Baxter v. Moses

• Decision Date: 16 August 1885
• Citation: 1 A. 350,77 Me. 465
• Parties: BAXTER v. MOSES and others.
• Court: Maine Supreme Court

1 A. 350

77 Me. 465

BAXTER

v. MOSES and others.¹

SUPREME COURT OF MAINE.

Filed August 16, 1885.

R. P. Tapley, for plaintiff.

Frye, Cotton & White and William M. Putnam, for defendants.

PETERS, C. J. This is a creditors' bill to collect certain debts, principally judgments, which are due from the Androscoggin Railroad Company, and is before us on demurrer. It is not claimed that the bill is maintainable under part 10, section 6, of chapter 77 of the Revised Statutes. That provides a remedy for a single creditor, by an attachment in equity of some specific property without asking for a discovery under the bill. Chapman v. Publishing Co., 128 Mass. 478; Insurance Co. v. Abbott, 127 Mass. 558; Donnell v. Railroad Co., 73 Me. 567. This is a materially different bill, but one common to the practice of the courts of chancery. It is not an answer to this mode of remedy that another remedy exists by the means of the process of foreign attachment, either of legal or equitable assets. Those remedies are partial and limited, while this is much more adequate and complete. Besides, the present form of proceeding, though always existing in modern equity procedure, is expressly allowed by the statutes of our state. Rev. St. c. 46, § 52. Either remedy does not exclude the other.

The first objection urged by the respondents against the bill is a want of jurisdiction in the court to act, because the bill contains no allegation that an execution was taken out upon any judgment and nulla bona returned thereon. This defense must prevail, and for the reason stated by Shepley, J., in Webster v. Clark, 25 Me. 313, who says: "Courts of equity are not tribunals for the collection of debts; and yet they afford their aid to enable creditors to obtain payment when their legal remedies have proved to be inadequate. It is only by the exhibition of such facts as show that these have been exhausted that their jurisdiction attaches. Hence it is that when an attempt is made by a process in equity to reach equitable interests, choses in action, or the avails of property fraudulently conveyed, the bill should state that judgment has been obtained, and that execution has been issued, and that it has been returned by an officer without satisfaction." Such has certainly become the settled rule in this state. It has been unhesitatingly affirmed in a series of cases: Hartshorn v. Eames, 31 Me. 93; Dana v. Haskell, 41 Me. 25; Dockray v. Mason, 48 Me. 178; Corey v. Greene, 51 Me. 115; Griffin v. Nitcher, 57 Me. 270; Howe v. Whitney, 66 Me. 17. Our decisions do not stand alone upon the question. The decided preponderance of authority is the same way. Mr. Bump, in his work on Fraudulent Conveyances, at page 514, gleans the rule from all the cases of the country, and states it in these explicit terms: "The creditor's right to relief in such case depends upon the fact of his having exhausted his legal remedies without being able to obtain satisfaction. The best and the only evidence of this is the actual return of an execution unsatisfied. The creditor must obtain judgment, issue an execution, and procure a return of nulla bona before he can file a bill in equity to obtain satisfaction out of the property of the debtor which cannot be reached by law." In Pom. Eq. Jur. § 1415, it is said: "The general rule is that a judgment must be obtained, and certain steps taken towards enforcing or perfecting such judgment, before a party is entitled to institute a suit of this character. In this there is an uniformity of opinion, but the difficulty arises in determining exactly how far a plaintiff should proceed after he has obtained his judgment." In a note the author explains: "Much of the conflict doubtless results from the effect judgments and writs of execution have in different states. The rule seems to be sustained by the weight of authority that before a creditor's suit can be brought to reach choses in action and personal property in such a shape or form, under such conditions that no levy can be made at law, execution must have been issued, and a return nulla bona made." The cases show that in those states where a judgment is itself a lien upon land an execution need not issue. In such case equity will proceed to make the lien effectual. Among the cases sustaining the rule as promulgated in our state are the following: Tappan v. Evans, 11 N. H. 311; Smith v. Millett, 12 R. I. 59; Adee v. Bigler, 81 N. Y. 349; Adsit v. Butler., 87 N. Y. 585. See, also, Haswell v. Lincks, Id. 637; Suydam v. Insurance Co., 51 Pa. St. 394; Dormueil v. Ward, 108 Ill. 216; Brown v. Bank, 31 Miss. 454; Scott v. Ware, 64 Ala. 174.

