Artman v. Giles

• Decision Date: 22 May 1893
• Docket Number: 183
• Citation: 155 Pa. 409,26 A. 668
• Parties: Artman et al. v. Giles et al., Appellants
• Court: Pennsylvania Supreme Court

26 A. 668

155 Pa. 409

Artman et al. v. Giles et al., Appellants

No. 183

Supreme Court of Pennsylvania

May 22, 1893

Argued March 30, 1893

Appeal, No. 183, Jan. T., 1893, by defendants, Leo Giles, Max Giles and Simon Dessau, judgment creditors of Isaac Giles from order of C.P. No. 3, Phila. Co., Sept. T., 1892, Nos 677, 678 and 679, continuing preliminary injunction in favor of E.R. Artman-Treichler Co. et al., against Isaac Giles, the appellants, the sheriff and the assignee for creditors of Isaac Giles.

Bill in equity by simple contract creditors and attaching creditors against Isaac Giles, his judgment creditors, Leo Giles, Max Giles and Simon Dessau, the sheriff, and the assignee in trust for creditors of Isaac Giles, for an injunction to restrain proceedings at law.

The bill averred that certain of the plaintiffs were creditors of Isaac Giles, trading as Giles & Co., and that certain others of the plaintiffs were lien creditors, having issued attachments under the act of 1869, and levied upon the goods and chattels of the defendant; that Isaac Giles, on Nov. 19, 1892, confessed judgment to the defendants Max Giles, Leo Giles and Simon Dessau, and that execution had issued upon these judgments; that on Nov. 21, 1892, Isaac Giles had made an assignment for the benefit of creditors to Mayer L. Kahn. The bill further averred that the sheriff's sale was not advertised and that the goods had not been catalogued. It also averred that the judgments had been confessed to hinder, delay and defraud creditors of Giles & Co.; that the assignment for the benefit of creditors was part of a fraudulent scheme, and that the assignee was not acting in good faith. It further charged Isaac Giles with various acts of fraud and asked for the following relief: (1) That an injunction might issue restraining the judgment creditors and sheriff from making sale of the goods and effects of Giles & Co. (2) That the assignee be removed and a receiver appointed. (3) Further relief.

The court continued an injunction restraining Max Giles, Leo Giles and Simon Dessau, and Horatio P. Connell, sheriff, from making the sale of the goods and effects of Isaac Giles, trading as Giles & Co.

Error assigned was above decree.

Injunction dissolved and bill dismissed.

John G. Johnson, Max Herzberg with him, for appellants. -- A simple contract creditor before judgment has no right, even though he has acquired a lien under the act of 1869, to contest in equity a fraudulent judgment by his debtor: Wiggins v. Armstrong, 2 Johns. Ch. 144; Angell v. Draper, 1 Vernon, 399; Shirley v. Watts, 3 Atk. 200; Bennett v. Musgrove, 2 Vesey, Sr. 51; Balch v. Wastall, 1 P. Wms. 445; Mitford's Eq. 115; Cooper's Eq. Pl. 445; Bigelow v. Andress, 31 Ill. 322; Martin v. Michael, 23 Mo. 50; Southard v. Benner, 72 N.Y. 426; Smith v. R.R. Co., 99 U.S. 401; Bassett v. St. Albans, 47 Vt. 314; Pendleton v. Perkins, 49 Mo. 565; Skeele v. Stanwood, 33 Me. 309; Barrow v. Bailey, 5 Fla. 9; Tate v. Liggat, 2 Leigh (Va.), 84; Smith v. Millett, 12 R.I. 59; Ferguson v. Bobo, 54 Miss. 121; McMinn v. Whelan, 27 Cal. 300; McDermott v. Blois, 1 R.M.C. (Ga.) 281; Uhl v. Dillon, 10 Md. 500; Weil v. Lamkins, 3 Neb. 384; Gorton v. Massey, 12 Minn. 147; High, Inj. § 131. In this case the attaching creditors acquired no lien, because title to the merchandise at the time of their attachments was vested in the assignee for the benefit of creditors.

For any dereliction of duty on the part of the sheriff or assignee the remedy was not in equity. There was no such dereliction. If the judgments complained of were fraudulent, even if the attaching creditors held a lien, the common law remedy of attacking such creditors should have been resorted to.

The common law affords a remedy which is sufficient and is exclusive.

John Sparhawk, Jr., John Weaver and John M. Gest with him, for sundry appellees. -- This is an interlocutory decree with which the Supreme Court will not interfere: Sheaffer's Ap., 100 Pa. 380; Scranton Gas Co. v. Northern Coal Co., 145 Pa. 21; Penrose v. Nixon, 140 Pa. 45; Roaring Creek Water Co. v. Girton, 142 Pa. 92; Dodd v. Smith, 144 Pa. 340; Black Lick Co. v. Saltsburg Gas Co., 139 Pa. 448; Thompson Glass Co. v. Fayette Fuel-Gas Co., 137 Pa. 317; Penna. R.R. v. Freeport, 138 Pa. 91; Acheson v. Stevenson, 130 Pa. 633; Curwensville Borough's Ap., 129 Pa. 74; Patterson's Ap., 129 Pa. 109; Whiteman v. Fayette Fuel-Gas Co., 139 Pa. 492.

The goods are not perishable and should not be sacrificed at a sheriff's sale. Irreparable injury will be the result of the dissolution of this injunction. No preference is asked by the appellees, but only that the goods may not be sacrificed pending the determination of the rights of the judgment creditors to their alleged lien. The custody of a receiver or an assignee can protect all parties: Act of June 14, 1836, P.L. 632.

