Taylor v. Gillean , 23 Tex. 508 ( 1859 )

Wheeler, C. J.

The appellants sought, by their intervention in the suit, to obtain the answer of the receiver, as garnishee, and to set aside the deed of assignment, and subject the notes and accounts in the hands of the receiver, to the satisfaction of their judgment.

To the first of these objects, they manifestly were not entitled. The effects in the hands of the receiver were under the immediate control, and held subject to the judgment of the court, and could not be interfered with by this process. Besides, it has been expressly decided, that a person having possession of choses in action of a debtor, cannot be charged by judgment, as garnishee. (Price v. Brady, 21 Texas Rep. 614.) A discovery was not sought by this proceeding.

The appellants were not in a situation to oppose, successfully, the dissolution of the injunction. To do this, they must' have made out a case which would entitle them to the award of an injunction. This they had not done. Their petition, if otherwise sufficient, was not verified by affidavit; nor had they given bond. To cure these defects, they asked that time be given them to amend; which, however, the court refused. The court, it seems,' had intimated its judgment upon the sufficiency of the petition, before the leave to amend was asked; and, as the case is presented by the record, we cannot say, that, in its then attitude, the refusal to delay the case to give time to amend, was not a proper exercise of judicial discretion.

The appellants cannot complain of the order dissolving the injunction. Were they entitled to have their petition continued over, as against the trustee, to enable them to impeach the assignment for fraud, and have the effects in the hands of the trustee, applied in satisfaction of their judgment ? The notes and accounts were not subject to be levied on and sold, under process of execution. (Price v. Brady, supra.) And if the petition of the plaintiffs can be maintained, it must be upon the ground that equity will assist a judgment-creditor to reach dioses in action, not tangible by execution, in aid and satisfaction of his judgment. Whether equity will interfere, and grant such a remedy, is a question upon which there appears to have been much contrariety of opinion. The question was considered, and many of the authorities examined by Chief Justice Hemphill, in Price v. Brady; but it was left open for future decision. In Bayard v. Hoffman, 4 Johns. Ch. Rep. 450, Chancellor Kent, upon a review of the English decisions, and an elaborate examination of the question, arrived at the conclusion, that in cases of fraudulent alienations of such property, courts of equity ought to interfere and grant remedial justice; for otherwise, a debtor, under shelter of such a conveyance, might convert all his property into stock, and settle it on his family, in defiance of his creditors, and to the utter subversion of justice. Judge Story has expressed the opinion, that the cases cited by Chancellor Kent, go far to establish the doctrine for which he contends; but he suggests, that a distinction may exist between cases where a party actually indebted, converts his existing tangible property into stock, to defraud creditors, and cases where he becomes possessed of stock, without indebtment at the time; or if indebted, without having obtained it by the conversion of any other tangible property. Where tangible property is converted into stock, to defraud existing creditors, he thinks there may be a solid ground to follow the fund, however altered. (1 Story, Eq. 368, n; see this subject examined in Donovan v. Finn, 1 Hopkins, (N. Y.) Ch. Rep. 59.) It is unquestionable, that some of the English cases, especially in the time of Lord Hardwicke, and some other American cases go the full extent of the doctrine held by Chancellor Kent, in Bayard v. Hoffman, supra; (Tappan v. Evans, 11 N. Hamp. 311; Storm v. Waddell, 2 Sandf. Ch. Rep. 494; 9 Paige, Rep. 182; Mercer v. Beale, 4 Leigh, 207;) and in several of the states, a remedy-is given by statute, to reach choses in action of every description, either by an execution at law, or by the assistance of a court of equity. (2 Kent, Com. 443, n, 8th edit.) Thére seem to be strong reasons, as well as much authority, for the doctrine, that equity will lend its assistance to the judgment creditor, to reach and subject choses in action, of which the debtor has made a fraudulent assignment, while the creditor was in pursuit of his demand; otherwise, as has been said, there would be great temptations to fraudulent alienations; and a debtor might thus place all his property beyond the reach of his creditors, to the utter subversion of justice.

It must, however, be admitted, that the question is left in uncertainty, by the conflict of judicial opinions; and it is not necessary that it be decided in the present case. For if it be admitted, that the powers of a court of equity may be invoked, to afford a remedy in such a case, it cannot be until after all legal remedies have been exhausted. That must' be shown, as a ground for invoking equitable jurisdiction. It does not appear in this case, that the legal remedy had been exhausted. It is not averred, that the judgment debtors have no property, which is subject to seizure and sale by the ordinary process of execution. It is alleged, that they are insolvent; but this may be true, and jet they may have tangible property, real and personal, subject to execution. The law, moreover, furnishes the appellants a remedy, by process of garnishment to the persons indebted to the defendants. By resorting to this legal remedy, as to the choses in action, which are subject to be thus reached, and making the assignee of the defendants a party to the proceeding, they might have impeached the validity of the assignment, and have reached the effects in the hands of the assignee, without calling to their aid, the equitable powers of the court. (Inglehart v. Moore, 21 Texas Rep. 501.) As the appellants were not entitled, to invoke the equitable powers of the court to afford a remedy in aid of their judgment, until they had exhausted their legal remedies (and it does not appear by the averments of their petition, that their legal remedies had been exhausted,) the court did not err in dismissing the petition, and the judgment is affirmed.

Judgment affirmed.