140 U.S. 106 (1891), Scott v. Neely

Citation:140 U.S. 106, 11 S.Ct. 712, 35 L.Ed. 358
Party Name:SCOTT et al. v. NEELY et al.
Case Date:April 27, 1891
Court:United States Supreme Court
 
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140 U.S. 106 (1891)

11 S.Ct. 712, 35 L.Ed. 358

SCOTT et al.

v.

NEELY et al.

United States Supreme Court.

April 27, 1891

Appeal from the district court of the United States for the northern district of Mississippi.

This is a suit in equity to subject to the payment of a debt alleged to be due and owing to the complainants by the defendant George Y. Scott certain property owned by him, and other property owned by his wife and co-defendant, Lottie M. Scott. The material facts out of which it arises, so far as is necessary for an intelligent consideration of the questions discussed, may be briefly stated as follows: In 1873 the defendant George Y. Scott was in partnership with his brother, Charles Scott, in the practice of the law in Bolivar county, Miss. Their practice is represented to have been large and lucrative. They were also engaged in other business, in which it is said they were successful, and that their income from all sources was from twelve to fifteen thousand dollars a year. In 1876 the brothers were of opinion that lands in the Mississippi Delta would in the then near future become valuable, and were therefore desirable as investments. They accordingly made purchases of different tracts, and took deeds of the lands to their respective wives. In some cases their notes were given for part of the purchase money. In January, 1880, the brothers dissolved their law partnership, and a partition of the lands purchased was made between their wives. Subsequently, during the same year, other lands were purchased by George Y. Scott, and the deeds taken in the name of his wife. In 1881, he also purchased a large tract, and took the deed in his own name, paying part of the purchase money in cash, and giving his promissory notes for the balance. The lands thus purchased by him, and those held by his wife, were greatly improved by him, and put in a high state of cultivation, and valuable crops were raised on some of them. In March, 1883, to enable him to carry on the 'planting business' on these lands, he arranged what is termed 'a line of credit' with the firm of Brooks, Neely & Co. of Tennessee, the complainants herein, as factors and commission merchants; they to furnish him supplies and money as needed, and he to ship to them the cotton raised on the plantations, to be sold by them, and the proceeds applied to the payment of their advances. The dealings between Scott and the complainants under this arrangement continued until July 6, 1885, at which time he owed them a balance of $6,264.89 on account, and a note of $2,000. The present suit was commenced in March, 1886, to subject, as stated above, the property owned by the defendant George Y. Scott, and other property owned by his wife, to the payment of these sums, with interest, and in aid thereof to set aside as fraudulent the conveyances to the wife of the lands purchased by her husband. Issue being joined on the replications to the answers by the defendants, testimony was taken, and upon the pleadings and proofs the case was heard by the district court of the United States for the northern district of Mississippi, exercising the powers of a circuit court. It was adjudged and decreed that certain parcels of the lands, which were described, were subject to the debt due the complainants, and that they had a lien for the same from the date of filing their bill, which debt, from the report of the master, was found to be $8,547.89. It was also decreed that the defendant George Y. Scott pay that sum within 30 days, and in default thereof that a commissioner of the court, appointed for that purpose, and 'clothed with the title to said lands,' proceed to advertise them, or a sufficiency thereof, and sell the same to the highest bidder for cash, and report his proceedings to the court. From this decree the defendants appealed to this court.

COUNSEL

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[11 S.Ct. 713] Edward Mayers, for appellants.

W. V. Sullivan and F. A. Montgomery, for appellees.

OPINION

Mr. Justice FIELD, after stating the facts as above, delivered the opinion of the court.

This is a suit in equity to subject the property of the defendants to the payment of a simple contract debt of one of them, in advance of any proceedings at law, either to establish the validity and amount of the debt or to enforce its collection. It is founded upon sections 1843 and 1845 of the Code of

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Mississippi of 1880, being parts of the chapter which treats of the chancery courts of the state. They are as follows: 'Sec. 1843. The said courts shall have jurisdiction of bills exhibited by creditors who have not obtained judgments at law, or, having judgments, have not had executions returned unsatisfied, to set aside fraudulent conveyances of property, or other devices resorted to for the purpose of hindering, delaying, or defrauding creditors; and may subject the property to satisfaction of the demands of such creditors; as if complainant had a judgment and execution thereon returned, 'No property found." 'Sec. 1845. The creditor, in such case, shall have a lien upon the property described therein from the filing of his bill, except as against bona fide purchasers before the service of process upon the defendant in such bill.'

At the outset of the case the question is presented whether a suit of this kind, where the complainant is a simple contract creditor, can be maintained in the courts of the United States. It is sought to uphold the affirmative of this position on the ground that the statute of Mississippi creates a new equitable right in the creditor, which, being capable of assertion by proceedings in conformity with the pleadings and practice in equity, will be enforced in those courts. The cases of Clark v. Smith, 13 Pet. 195; Broderick's Will, 21 Wall. 503; and Holland v. Challen, 110 U.S. 15, 3 S.Ct. 495,--are cited in its support. The general proposition, as to the enforcement in the federal courts of new equitable rights created by the states, is undoubtedly correct, subject, however, to this qualification: that such enforcement does not impair any right conferred, or conflict with any inhibition imposed, by the constitution or laws of the United States. Neither such right nor such inhibition can be in any way impaired, however fully the new equitable right may be enjoyed or enforced in the states by whose legislation it is created. The constitution, in its seventh amendment, declares that 'in suits at common law where the value in controversy shall exceed twenty dollars, the right of trial [11 S.Ct. 714] by jury shall be preserved.' In the federal courts this right cannot be dispensed with, except by the assent of the

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parties entitled to it; nor can it be impaired by any blending with a claim, properly cognizable at law, of a demand for equitable relief in aid of the legal action, or during its pendency. Such aid in the federal courts must be sought in separate proceedings, to the end that the right to a trial by a jury in the legal action may be preserved intact. In the case before us the debt due the complainants was in no respect different from any other debt upon contract. It was the subject of a legal action only, in which the defendants were entitled to a jury trial in the federal courts. Uniting with a demand for its payment, under the statute of Mississippi, a proceeding to set aside alleged fraudulent conveyances of the defendants, did not take that right from them, or in any respect impair it. This conclusion finds support in the prohibition of the law of congress respecting suits in equity. The sixteenth section of the judiciary act of 1789 enacted that such suits 'shall not be sustained in either of the courts of the United States in any case where plain, adequate, and complete remedy may be had at law;'...

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