The facts in this case disclose not only a fraudulent judgment, but that the debts due the appellees were fraudulently contracted, and that the fraudulent contraction of the debts, the fraudulent confession of judgments, the lumping sheriff's sale, under the control of the debtors, conspirators, and the fraudulent assignment for the benefit of creditors formed, as a whole, a concerted scheme to defraud the appellees.

The appellants cited as the leading case, Wiggins v. Armstrong, 2 Johns. Ch. 144, where the plaintiffs had not obtained any lien whatever upon the property of the defendant, nor did the case show (as does this at bar) combination as well as fraud. As it was, Chancellor KENT rendered his decision, as it seems, reluctantly against his first impression.

Bigelow v. Andress, 31 Ills. 323, relied upon by the appellants, was decided purely upon the ground that the plaintiffs seeking relief had no lien upon the defendant's effects.

Reference to the case of Brashear v. West, 7 Peters, 608, will show that the Supreme Court of the United States (opinion by Chief Justice MARSHALL), in construing the act of Pennsylvania in regard to foreign attachments, held that the service of an attachment upon a garnishee placed the goods of the debtor in the garnishee's hands in custodia legis and gave the plaintiff a lien.

In Smith v. R.R., 99 U.S. 400, the complainant had no lien upon the fund.

In McDermott v. Blois, 1 R.M.C. (Ga.) 281, the demurrer to the bill was sustained because the complainant was not a lien creditor.

In Cohen v. Meyers, 42 Ga. 46, the bill charged insolvency of the debtor and that he had fraudulently transferred his goods to a third person, who was charged with complicity in the fraud, and that the debtor had bought the goods with intent to defraud the plaintiffs; the court allowed a receiver at the instance of a simple contract creditor who had not reduced his claim to judgment. See also to the same effect Heyneman v. Dannenberg, 6 Cal. 376; Field v. Holzman, 93 Ind. 205; Fowler's Ap., 87 Pa. 449; Cogburn v. Pollock, 54 Miss. 639; Blum v. Schram, 58 Texas, 524; High, Inj. § 1405; Manufacturing Co. v. Bradley, 105 U.S. 182.

A creditor without having first obtained a judgment at law may come into a court of equity to set aside fraudulent conveyances of his debtor made for the purpose of hindering and delaying creditors and to subject the property to the payment of the debt due: Thurmond v. Reese, 3 Ga. 449; Cornwell v. Radway, 22 Wis. 260; Sanderson v. Stockdale, 11 Ind. 563; Des Brisay v. Hogan, 53 Me. 554; Day v. Washburn, 24 Howard, 352; Tappan v. Evans, 11 N.H. 311; Holt v. Bancroft, 30 Ala. 193; Case v. Beauregard, 101 U.S. 691; Bank v. Harvey, 16 Iowa 141; 2 Bigelow, Fraud, p. 80; Botsford v. Beers, 11 Conn. 369; Weightman v. Hatch, 17 Ill. 281.

In the supervision of trustees, especially assignees for the benefit of creditors, the courts of common pleas are wisely clothed with very large discretionary powers, and their orders and decrees should not be modified or reversed, except for manifest abuse of such discretion: Weiskettle's Ap., 103 Pa. 522; News v. Shackamaxon Bank, 16 W.N. 207; Union Banking Co. Case, 12 Phila. 214; Klapp's Assignee v. Shirk, 13 Pa. 589; Neal v. Bank, 11 Pa. 17; Irwin v. Keen, 3 Whart. 347; Zerbe v. Miller, 16 Pa. 495.

The right of a creditor is not taken away or postponed by the existence of a voluntary assignment for the benefit of creditors Bank v. Hopkins, 111 Pa. 329.

William S. Divine, Samuel B. Huey with him, for appellees. -- The judgments were fraudulent: United States v. Conyngham, Wallace C.C.R. 178; Eberle v. Mayer, 1 Rawle, 366; Com. v. Strembach, 3 Rawle, 341: McClure v. Ege, 7 Watts, 74; Mentz v. Hamman, 5 Whart. 150; Weir v. Hale, 3 W. & S. 285; Baum, Raiguel & Co. v. Ahl, 29 Pa. 387.

That a judgment fraudulently given by collusion between debtor and plaintiff in such judgment for the purpose of hindering and delaying creditors can be attacked collaterally is beyond question: Reed's Ap., 71 Pa. 380; Thompson's Ap., 57 Pa. 175; Clark v. Douglass, 62 Pa. 408; Sheetz v. Hambest, 81 Pa. 102; Second National Bank of Titusville's Appeal, 96 Pa. 460.

Julius C. Levi, for sundry appellees. -- Attaching creditors have a standing to attack the judgments: Wade on Attachments, ed. 1886, § 33, p. 77; Wait, Fraudulent Conveyances, ed. 1889, § 81, p. 127; Bates v. Plonsky, 28 Hun, 112; Greenleaf v. Mumford, 19 Abb. Pr. 469; Rinchey v. Stryker, 28 N.Y. 45; Carr v. Van Hoesen, 26 Hun, 316; Smith v. Longmire, 24 Hun, 257; Hall v. Stryker, 27 N.Y. 596; Castle v. Lewis, 78 N.Y. 131; Ocean Nat. Bank v. Olcott, 46 N.Y. 12; Deutsch v. Reilly, 57 How. Pr. 75; Erie Ry. v. Wilkes-Barre Coal & Iron Co., 9 Phila. 262; Fowler's Ap., 87 Pa. 449.

Before STERRETT, C.J., GREEN, McCOLLUM, MITCHELL and DEAN, JJ.

OPINION

MR. MITCHELL, JUSTICE

There are some formal objections to ...