State Bank of Ceresco v. Belk

• Decision Date: 09 April 1903
• Docket Number: 12,311
• Parties: STATE BANK OF CERESCO, APPELLEE, v. WILLIAM BELK ET AL., APPELLANTS
• Court: Nebraska Supreme Court

94 N.W. 617

68 Neb. 517

STATE BANK OF CERESCO, APPELLEE, v. WILLIAM BELK ET AL., APPELLANTS

No. 12,311

Supreme Court of Nebraska

April 9, 1903

APPEAL from the district court for Lancaster county: ALBERT J CORNISH, DISTRICT JUDGE. Affirmed.

AFFIRMED.

Charles L. Burr and Lionel C. Burr, for appellants.

Albert G. Greenlee, contra.

DUFFIE C. AMES and ALBERT, CC., concur.

OPINION

DUFFIE, C.

This is a creditors' suit brought by the appellee against William Belk, Henrietta Belk, his wife, Nina Riggs, daughter of the said William and Henrietta Belk, and George A. Riggs, her husband. The undisputed facts are as follows:

At the May, 1899, term of the district court for Lancaster county the bank recovered judgment against Belk for about $ 450 and costs, taxed at upwards of $ 90. The basis of the judgment was a promissory note, of which the following is a copy:

"$ 300. CERESCO, NEB., Sept. 30, 1889.

"On demand after date, for value received, we jointly and severally promise to pay to the order of State Bank of Ceresco, Neb. three hundred dollars, with interest at the rate of ten per cent. per annum from maturity until paid. This note is given as security for a note of even date and amount of Thomas Stretch in favor of State Bank of Ceresco and the maker hereof waives protest and notice of non-payment and guarantees the payment of said note, or any renewal of the same.

(Signed) "WILLIAM BELK."

At the time of making said note Belk was the owner of some two hundred acres of land, which it is sought to subject to the payment of the judgment. On October 21, 1895, Belk and his wife deeded this land to George A. Riggs, their son in law. This conveyance was made while the suit in which judgment was finally entered was still pending. At the time of the conveyance to Riggs the land was encumbered by a mortgage for $ 3,000, and the consideration expressed in the conveyance was $ 4,000, and the assumption by Riggs of said mortgage. Riggs executed a mortgage back to secure the sum of $ 3,800 of the consideration, but this mortgage, instead of running to William Belk, was made to Henrietta Belk, the wife. The district court found the conveyance fraudulent as to creditors, and decreed a cancelation of the conveyance, making provision, however, for Belk to have his homestead interest in the property set aside previous to a sale. From this decree the defendants have appealed.

It will be noticed that the note upon which judgment against Belk was entered was given as security for the payment of another note of like date and amount executed to the bank by one Thomas Stretch, and it is earnestly insisted that a creditors' suit can not be maintained against the surety without a showing on the part of the appellee that it has exhausted its legal remedies not only against the defendant Belk, but against Stretch, the principal debtor. The rule is of universal application that a creditors' suit to come at the equitable assets of the debtor which an execution at law will not reach, can not be maintained until the creditor has exhausted his legal remedies for the collection of his debt. A court of law is the proper forum for the enforcement of legal demands, and a court of equity will not interpose its extraordinary aid until legal remedies have proved ineffectual. It has been frequently said that courts of equity are not tribunals for the establishment or collection of ordinary demands. Sloan v. Waring, 55 How. Pr. (N.Y.) 62; Dawson v. Sims, 14 Ore. 561, 13 P. 506; Taylor v. Bowker, 111 U.S. 110, 28 L.Ed. 368, 4 S.Ct. 397. It is also held in some jurisdictions that, where there are two or more joint debtors, it is not sufficient to exhaust the legal remedies against one of them only, but they must be exhausted against all. Voorhees v. Howard, 4 Keyes 371; Child v. Brace, 4 Paige Ch. 308; Field v. Hunt, 22 How. Pr. (N.Y.) 329.

There are, however, two classes of cases, both commonly called creditors' suits, which, although resembling each other are clearly distinguishable. The first, a creditor's suit strictly, so called, is where the creditor seeks to satisfy his judgment out of the equitable assets of the debtor which can not be reached on execution. Generally in that class of cases the action can not be brought until the creditor has exhausted his remedy at law by the issue of an execution and its return unsatisfied. This is required because equity will not aid the creditor to collect his debt until the legal assets are exhausted, for until this is done he may have an adequate remedy at law. The second class of cases is where property legally liable to execution has been fraudulently conveyed or incumbered by the debtor, and the creditor brings the action to set aside the conveyance or incumbrance as an obstruction to the enforcement of his lien; for though the property might be sold on execution notwithstanding the fraudulent conveyance, the creditor will not be required to sell a doubtful or obstructed title. In the latter class of cases, the prevailing doctrine is that it is not necessary to allege that an execution has been returned...