Coates Bros. v. Wilkes

• Decision Date: 28 February 1885
• Citation: 92 N.C. 376
• Court: North Carolina Supreme Court
• Parties: COATES BROS. v. JOHN WILKES.

92 N.C. 376

COATES BROS.

v.JOHN WILKES.

Supreme Court of North Carolina.

February Term, 1885.

MOTION for a receiver, in supplemental proceedings, heard before Graves, Judge, at Chambers in ROWAN county.

His Honor refused the motion, and the plaintiff appealed.

Mr. B. C. Potts, for the plaintiffs .

Mr. J. S. Henderson, for the defendant .

MERRIMON, J.

The plaintiff obtained judgment at Spring Term of 1874, of the Superior Court of Rowan county, against the defendant for the sum of $31,187.17 and costs. The defendant then, and ever since that time, has resided in the county of Mecklenburg. The judgment mentioned was docketed in the Superior Court of the latter county, on the 9th day of September, 1874. Executions against the property of the defendant, repeatedly issued upon this judgment from the Superior Court of Rowan county, directed and delivered to the sheriff of Mecklenburg county, and the last one was so issued and delivered on the 21st day of August, 1880. These executions were each successively returned by the sheriff, wholly unsatisfied.

Afterwards, on the 21st day of April, 1883, the plaintiffs begun their proceeding, supplementary to the execution upon the judgment mentioned, in the Superior Court of Rowan county against the defendant.

On that day, an order was entered by the court (the clerk), requiring the defendant to appear therein and answer concerning his property as required by law, and he was forbidden to transfer or make any other disposition of his property not exempt from execution, until the further order of the court.

Afterwards, on the 8th day of May, 1883, the defendant was examined in pursuance of that order at length before the court, in respect to his property. Upon such examination, the plaintiff moved that the defendant be required to produce the books of account and record of business, that the defendant alleged belonged to Mrs. Jane Wilkes, his wife, to the end the same might be examined and used as evidence in such proceeding. The court (the clerk), refused to grant this motion of the plaintiff. From the order denying the same, the plaintiff appealed to the judge.

Afterwards, on the 21st day of January, 1884, upon notice to the defendant, the plaintiffs moved before the judge in the same proceeding that a receiver be appointed in that behalf; and, at the same time, the judge heard the appeal mentioned above.

The plaintiffs supported their motion for a receiver by the testimony of the defendant taken as stated above, and the depositions of other persons, all of which are sent up as part of the case settled upon appeal for this court.

The judge found the facts of the matter so before him, denied the motion for a receiver, and affirmed the order of the court (the clerk), denying the plaintiffs' motion that the defendant be required to produce the books mentioned. The plaintiffs excepted, and appealed to this court.

The defendant's counsel raised numerous objections to the application of the plaintiffs for a receiver. Among other things he insisted here, first, that the findings of the facts by the judge below is conclusive, and this court has no authority to review the same, and secondly, that if this is not true, then, such findings are correct and fully warranted by the evidence.

We think it very clear, that these objections cannot be sustained.

The proceedings supplementary to the execution in an action, as allowed and provided for by The Code, secs. 488-500, are mainly, if not altogether equitable in their nature. While, perhaps, they go beyond in some respects, they are in large part a substitute for, and take the place of, the methods of granting relief in equity in favor of a judgment creditor as against his judgment debtor, after he had exhausted his remedy at law by the ordinary process of execution, as these prevailed before the present Code System of procedure was adopted. Hasty v. Simpson, 77 N. C., 69; Rand v. Rand, 78 N. C., 12; Hinsdale v. Sinclair, 83 N. C., 338; High on Rec., 401.

In the order of procedure, such supplementary proceedings are incident to the action; they extend and enlarge its scope for the purpose of reaching the judgment debtor's property of every kind subject to the payment of his debts, that cannot, for any cause, be successfully reached by the ordinary process of execution, and subjecting the same, or so much thereof as may be necessary, to the payment of the judgment.

