being a nonresident, and the service of the summons upon him having been made without the state, and the action being for a sum of money only, no judgment could be entered against him until an attachment issued in the action had been levied upon his property. Code Civ. Proc. §§ 1216, 1217. It was for the purpose of making the levy of such attachment good that this action was brought. At what time may it be maintained? This question has been much discussed in the courts. Ordinarily, an action in the nature of a creditors’ bill can be maintained only after the entry of judgment and the return unsatisfied of an execution issued thereon. Id. § 1871. But cases have arisen in which it was impossible for parties to comply with this provision, in which it has been found necessary, in order to protect the rights of creditors, for the court to interfere through its equity powers. It consequently has been held that an attachment creditor, after recovery of judgment and the issuing of execution, may maintain an equitable action in his own name to set aside a fraudulent transfer of the property which had been seized under the attachment (Bank v. Dakin, 51 N. Y. 519); and, on the other hand, 'that the attaching creditor had no standing in court to reach equitable assets until his remedy at law was exhausted, nor to attack a fraudulent transfer of the property of his debtor until after judgment (Thurber v. Blanck, 50 N. Y. 80). Again, a creditor, by attaching property in the possession of his debtor, acquires a specific lien upon his interest, and is entitled, like a judgment creditor, to impeach the title of a fraudulent mortgagee. Frost v. Mott, 34 N. Y. 253. After the court had thus given expression upon the subject, the attention of the legislature was again called thereto, and in 1889 (chapter 504) the second subdivision of section 655 of the Code above quoted was enacted. To my mind it was the legislative intention to bring the practice as nearly in harmony with that provided in judgment creditors’ actions as was possible, and still preserve the rights and remedies of attaching creditors. «

The plaintiff the First National Bank of Salem could not enter judgment against the defendant Davis until it could show a levy of the attachment issued in its action upon property belonging to Davis. This it was unable to do, for the reason that the property of Davis, being real, had been conveyed to another person. It can make such attachment good only by procuring a judgment in this court declaring such conveyance or transfer to have been made in fraud of its rights. But, as we have seen, ordinarily such an action could be maintained only after the creditor had established the amount of his claim by a judgment, and exhausted the remedies given him at law by the issue and return of an execution unsatisfied; but this could not be done if the plaintiff is given no power to enter judgment, and, to my mind, it was to relieve creditors similarly situated that the provision in question was enacted. It gives him the right to now maintain an action where the defendant has not anpeared in the action, but has made default, whereby the rights of the plaintiff have become fixed and the amount of his claim established. My attention has been called to the case of People v. Van Buren, 136 N. Y. 252, 32 N. E. 775, which it is claimed sustains the plaintiffs’ contention. It is sufficient to say in reference to that case that the attention of the court does not appear to have been called to the provisions of the Code under consideration, and the judge delivering the prevailing opinion of the court expressly states therein that “the mere existence of a fraudulent transfer would not be sufficient to authorize a court of equity to entertain an action at the suit of an attaching creditor to set it aside.”

I do not understand that the allegations of the complaint call for the exercise of any of the equitable powers of the court, independent of the provisions of the Code. It may be that the provisions in reference to attaching creditors’ actions and creditors’ bills do not extend so far as to deny to a creditor the interposition of the equity powers of the court where the situation is such as to render it impossible for him to obtain relief under those provisions. Bank v. Wetmore, 124 N. Y. 241, 26 N. E. 548; People v. Van Buren, 136 N. Y. 252-260, 32 N. E. 775. But this power will not be extended to cases where parties may comply with the provisions of the Code, and by so doing obtain full relief and protection. In this case the alleged fraudulent transfer was of real estate, and it is not alleged nor is it apparent that the plaintiff will suffer any harm from waiting until the defendant has appeared in the original action or has made default. By so waiting, the parties may avoid the expense and trouble of trying the action in aid of the attachment, and of carrying it up through the courts of the state, and then possibly, upon a trial of the original action in which the attachment was issued, find that the plaintiff had no cause of action.

The demurrers should be sustained, with leave to the plaintiffs to amend their complaint within 20 days upon payment of the costs of the demurrers.