Chicago & A. Bridge Co. v. Anglo-American Packing & Provision Co.

• Decision Date: 18 June 1891
• Citation: 46 F. 584
• Court: U.S. District Court — Western District of Missouri
• Parties: CHICAGO & A. BRIDGE CO. v. ANGLO-AMERICAN PACKING & PROVISION CO. et al.

46 F. 584

CHICAGO & A. BRIDGE CO. v. ANGLO-AMERICAN PACKING & PROVISION CO. et al.

United States Circuit Court, W.D. Missouri, Saint Joseph Division.

June 18, 1891

This is a bill in equity. Its substantial averments are as follows The complainant is a corporation under the laws of Kansas and Missouri, and the Anglo-American Packing & Provision Company is a business corporation of the state of Illinois, and the other respondents, Robert D., John, George, Anderson William, and Alexander Fowler, are also citizens of and residents of, the state of Illinois. From January, 1878 to 1884 or 1885, the said Fowlers were in business as partners, under the firm name of 'Fowler Bros.,' engaged in butchering hogs and packing pork at the town of Winthrop, in Buchanan county, Mo. In 1878 they purchased the real estate in question, situated in said county, and caused the deed therefor to be made to the respondents Robert D. and Anderson Fowler. Said property was designed and used for the plant in conducting said packing business, and was bought, used, and treated as partnership property of said Fowler Bros. The said Fowlers were the sole incorporators and stockholders and managers of said packing company, organized as a corporation, as aforesaid; and said real estate, so held as partnership property, was put into said corporation as an asset thereof; the said corporation issuing stock to said Fowlers in amount and value equal to the value of all the partnership property, including said real estate, which was thereafter treated and regarded as a part of the assets of the corporation, although the legal title remained in said Robert D. and Anderson Fowler. From 1878 to 1884 or 1885, the said corporation respondent occupied and used said real estate, conducting thereon the business aforesaid, as formerly conducted by said Fowler Bros. In 1880 the respondent corporation contracted with the complainant the debt in question, for which the complainant brought suit in the circuit court of the United States for the district of Kansas, and on the 10th day of May, 1885, recovered judgment against the respondent corporation for the sum of $3,404.74, and costs amounting to $363.90. On this judgment execution was duly issued from said court, and was returned nulla bona. The bill avers that said respondent corporation neither at the time owned, nor has since owned, any property in said state of Kansas. It is also averred that in 1884, during the pendency of said suit in the United States court in Kansas, the said Fowlers entered into a contract with the respondent George Fowler, by which all the assets of the corporation, except the said real estate, was conveyed to said George Fowler. Among other things, said contract provided that--

'The packing-house property at Winthrop shall be sold, and, after first discharging all debts, liabilities, and outgoings affecting the same, the moneys arising from such sale shall be applied, first, in repaying to each partner the amount of capital invested in said concern, and interest thereon, and the ultimate surplus shall be divided equally among all the parties hereto; it being understood that any loss which may arise on the sale of the last-mentioned premises shall, in the final adjustment of the accounts, be borne by all the parties hereto in equal shares.'

The bill avers that the property so alluded to was the real estate in question. In November, 1889, complainant instituted suit by attachment in the circuit court of Buchanan county, Mo., against the respondent corporation on said judgment, so recovered in the United States court in Kansas, and caused the real estate aforesaid to be seized under writ of attachment. Service was had in this action on the defendant therein on order of publication. There was no appearance therein by the defendant. Judgment by default was taken, which judgment was made final May 31, 1890. Thereafter, and without issuing any execution on this judgment, the complainant filed the present bill in the said circuit court of Buchanan county, setting out the facts aforesaid, alleging that the respondent corporation and the other respondents are citizens, residents of the state of Illinois, and that the said corporation has no other property in the state of Missouri. The bill alleges that, while the legal title to the said real estate remains in the said Robert D. and Anderson Fowler, they hold the same in trust for the said corporation, with a resulting trust in favor of the complainant, as such creditor. The prayer of the bill is that said Fowlers be adjudged to so hold the said property in trust; that the court, by proper decree, subject said real estate to the payment of the judgment aforesaid, and order the sale of the said real estate for the satisfaction thereof; and for all proper relief. Service of this bill was had on order of publication. On the return-day the said Fowlers (Robert and Anderson) appeared, and on their application this cause was removed to this court, on the ground that applicants were non-residents of the state. In this court said Fowlers demur to the bill on the ground that it does not state facts sufficient to entitle the complainant to the relief sought, or to any relief whatever against respondents.