In effectuating this purpose, it very frequently becomes necessary to grant relief by injunction and the appointment of a receiver, as in other cases. Indeed, a receiver is appointed almost as of course, where it appears that the judgment debtor has, or probably has, property that ought to be so subjected to the satisfaction of the judgment, after the return of the execution unsatisfied. The receivership operates and reaches out in every direction as an equitable execution, and it is the business of the receiver, under the superintendence of the Court, to make it effectual by all proper means.

If it appear that the debtor has funds or property in his own hands, the Court may, by proper order, apply the same to the judgment; but if the title to the property alleged or claimed to be that of the debtor, be in dispute, or it be disposed of by the debtor, in fraud of creditors, in such way as that it cannot be promptly reached by execution or the order of the Court, then a receiver may be appointed at once. And it is not essential to such appointment, that it shall actually appear that the debtor has property; if it appear with reasonable certainty, or that it is probable that he has property that ought to be subjected to the payment of the judgment, a receiver may be appointed. Bloodgood v. Clark, 4 Paige, 574; Osborne v. Hyer, 2 Id., 342; 2 Whit. Pr., 697; High on Rec., 400, et seq., and notes.

It is an important part of the duties of the receiver to take possession and get control of the property of the judgment debtor, whether in possession or action, as soon as practicable, and to bring all actions necessary to secure and recover such property as may be in the hands of third parties, however they may hold and claim the same, and particularly to recover property conveyed to third parties fraudulently as to creditors.

The general principles of law applicable to receivers, apply as to them in the case of supplementary proceedings; and The Code, §494, specially authorizes their appointment in such cases, and §497 provides that if it appear that a person or corporation alleged to have property of the judgment debtor, or indebted to him, claims an interest in the property or denies the debt, such interest or debt shall be recoverable only in an action against such person or corporation by the receiver, and the Court is authorized to prevent any transfer or other disposition of such property, until sufficient opportunity shall be afforded the receiver to bring the action and prosecute the same to judgment and execution.

The judgment debtor cannot complain at the appointment of a receiver. If he has property subject to the payment of his debt, it ought to be applied to it; if he has not such property, this fact ought to appear, with reasonable certainty, to the satisfaction of the creditor. The receiver proceeds to do this, not at the peril of the debtor, but at his own peril, as to costs, if he fails in his action. The purpose of the law in such proceedings, is to afford the largest and most thorough means of scrutiny, legal and equitable in their character, in reaching such property as the debtor has, that ought justly to go to the discharge of the debt his creditor has against him.

It thus appears that supplementary proceedings are incident to the action, equitable in their nature, and that an injunction may be granted and a receiver may be appointed as occasion may require.

This Court has no authority to review, change, or modify in any respect, the findings of fact by the Court below, in matters purely legal in their nature. But, while the Legislature has not undertaken to provide how the facts in actions and matters purely equitable in their nature shall be ascertained, otherwise than as in actions where the matter in litigation is purely legal in its nature, it is settled, that in equitable matters wherein the evidence is and must be written in the form of affidavits, or depositions, or is documentary, and the court below finds the facts, this Court has authority, and it is its duty in a proper case, upon appeal, to consider the evidence before that court, review its findings of fact, and sustain, reverse or modify them. It has uniformly done so since the amendment of the Constitution in 1877 (Art. 4, §8) in respect to applications for injunctions, receivers, and like applications wholly equitable in their nature, wherein questions of fact, as distinguished from issues of fact, have been passed upon by the Superior Court. In such applications all the evidence before the court must, upon appeal, be sent to this Court, and here considered. In such cases this Court takes cognizance of and reviews the evidence, and finds the facts, just as it did in equity cases before the present Constitution and The Code method of procedure were adopted. Gillis v. Martin, 2 Dev. Eq., 470; Graham v. Skinner, 4 Jo. Eq., 94; Jones v. Boyd, 80 N. C., 258; Young v. Rollins, 90 N. C., 125; Worthy v. Shields, Id. 192.

But this Court cannot review the evidence and findings of fact in cases purely equitable, where issues of fact are tried; because such issues, under existing laws, are tried by a jury, just as in cases at law, and, besides, no method has been devised or provided by the Legislature, under the present Constitution, for taking the evidence in such cases, in such shape as that it could be sent to this Court to be considered, if it were competent for it to do so. It is not essential that questions of fact shall be tried by a jury; the evidence submitted to the court upon...