Citation Numbers: 22 F. 689
Judges: Hammond
Filed Date: 1/12/1885
Status: Precedential
Modified Date: 9/9/2022
When this case was formerly heard, there was a decree for the plaintiffs setting aside a fraudulent conveyance, and a reference to the master to report the amount of the fund, and the parties entitled thereto, preparatory to its proper distribution. Flash v. Wilkerson, 20 Fed. Rep. 257. The bill was filed by certain creditors “in behalf of themselves and all other creditors of defendant J. R. Wilkerson who might make themselves parties, and bear their proportion of the expenses.” It was filed in the state chancery court, where attachments issued, and a receiver was appointed, but was subsequently removed to this court. There were two funds in the hands of the receiver, — the principal one being that realized by the sale of the stock of goods which the debtor bad fraudulently conveyed, and which was attached in the hands of the vendee; and the other, that realized from outside assets which had never been fraudulently conveyed, but had passed by a general assignment made a few days after the fraudulent sale to Ilopper. The decree rendered at the hearing gave certain specific directions as to tho disposition of the principal fund; among others, that it should be “applied to the debts of complainants, and such other creditors oí J. R. Wilkerson as may be en
“That time be given until the first day of October next for creditors to make themselves parties, complainants to the cause, by filing their claims, with satisfactory proof thereof, with the clerk to whom this cause is referred, and who is directed to report to the court by the first day of the next term the amount of the claims filed and proven by each creditor, as well as the claims of the creditors already before the court and named as complainants in this suit, setting forth in his report the nature and character of the respective elaiihs, and the several amounts due thereon. All questions not adjudicated, and all questions of distribution, are reserved.”
The clerk, as special master, has filed his report under this decree, making a pro rata distribution of both funds among all the creditors who have proved their debts. No objection is made to this as to the second fund above mentioned, but the plaintiffs insist that they alone are entitled to the whole fund arising out of the sale of the goods fraudulently conveyed to Hopper, and that the other creditors should not be permitted to share therein; and this is the question submitted for our decision. The plaintiffs were all judgment creditors with nulla bona returns of their respective executions at the time they filed their bill, and whether proceeding under their rights and privileges in that behalf, or under section 4288 of the Code—to be presently quoted —as they chose to do, the only way to acquire a full and separate satisfaction of their respective claims, yegardless of each other and of all other creditors, was by separate and independent bills, each acquiring a lien in the order of its priority. Code, Tenn. (T. & S.) §§ 4283-4293. The plaintiffs did not choose to sue independently, but joined with each other in their own behalf, and that of all other creditors who might make themselves parties, under the following section of the Code:
“Any creditor, without having first obtained a judgment at law, may file his bill in chancery for himself, or for himself and other creditors, to set aside fraudulent conveyances of property, or other devices resorted to for the purpose of hindering and delaying creditors, and subject the property by sale or otherwise, to the satisfaction of the debt.” Tenn. Code, 4288.
A court of equity usually struggles for the principle of equality among creditors in the distribution of the assets of an insolvent debtor through its remedial process; and if judgment creditors, either under the ordinary remedy which a court of equity affords to them as such or the statutory provisions of the Tennessee Code in their behalf, might by a proper proceeding appropriate all the assets in the hands of a fraudulent vendee, they certainly abandon this privilege when they resort to the above-quoted section. If it stood alone, I have no doubt any court of equity would use all its powers to extend to its utmost the right of all creditors to come in and share in the fund, and would impose as few limitations as possible upon that
Whether the lien given from the filing of the bill by section 4286 of the Tennessee Code is to be confined to bills filed under section 4283, or applies as well to bills under section 4288, above quoted, is immaterial, because, certainly, these plaintiffs acquired a specific lien under section 4289 when their attachment was levied. August v. Seeskind, 6 Coldw. 166; House v. Swanson, 7 Heisk. 32; Greene v. Starnes, 1 Heisk. 182; Cowan v. Dunn, 1 Lea, 68; McCrasly v. Hasslock, 4 Baxt. 2; Brooks v. Gibson, 7 Lea, 271; Armstrong v. Croft, 3 Lea, 193; Tarbox v. Tonder, 1 Tenn. Ch. 163. This lien cannot be disturbed by permitting others to displace it, in whole or in part, without a compliance with the statutory prerequisites which entitle other creditors to come in and share the fund. These are set forth in the next section (4290) as follows:
“If the bill is filed by one creditor lor liimsclf and others, the other creditors may make themselves parties at any time before final decree by petition, agreeing fo join in the bonds required in the case, and giving bond, with good security, to the original complainant, and in sufficient penalty, to pay their proportional part of the recovery oil such bonds.” Tenn. Code, § 4290.
The doubt I have had on this section is whether it is a mere rule of practice prescribed for the state courts, and therefore not binding on the
The general creditors, therefore, should have come in before the final decree and given the required bond, or they cannot share in the fund and displace the priority acquired by the original plaintiff; and, .after ail, this is not a harsh rule, for almost any one would be willing to stand outside, and, after a recovery, come in and prove his claim; while the timid and the selfish would prefer this to sharing the perils of the litigation, as this statute requires they shall.
It is further urged that, because the debtor Wilkerson made a gun-
The report of the master must be modified in accordance with this opinion. Decree accordingly.