August v. Seeskind

• Decision Date: 31 December 1868
• Court: Tennessee Supreme Court
• Parties: August & Bing v. E. Seeskind et als. J. Blum & Co. v. Same, Newberger & Rouk v. Same.

46 Tenn. 166

August & Bing

v.E. Seeskind et als.

J. Blum & Co.

v.Same,

Newberger & Rouk

v.Same.

Supreme Court of Tennessee.

December Term, 1868.

FROM DAVIDSON.

This cause was heard at the April Term, 1867, before Chancellor DAVID CAMPBELL, when there was a decree for the complainants. Respondents appealed.E. A. OTIS, THOS. H. MALONE and M. M. BRIEN, Jr., for Complainants.

EAST & SPURLOCK, and GUILD & SMITH, for Respondents.

HENRY G. SMITH, J., delivered the opinion of the Court.

These causes were heard in Chancery at Nashville, together. In their material elements they are alike, and the discussion and disposition of one, will apply to and dispose of the others.

E. Seeskind and George Lyon were partners in the business of merchants, under the name of E. Seeskind & Co., having a business house at Nashville, in Tennessee, and another at Columbia, in South Carolina. In January, 1866, under the stress of attachments levied by creditors on the property of the firm at Nashville, during the temporary absence of Seeskind from Nashville, Lyon executed at Nashville, in the name of E. Seeskind & Co., an assignment of all the properties of the firm and of both the business houses, to Max Dinkenspiel, in trust, to sell the properties and apply the proceeds to the payment of their creditors. Preferences were made by the terms of the deed, among the creditors. The attaching creditors and others, were placed in the first class; other creditors in the second class; and the residue of their creditors in the third and last class.

The deed contains a clause, which declares that no responsibility shall be incurred by the trustee, except for a wanton neglect in the discharge of his duty in the execution of the trust.

Soon after the making of the assignment, the trustee, Dinkenspiel, went into the County Court at Nashville, and entered into the bond and took the oath prescribed by the Code, section 1974, and following, to perform faithfully the duties imposed on him by law and the deed of assignment.

The defendants allege in their pleadings, and show by proof, that it was supposed by Lyon and Dinkenspiel, at the time Lyon signed and executed the deed, that this clause was not in the deed. It was inserted by the draftsman, at the suggestion of Lyon in the first instance. When read to Dinkenspiel, he objected to the clause, and it was ordered to be erased. Some interruption occurred at the moment, which prevented the erasure of the clause and signing of the deed at that time. Afterwards, and when the deed was signed, the fact that the clause had not been erased, was inadvertently overlooked.

Neither trustee nor beneficiary signed the deed. The execution of the deed was made in the presence of Dinkenspiel, and he accepted the trust at the time, and thus became a party to it.

A few days after the assignment was made, three creditors of the firm, of the residuary class, the complainants here, and who did not accept the assignment, exhibited separate bills of complaint in the Chancery Court at Nashville, against Seeskind, Lyon, Dinkenspiel, and the preferred creditors. These bills are substantially alike. They are framed chiefly upon the jurisdiction created by the sections of the Code, 4288, and the following. The equities which they allege, are, the indebtedness of E. Seeskind & Co., and the fraudulent character of the assignment as against the creditors. The frauds alleged, are: first, actual, that the purpose of the parties was to defraud creditors; second, fraud, by construction of law upon the clause exempting the trustee from responsibility, except for wanton neglect of duty; and third, fraud in this, that Lyon made the assignment, giving preferences, in the temporary absence, and without the concurrence, of Seeskind.

Writs of attachment were issued upon the bills by the clerk of the Chancery Court, upon bonds given by the complainants, of the kind prescribed in cases of original attachments, and without any order of Judge or Chancellor, and without any bond prescribed by Judge or Chancellor. Under these writs, the properties of the firm at Nashville embraced in the assignment, were seized.

The trustee, Dinkenspiel, replevied the properties, giving bond and security, as prescribed by law, for replevy in cases of original attachment.

The defendants put in answers denying the frauds charged, and the equities generally of the bills. Proofs were taken, and the causes went to final hearing on bills, answers, replications, proofs etc.

Such is a general outline of the pleadings and evidence in the case sufficiently particular and accurate for the purposes of this opinion, and the decision of the rights of the parties.

