Citizens Fire, Marine & Life Ins. Co. of Wheeling, Va. v. Wallis

• Decision Date: 30 May 1865
• Citation: 23 Md. 173
• Parties: THE CITIZENS FIRE, MARINE AND LIFE INSURANCE COMPANY, of Wheeling, Va., v. S. T. WALLIS and JOHN H. THOMAS, Garnishees of GITTINGS, ALLNUTT & CO.
• Court: Maryland Court of Appeals

23 Md. 173

THE CITIZENS FIRE, MARINE AND LIFE INSURANCE COMPANY, of Wheeling, Va., v. S. T. WALLIS and JOHN H. THOMAS, Garnishees of GITTINGS, ALLNUTT & CO.

Court of Appeals of Maryland.

May 30, 1865

APPEAL from the Superior Court of Baltimore city.

An attachment on judgment was issued by the appellant on the 3rd of May 1860, to affect the rights and credits of Gittings, Allnutt & Co., which, on the 4th of May 1860 was laid in the hands of Wallis and Thomas, as garnishees who appeared and plead nulla bona; on which issue was joined, and the case was submitted to the Court upon an agreed statement of facts, the material parts of which are as follows:

By a deed of trust, dated the 15th of November 1856, the firm of Gittings, Allnutt & Co., composed of James Gittings and George R. W. Allnutt, conveyed to Wallis and Thomas " all the stock in trade, debts, sum or sums of money, books of account, claims, securities, bills receivable, assets effects and property of every kind whatsoever, wheresoever situated, due, owing or being, of the said firm of Gittings Allnutt & Co.," in trust to sell, and out of the proceeds to pay certain preferred creditors in full, and then, after payment of such preferred debts, in trust for the benefit of, " and to pay and satisfy, pari passu, all such creditors of Gittings, Allnutt & Co., without priority or preference, as shall, on or before the 1st of February 1857, agree to accept such dividend or dividends as they may receive and severally obtain, under this deed, in full satisfaction of their respective claims, and execute a full and sufficient release under seal therefor, to said Gittings, Allnutt & Co., the amounts in full, or pro rata, as the case may be, of their respective lawful and just claims, and after payment or satisfaction of the whole of said creditors aforenamed, described and provided for, whether preferred or agreeing to release as aforesaid, then in trust to pay and satisfy the remaining debts or liabilities of said firm in full or pro rata, as the same may suffice."

In January 1857, a number of creditors (seventeen in all) executed releases under seal, in accordance with the terms of the deed. By these releases, the creditors assented to the terms of the deed, and agreed " to accept such dividend or dividends as we may receive and severally obtain under such deed, in full satisfaction of our respective claims against the said firm. And in consideration of the premises, we do hereby severally release, acquit and forever discharge James Gittings and George R. W. Allnutt, and their and each of their representatives, and the said firm of Gittings, Allnutt & Co., of and from all and every our respective claims and demands whatsoever aforesaid, already existing and hereafter to accrue."

It was agreed that these parties were, at the time of executing these releases, creditors of the said firm to the amount of $40,000 and upwards, of which they have never been paid, or received any part, either under the deed of trust or any other source, and that said releases were executed upon consideration of the deed of trust, and in contemplation of the benefit to be derived thereunder, and for no other consideration whatever.

On the 9th of February 1858, a judgment was confessed by Gittings, Allnutt & Co., for $8,000, without stay of execution, in favor of F. K. Howard, for the use and benefit of the creditors who had so released, and on this judgment an attachment was issued, and the same day (9th of February 1858) laid in the hands of the garnishees in this case. It was agreed that Howard was not personally and in his own right a creditor of Gittings and Allnutt, but was the agent and attorney, duly authorized, of the parties for whose use his suit was entered, and that he sued and recovered judgment, and issued his attachment for the use and benefit of the said parties only, his name being used for convenience, and that the moneys for the recovery of which Mr. Howard's suit was instituted and the judgment in his favor rendered, and which it was the purpose of the said suit and confessed judgment and attachment to secure, were the same debts due by Gittings and Allnutt to said parties prior to and at the time of the execution of said releases, and that they are the only creditors who executed releases, or, with reference to the deed of trust aforesaid, who have not received their pro rata shares under said deed.

The judgment on which the appellant's attachment was issued, was recovered on the 25th of February 1859, for $2,500, subsequently to the attachment on the judgment for the use of the other creditors, but the suit had been commenced on the 8th of January 1858.

It was agreed that the garnishees had in their hands moneys more than sufficient to cover the appellant's judgment, received by them as trustees acting under said deed of trust, but not sufficient to cover the judgment in favor of Howard, for the use of the other creditors.