The rule has been sustained by the federal supreme court in several cases, and in too strong terms to suppose that it can be considered as reversed by that court by the observations of Mr. Justice Strong in relation to it in the case of Case v. Beauregard, 101 U. S. 888, a case cited for the complainant. See Jones v. Green, 1 Wall. 330; Taylor v. Bowker, 111 U. S. 110; S. C. 4 Sup. Ct. Rep. 397. We think that, outside of the authorities, the rule is a reasonable one. It should not be in the power of a creditor to institute such an extraordinary remedy against his debtor for no other reason than that his debt is overdue. A debtor may be able to relieve himself from threatening insolvency by the time an execution is obtained and demanded of him. His inability or unwillingness to pay should be established by some certain rule. What more reasonable one could be devised than that there shall be a judgment, an execution, and a return of nulla bona. And to remove all uncertainty the official return is conclusive evidence that the creditor has exhausted all legal remedy without succeeding in collecting his debt. It is a beneficent rule for both parties.

The counsel for complainant contends that the demurrer admits the insolvency, and that the admission obviates the necessity of a return of nulla bona. The official return being the only sufficient evidence that the debt cannot be legally collected, the demurrer is not a waiver of a right to ask for a production of such evidence. It complains of the insufficiency of the bill, because it does not allege that such evidence exists. It is contended for the complainant that the rule held to in the cases in this state, before cited, was adopted when we had quite limited powers of chancery, and that with our equitable jurisdiction enlarged as it now is the rule should be different. No such excuse was ever given for the rule in its early days. No chancery jurisdiction, however enlarged, takes upon itself the collection of legal debts before legal remedies are exhausted. Nor is there force, to our minds, in the distinction seen by counsel that in our own cases referred to before, the bill complained against the principal debtor, together with some third party, while the present bill complains against the debtor only. The distinction does not appear to have been before taken. Many of the cases where a return of nulla bona was required were against debtors alone, and one of the New York cases, before cited, involved the insolvency of a corporation very much as this case does. There is more reason for an application of the rule to the debtor than to parties associated in bill with him. It is especially for his protection that the rule exists. It is his business that the creditors' bill usually winds up. The forms of creditors' bills in the books are of both descriptions, and the rule is the same. It does not vary the case that the statute allows the remedy pursued in this case to a "judgment creditor." See Rev. St. c. 46, § 52. It means a judgment creditor who has first exhausted all legal remedy. The original act of 1848, from which the present provision came by revision, but not by legislative alteration, virtually so declared. See chapter 64, Laws 1848. What was at first expressed is now implied. The change in words was to condense the enactment into a more concise expression. There has been no attempt to change the policy of the law so long understood and adhered to. This view of our statutory provision was taken in the case of Taylor v. Bowker, 111 U. S. 110; S. C. 4 Sup. Ct. Rep. 397.

No doubt, there may be exceptions to the rule requiring a return of nulla bona. Where the common-law means cannot, for exceptional causes, be made to apply, there are cases which decide that equity may do what the law would do if it could apply. Wiggin v. Heywood, 118 Mass. 514; Merchants' Bank v. Paine, 13 R. I. 592. But we have no opinion to express upon any exceptional and hypothetical case at this time. Here there were judgments for many years existing, and no excuse is suggested or appears why further steps were not taken to enforce them. Another question is whether the statute of limitations applies. This defense may be taken on demurrer where the bill on its face shows its application. Mooers v. Railroad Co., 58 Me. 279; Story, Eq. PL §§ 484, 751. Although the doctrine of equitable limitations lacks somewhat in definiteness, adapting itself, as it does, a good deal to circumstances, still it is well settled that upon legal titles and legal demand courts of equity adopt and apply statutes of limitation, acting upon them by analogy to the law. This rule applies to most questions in equity. It does not generally apply in cases of express trust. It may, however, apply in cases arising out of express trusts, where the trust has been repudiated by the trustee and he assumes a position of hostility to it. Besides applying the legal doctrine of limitations, equity has a favorite doctrine of its own, which allows a defense to be based on a mere lapse of time and the stale-ness of a claim, denominated laches, if the delay has been of a passive character and acquiescence under other circumstances. The defense of laches or acquiescence is independent of the statutory rules of limitation, and, where no statute directly governs the...