A point is made by the defendant, which, if well taken, disposes of the case.

The writ of attachment was issued by the clerk, without order of Judge or Chancellor, and without bond prescribed by Judge or Chancellor. The defendants allege the writ to be void for want of such order and bond, and so the seizure of the properties without jurisdiction of the properties seized, and consequently, incapable of rendering a decree subjecting them to the demand of the complainants.

The bill is framed and stands as before stated, upon the equity and jurisdiction created by the secs. 4288, and following, of the Code. These sections are, in terms as follows: “Any creditor, without having first obtained a judgment at law, may file his bill in chancery, for himself, or for himself and other creditors, to set aside fraudulent conveyances of property, or other devices resorted to for the purpose of hindering and delaying creditors, and subject the property, by sale or otherwise, to the satisfaction of the debt.” “Upon filing the bill, writs of attachment and injunction may be granted on complainant giving bond and security in such sums as the Chancellor or Judge may order, conditioned to comply with the orders and decrees of the Court, and to pay such damages as may be awarded and recovered, for wrongfully suing out such attachment or injunction.” “The Court has the same power and jurisdiction in all respects, to set aside fraudulent devices, in the cases mentioned in the last three sections, and to subject the property, by sale or otherwise, to the payment of debts, as if the creditor had obtained judgment, and execution thereon had been returned unsatisfied.”

The intent of these enactments of the Code is, to give creditors at large, the same remedies against fraudulent conveyances and decrees of their debtors, as are had in chancery, according to the course of the common law, by judgment creditors. The proper construction of the sections quoted above, is, that the Court has the same power and jurisdiction, in all respects, to set aside fraudulent conveyances and other fraudulent devices, in the cases mentioned in the three sections, 4288, 4289, 4290, and to subject the property, by sale or otherwise, to the payment of debts, as if the creditor had judgment, or judgment and execution, or judgment, execution and a nulla bona return.

And now, as to the writ of attachment herein assailed as void. It is an error, to confound the writ of attachment authorized and proper in cases of the kind here, with the writs of attachment grounded on one or more of the causes designated in the seven subsections of the section 3455, of the Code, and commonly called original attachments. The writ of original attachment is the original leading process in the cause. Its purpose is, to bring the property of defendant into court, and thereby give the Court jurisdiction of the action against the defendant. Unless the property of the defendant be brought, by the writ, into the control of the Court, the Court has no jurisdiction of the action against the defendant. The seizure of the property is essential to the jurisdiction of the Court. If the writ be void, and the defendant do nothing to waive the irregularity of the writ, or to give the Court jurisdiction of his person, and so of the action, by his appearance and pleading to the merits, the Court has no jurisdiction of the action; and proceedings thereon are void, the seizure is void, and the judgment thereon is void.

In cases of creditor's bills upon judgment to set aside fraudulent conveyances, the original process is the chancery writ of subpoena. Upon the filing of the bill, the subpoena issues, and the defendant is brought into court by service of the subpoena, or, if service of subpoena on the person of the defendant be not practicable, by reason of his non-residence, or other sufficient cause, publication takes the place, and performs the function of the subpoena. By service of the subpoena or publication, the Court obtains jurisdiction of the person of the defendant, and so of the action against the defendant. Having thus obtained jurisdiction, the Court may rightfully proceed to decree upon the equity of the cause, and give such relief to the complainant as may be suitable to the equity alleged and established. If the subject matter of the controversy be property of any kind, the Court may decree such relief as may be proper to the equities of the parties, and execute such relief by process suitable to the purpose. Seizure of the property, pending the litigation, or at the beginning, is not generally essential to give the Court jurisdiction over it, and to enforce the proper relief in respect of it.

But it may be useful in the progress of the cause, and often at the beginning, to obtain control of the property?? ,with a view to its safety, to abide the issue of the suit. Causes of fear may exist, at any time pending the litigation, or at the beginning, that the property which is the subject matter of the suit, may be wasted, squandered, removed, destroyed or otherwise put in jeopardy. If such causes of fear exist, and they be properly shown to the Court, and verified, the court will issue process to seize and impound it. Such process is the writ of attachment. This is auxiliary to the...