The Court below (MARTIN, J.,) rendered judgment in favor of the garnishees for costs, from which judgment the plaintiff appealed.

The cause was argued before BOWIE, C. J., and BARTOL, GOLDSBOROUGH, COCHRAN and WEISEL, J. Thos. S. Alexander, Geo. W. Dobbin and A. F. Musselman, for appellant:

The obstacles in the way of the recovery by the plaintiff are two: 1st, the deed of trust of 1856; and 2nd, the Howard suit, judgment and attachment laid in the hands of the garnishees.

I. A plaintiff in attachment may attack a deed of trust. American Ex. Bank vs. Inloes, 7 Md. Rep., 386. Keighler vs. Ward, 8 Md. Rep., 254. The deed of November 1856, is void, because Gittings and Allnutt thereby convey only partnership property. Barnitz vs. Rice, 14 Md. Rep., 24. Rosenberg vs Moore, 11 Md. Rep., 376. Bridges & Woods vs. Hindes, et al., 16 Md. Rep., 101.

II. Where successive judgment creditors claim liens on the same property, a junior creditor may impeach the judgment of an elder lien creditor, as it is not conclusive, but may be examined into for fraud, want of consideration, payment, & c. Hauer's Appeal, 5 Watts & Serg., 475. Proc tor vs. Johnson, 2 Salk., 600. Webster vs. Reid, 11 How., 437. Thomas vs. Doub, 8 Gill, 1. 13 Eliz., ch. 5, in Roberts on Fraud. Con.

In relation to Howard's action, the confessed judgment and attachment thereon, there are two contradictory statements of fact: one, in Mr. Howard's nar., pleadings filed, and docket entries in that suit, in his own name and right; and the other, in the agreed statement of facts filed in the cause, wherein it is alleged that Mr. Howard sued as agent for the cestuis que use of his said judgment. It is respectfully submitted that said Howard's action, judgment confessed, and all the proceedings thereon, are fictitious, fraudulent and void as against this appellant, under well established principles, in connection with the Statute of 13th Elizabeth, ch. 5, which applies expressly to all suits, actions and judgments, notwithstanding any entry of use, or any other device whatsoever. The nar. filed by Mr. Howard being wholly fictitious and cut down by said statute as against this plaintiff, the judgment confessed and attachment thereon can be in no better situation than the nar., the whole being destitute of valuable consideration. If cut down by the statute, can said judgment of record be rendered valid and operative against this plaintiff by parol? It is thought not. In Harris vs. Alcock, 10 G. & J., 248, this Court say: " You cannot offer evidence to add to or contradict a deed, much less can you do so in relation to a record, which is of much greater solemnity." See, also, Proctor vs. Johnson, 2 Salk., 600. 5 La. Rep., 18, & c. 4 La. Rep., 416. No cause of action was merged by the confessed judgment of Howard. He had no cause of action in his own right, and no others were set out or declared upon in the nar., and non constat, that other creditors might not yet sue on their claims. If Mr. Howard took nothing by the judgment, the cestuis que use took nothing by the assignment. Had action been properly brought in the name of any one of the creditors of Gittings and Allnutt, for the use of himself and other creditors, on the note of Gittings, Allnutt & Co., the decision in Harris vs. Alcock would have sustained the judgment confessed. The plaintiff's cause of action is merged in its judgment. As to it, want of an actual debt due to Howard, as a foundation for his judgment, is an incurable vice. Hauer's Appeal, 5 Watts & Serg., 475.

1st. In a suit by creditors impeaching the consideration of a deed for fraud, and success in the overthrow or disproof of the entire expressed consideration, the grantee cannot offer evidence of any different consideration. Betts vs. Union Bank, 1 H. & G., 175, & c. Otherwise, in case of only partial success in the impeachment of the consideration of the deed. Cole vs. Albers, 1 Gill, 422, 423.

In a suit by creditors impeaching the consideration of a judgment for fraud, and success in disproof of the entire consideration, the grantees and those claiming under them are estopped by the record of judgment, and bound by it, and cannot set up any other or different consideration. Proctor vs. Johnson, 2 Salk., 600. But in case of the overthrow or disproof of only part of the expressed consideration, the defendant in the judgment, if confessed upon a note, may offer in evidence the real consideration to explain the words " value received," and to rebut the charge of fraud. In the case at bar, no note appears. Harris vs. Alcock, 10 G. & J., 248.

As regards the question of impeachment of expressed considerations of judgments and deeds, for fraud, by strangers, Harris vs. Alcock is analogous to Cole vs. Albers, and Proctor vs. Johnson is analogous to Betts vs....