Thomas & Dowe and B. P. Waggener, for complainant.

Lancaster, Pike & Hall, for respondents.

PHILIPS J.,

(after stating the facts as above.) It is to be kept in mind, in the consideration of this case, that the suit was instituted in the state court, and that jurisdiction in this court attaches by reason of the act of removal. It is also to be kept in mind that the plaintiff had first reduced this claim against the defendant corporation, Anglo-American Packing & Provision Company, to judgment in the United States circuit court of Kansas. That judgment was in personam, and, it being a court of record, every intendment is to be indulged in favor of the validity and conclusiveness of that judgment. According to the averment of the bill, the real estate in question is an asset of the debtor corporation. While the legal title thereto is in the Fowlers, in equity the property belongs to the corporation, and is held by them in trust for the payment of the corporation debts. As such it was subject to seizure under process of attachment for the complainant's debt. Section 4915, Rev. St. Mo.; Evans v. Wilder, 5 Mo. 313; Rankin v. Harper, 23 Mo. 585; Herrington v. Herrington, 27 Mo. 560; Dunnica v. Coy, 28 Mo. 525. The situs of the land drew to it the venue in the attachment proceeding in the Buchanan circuit court. The action could not have been instituted elsewhere. Sections 2010, 2011, Rev. St. Mo. The defendants therein being non-residents of the state, the statute (section 2022) expressly authorizes service by publication. After due proof of publication, judgment was taken therein by default.

It is true that it is a judgment in rem only, but it constituted a lien on the attached property, effectually binding it from the time of the levy of the writ of attachment, (Lackey v. Seibert, 23 Mo. 85,) and, when the plaintiff therein obtained its judgment this lien became res adjudicata.

Having thus secured this lien by attachment prosecuted to judgment the question arises, did the plaintiff therein have the right to resort to this bill in equity to remove the obstruction of the legal title in the Fowlers, and to subject the property to the payment of its debt, without first issuing an execution on the judgment, and having a return of nulla bona? Counsel for complainant invokes section 571, Rev. St. Mo., which declares that 'any attaching creditor may maintain an action for the purpose of setting aside any fraudulent conveyance, assignment, charge, lien, or incumbrance of or upon any property attached in any action instituted by him. ' This statute clearly is not applicable to the facts of this case. It obtains solely as to fraudulent conveyances, etc., whereas the deed by which defendants obtained the legal title to the property in question was not fraudulently taken. By the averments of the bill they held it under conditions of implied trust, for the use and benefit of the debtor, with a resulting trust in favor of its creditors. The general rule of equity, as contended for by respondents, is that before the general creditor can resort to a court of equity to reach his debtor's property held under a fraudulent deed, and the like, he must reduce his claim to judgment, issue execution, and have a return of nulla bona; in other words, he must exhaust his legal remedies. The reason of this rule, requiring a judgment, etc., is that the claim must be rendered certain; otherwise, the proceeding to vacate the fraudulent transfer of the title, and to remove obstacles placed in the way of the successful operation of the execution, might be entirely fruitless if after all the debtor failed to obtain a judgment on his claim. But in this case the complainant had already obtained judgment in personam in the United States circuit court of a sister state. What was the effect of that judgment? 'A judgment rendered by a court of competent authority, having jurisdiction of the parties and subject-matter, in one state, in conclusive on the merits in the courts of every other state when made the basis of an action, and in such action the merits cannot be inquired into. * * * Accordingly, the courts of one state, when called upon to recognize and enforce a judgment from another state, must admit, not only that there is a record, and that it is what it purports to be, but also that it is just, that the money awarded to the plaintiff is legally due, and that he has a right to recover it without a reinvestigation of his claim. * * * The true doctrine is that such a judgment is to receive in...