Adsit v. Sanford , 30 N.Y. Sup. Ct. 45 ( 1880 )

Landon, J.:

The sole point urged, by the defendant upon our consideration is, that the complaint does not state facts sufficient to constitute a cause of action, for the reason that it fails to allege that an execution upon the judgment was ever issued and returned wholly or in part unsatisfied. The plaintiff concedes that if this were a creditor’s bill seeking the discovery and application of personal property or things in action, held by some third person for the benefit of the judgment debtor, it would be necessary to allege the issue and return of an execution; for the statute required it. (2 R. S., 174, § 38.) But by this action the plaintiff seeks to invoke the equitable interposition of the court to relieve the plaintiff from the hindrance and injury which the fraudulent conveyance of the judgment debtor occasions, thus presenting a subject of equitable jurisdiction, untouched by the statute in question. (Chautauque Co. Bank v. White, 6 N. Y., 236.) And the plaintiff further urges, that since the complaint alleges, and the demurrer concedes that the judgment debtor, since, the entry of the judgment, and until his death, was wholly insolvent, having neither real nor personal property from which any part of the judgment could be collected, the law, which does not require performance of vain and useless acts, does not require the performance of this particular vain and useless formality. Cogent as this reasoning appears, the law, nevertheless, is that the execution must have been issued, and the complaint is defective in not alleging it. In Ocean Bank v. Olcott (46 N. Y., 12), the plaintiff sought to establish a lien upon land paid for by the debtor, but the conveyance for which was taken in the name of his wife. Clearly this was not a creditor’s bill under the statute in question. The court held that the plaintiff, in order to recover, must have both judgment and execution. Church, Ch. J., in delivering the opinion of the court, says : “ All available legal remedies (must) be resorted to as a preliminary requisite to an action for the application of the trust propertyand then adds, “ It is difficult to perceive any distinction or any reason for it, between the rights of creditors as to property fraudulently transferred by the debtor himself, and property paid for by him and transferred to a third person,” and he concludes that the creditors of the latter must resort to all the preliminaries required of the former. In Allyn v. Thurston (53 N. Y., 622), the plaintiff was a judgment creditor of Willetts and Thurston, both of whom were insolvent. Thurston had paid for real estate, and the conveyance was taken in the name of his wife. No execution was issued. The plaintiff sought to have a trust declared in his favor, and his judgment satisfied by a sale of the land. The court, on the authority of Ocean Bank v. Olcott, held that the complaint did not state a cause of action. We have been shown a copy of the appeal boob, containing the opinion of the General Term. That court hold that it was only necessary for the plaintiff to establish his debt by a judgment. In Estes v. Wilcox (61 N. Y., 264), the plaintiff was the creditor,of one Whipple, who died intestate, leaving assets enough to pay only 40¿ cents on the dollar of his indebtedness. In his life-time he paid the purchase price of certain real estate, the deed for which was taken in the name of the defendant. Upon demurrer to the complaint the Special Term, as appears from the appeal book, sought to distinguish the case from Ocean Bank v. Olcott, and remarked: “ It is admitted by the demurrer that there is no legal remedy available to the plaintiff in respect to 59$0 of Ills debt uncollected out of the assets of the deceased debtor.” But the Court of Appeals held the complaint' defective. (See also Geery v. Geery, 63 N. Y., 252.) The plaintiff is mistaken in supposing that the sole reason for requiring judgment and execution issued and returned in the statutory-creditors’ bills is because the statute requires it. Long before the statute, creditors’ bills were a familiar subject of chancery jurisdiction, and the rule was inflexible that before resort could be had to equity, the creditor must obtain judgment and issue execution, and if he desired to apply to the satisfaction of his judgment any property, other than that upon which liis- judgment or cxec;Utio,n was a specific lien, he must have had his execution returned. The statute was enacted principally to remove a doubt which had been started by the case of Donovan v. Finn (1 Hopk., 59), (at variance with previous cases), whether the creditor could reach assets held by a third person for the debtor, when the transaction was entirely free from fraud. (See revisers’ notes, 5 Edm. Stat., 405 ; Dunlevy v. Tallmadge, 32 N. Y., 457.) Whether, therefore, the case is strictly a creditor’s bill, or “ in the nature of one,” as the phrase of the books is when speaking either of fraudulent conveyances or resulting trusts, it is equally imperative that the creditor should have actually resorted to and exhausted the ordinary legal remedies before equity will entertain. jurisdiction. It will not answer to substitute for execution an excuse for not issuing it, unless that excuse asserts the impossibility, not the impracticability, not the inconvenience, not the uselessness of issuing it. It must be legally shown that the debt cannot be collected at law, and the best evidence of that is the effort, and its failure. If execution cannot be issued in this State, it will suffice if issued in the State of. the debtor’s residence. (McCartney v. Bostwick, 32 N. Y., 53.) If the debtor’s property is in the hands of a receiver appointed by the court, so that levy cannot be made, levy is excused. (Stewart v. Beale, 7 Hun, 405.) The case of Loomis v. Tifft (16 Barb., 541), cited by the plaintiff, is regarded by this court as overruled. (Evans v. Hill, 18 Hun, 465.) The judgment of the Special Term, overruling the demurrer, must be reversed, and the defendant must. have judgment allowing the demurrer, with costs of this court, and of the court below.

Learned, P. J., concurred ; Bockes, J., taking no part.

Judgment interlocutory reversed, and judgment for defendant on demurrer, with costs of this court and of court below.