Dawson v. Sims

• Decision Date: 07 March 1887
• Parties: DAWSON v. SIMS and others.
• Court: Oregon Supreme Court

13 P. 506

14 Or. 561

DAWSON v. SIMS and others.

Supreme Court of Oregon

March 7, 1887

L.B Cox, for appellant.

C.H Finn, for respondents.

LORD C.J.

This is a suit in equity to set aside a general assignment for the benefit of creditors, and certain other instruments executed by the defendants, Sims, to the end that the property thereby conveyed and mortgaged may be made subject to a claim or indebtedness held by the plaintiff against L.J. and G.R Sims, upon which an action by attachment has been commenced. A demurrer was sustained to plaintiff's complaint, and upon refusal to plead further, judgment was rendered against him, and he has appealed to this court.

The only question raised by the demurrer is a want of jurisdiction in the court to act without an allegation that judgment has been obtained, and that execution issued therein has been returned unsatisfied. It is insisted that such an exhibition of facts is a condition precedent, and one which must be disclosed by averment in the complaint, before the jurisdiction of equity will attach. In Dawson v. Coffey, 12 Or. 519, 8 P. 838, WALDO, C.J., said: "It is exclusively in the province of a court of law to say there is a legal debt, and that it cannot be made at law. Therefore a creditors' bill 'must be preceded by a judgment at law, establishing the measure and validity of the demand of the complainant for which he seeks satisfaction in chancery.' Smith v. Railway Co., 99 U.S. 401. *** 'It is not a mere technical objection, but goes to the very foundation of the suit, and is not waived even by a general answer. The complaint must show an execution returned unsatisfied, and no state of facts will excuse such a return.' Freem. Ch. 306."

Upon the strength of this decision it is claimed that a judgment at law, and the return of execution nulla bona, is a prerequisite to the maintenance of such a suit, and that no state of facts short of such an averment can obviate the defect of their omission in the complaint. Hence the lien created by an attachment would be insufficient to authorize the jurisdiction of equity. But the language of the opinion must be read in the light of the facts to which it applied. The case before the court was that of simple contract creditors, alleging an indebtedness, seeking to maintain a suit to set aside conveyances on the ground of fraud for the purpose of collecting their debts. Upon this state of facts the rule of law as stated is beyond dispute. No principle is better settled in equity than that its courts are not tribunals for the collection of debts, and that, before its jurisdiction can be invoked to aid creditors in obtaining payment, all legal remedies must have been exhausted or proved inadequate. Bump, Fraud. Conv. 514-521; 3 Pom.Eq.Jur. § 1415; Wait, Creditors' Bill, § 73; Bisp.Eq. § 527. But the question whether the lien created by the attachment is sufficient, in a proper case, to justify equitable interference in behalf of creditors' suits, was not decided, unless the law in any case of this kind has made a judgment a sine qua non to the exercise of equitable intervention. The answer to this question has not been altogether satisfactory, but has resulted in a conflict of authority. In a note to section 1415 of Pomeroy's Equity Jurisprudence, the decisions pro and con have been collected; and in Hahn v. Salmon, 20 F. 804, Mr. Justice DEADY, after a careful consideration, reached the conclusion that, for the protection of such a lien, the plaintiff in a creditors' bill was entitled to the aid of a court of equity. See, also, Wade, Attachm. § 33, and notes. On the other hand, Mr. Wait regards the interference of equity to protect liens created by attachment as a violation of the rules of chancery practice, established upon the definite principle that, before a creditor can maintain such a suit, he must previously have established his claim by judgment in a court of law. He says: "We deny that a mere attaching creditor can, under any correct theory of law, become an actor in a creditor's suit. Indeed, the underlying principles of the cases in which it is sought to make a lien acquired by the provisional remedy of attachment the practical equivalent of a lien procured by final judgment, are subversive of the time-honored policy and rule of the courts that a creditors' bill must be founded on a definite claim established by a judgment at law. If the innovations of modern procedure call for the abrogation of this old chancery practice, it should not be superseded by indirection, but rather by some carefully formulated legislative substitute. The requirement is neither artificial nor technical; it is a necessary protection and safeguard to the debtor." Wait, Fraud. Conv. § 81.

Except to satisfy a claim out of some fund accessible only in equity, ( Hodges v. Silver Hill Min. Co., 9 Or 202,) the impression has heretofore remained with me that the claim must be first established at law before the equitable jurisdiction can be invoked. It is admitted that the object of a creditors' bill is not to ascertain or determine the amount and validity of...