Fremont Farmers Union Co-Op. Ass'n v. Markussen
| Decision Date | 03 July 1939 |
| Docket Number | 30502. |
| Citation | 286 N.W. 784,136 Neb. 567 |
| Parties | FREMONT FARMERS UNION CO-OPERATIVE ASS'N v. MARKUSSEN ET AL. |
| Court | Nebraska Supreme Court |
Syllabus by the Court.
1. It is not necessary to the maintenance of a creditors' suit in this state that some independent ground of chancery jurisdiction, such as fraud or trust, shall exist, but such a suit may be maintained by a judgment creditor to reach any assets of his debtor not immediately subject to execution or garnishment at law, which are not exempt by statute or immune as a matter of public policy. Comp.St.1929, § 20-1565.
2. A creditors' suit may be maintained to impress a lien upon the distributive share of a judgment debtor in a decedent's estate which is in process of administration in the county court and to require the administrator or executor to account for it, after order of distribution by the county court, to the clerk of the district court or to a receiver appointed for that purpose.
Appeal from District Court, Dodge County; Spear, Judge.
Proceeding in the nature of an equitable garnishment or creditor's suit by the Fremont Farmers Union Cooperative Association against Alva Markussen and others. From a judgment in favor of the defendants, the plaintiff appeals.
Judgment reversed and cause remanded.
John L. Cutright and Seymour S. Sidner, both of Fremont, for appellant.
Courtright, Sidner, Lee & Gunderson, of Fremont, for appellee Jorgensen.
William H. Lamme, of Fremont, for appellee Markussen.
Heard before SIMMONS, C. J., and EBERLY, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ.
This is a proceeding in the nature of an equitable garnishment or creditors' suit against the administrator of an intestate's estate and one of the next of kin, to subject the latter's interest in the estate to the satisfaction of some judgments, on which execution at law had been returned unsatisfied. The suit was instituted in the district court for Dodge county, and the estate was being administered in the county court of that county. No decree of heirship or order of distribution had as yet been entered by the county court, but the petition alleged that the judgment debtor would ultimately be entitled to a distributive share in cash, out of such estate, sufficient to satisfy plaintiff's judgments. The trial court sustained a demurrer to the petition, and, on plaintiff's election to stand on its pleading, dismissed the action.
The appeal involves two questions: (1) Can a suit in equity be maintained to subject, to the satisfaction of a judgment, property which cannot be reached by execution or garnishment at law, where no other independent ground of chancery jurisdiction, such as fraud or trust, is involved? (2) If so, can such a suit be maintained to reach a next of kin's distributive share in a decedent's estate which is in process of administration in the county court?
On the first question, the courts are in hopeless conflict. 5 Pomeroy, Equity Jurisprudence (2d Ed.) sec. 2300. The right, in the absence of statutory authorization, to grant such relief, except as an incident in the assumption of chancery jurisdiction on some other recognized ground, such as fraud or trust, has been vigorously denied. Donovan v. Finn, Hopk.Ch.,N.Y., 59, 14 Am.Dec. 531; Greene v. Keene, 14 R.I. 388, 51 Am.Rep. 400; Harper v. Clayton, 84 Md. 346, 35 A. 1083, 35 L.R.A. 211, 57 Am.St.Rep. 407.This is the rule that, after some vacillation, finally has been adopted by the English courts. 15 C.J. 1383. On the other hand, it has been asserted, with equal force, that the granting of such relief, even where no other ground of equity jurisdiction is present, is a necessary inference from the inherent purpose of chancery to provide a remedy where the inflexible processes and strict rules of legal justice fail. Pendleton v. Perkins, 49 Mo. 565; Bay State Iron Co. v. Goodall, 39 N.H. 223, 75 Am.Dec. 219.The United States supreme court, in Ager v. Murray, 105 U.S. 126, 26 L.Ed. 942, declared that it is within the general jurisdiction of a court of chancery to assist a judgment creditor to reach and to apply to the payment of his debt any property of the judgment debtor which, by reason of its nature only, and not by reason of any positive rule exempting it from liability for debt, cannot be taken on execution at law.
In many states, statutes have been enacted to remove all doubt as to the power of a chancery court to act in such a situation. 14 Am.Jur. 682. In this state, section 20-1565, Comp.St.1929, which is part of the statutes relating to proceedings in aid of execution, provides: " Where a judgment debtor has not personal or real property subject to levy on execution, sufficient to satisfy the judgment, any interest which he may have in any banking, turnpike, bridge, or other joint stock company, or any interest he may have in any money, contracts, claims or choses in action, due or to become due to him, or in any judgment or decree, or any money, goods or effects which he may have in possession of any person, body politic or corporate, shall be subject to the payment of such judgment by proceedings in equity, or as in this chapter prescribed."
This provision has been recognized by the courts as conferring jurisdiction in creditors' suits, without the necessity of any other ground of chancery jurisdiction. In German Nat. Bank v. First Nat. Bank, 55 Neb. 86, 75 N.W. 531, 532, it was held: " An action in the nature of a creditors' bill may be maintained by a judgment creditor to reach any assets of the debtor subject to the payment of his debts, which cannot be reached by ordinary process of law." On a second appeal (German Nat. Bank v. First Nat. Bank, 59 Neb. 7, 80 N.W. 48) the court, though denying relief under the particular facts involved, recognized the right under this statute to maintain a creditors' suit to subject a chose in action to the satisfaction of a judgment. And in Parsons v. Cathers, 92 Neb. 525, 138 N.W. 747, 748, the court upheld the right, under this statute, to subject to the payment of a judgment money owing to the debtor on other judgments in his favor against a municipal corporation, which could not be reached by execution or garnishment at law. The opinion says: " In direct terms the equitable remedy extends to the interest of a judgment debtor in a judgment against a ‘ body-politic or corporate.' "
It must therefore be regarded as definitely established that, under section 20-1565, Comp.St.1929, it is not necessary to the maintenance of a creditors' suit that some independent ground of chancery jurisdiction, such as fraud or trust, shall exist, but that such a suit may be maintained by a judgment creditor to reach any assets of his debtor not immediately subject to execution or garnishment at law, which are not exempt by statute or accorded immunity on the ground of public policy.
The exemption rights of the judgment debtor involved are not before us on this demurrer. The sole remaining question, then, is whether a distributive share in a decedent's estate, which is in process of administration in the county court, is to be accorded immunity against a creditors' suit, on the ground of public policy.
In American State Bank v. Phelps, 120 Neb. 370, 232 N.W 612, it was declared to be the established rule in this state that garnishment process at law cannot be made to emanate out of one court against another, and it was held that a distributive share in a decedent's estate in the county court, therefore, was not subject to garnishment in the district court. The possibility of jurisdictional clash from the application of the rigid legal process of one court to the other, upon which that decision rests, is an element, however, which the legislature has not deemed it necessary to recognize in dealing with the more flexible processes of a court of chancery in a creditors' suit under the statute. Section 20-1565 makes any interest which a judgment debtor may have in money, contracts, claims or choses in action, due or to become due to him, or in any judgment or decree, or any money, goods or effects which he may have in possession of any person, body politic or corporate, subject to a creditors' suit in equity. No qualification or restriction is imposed. It is not required that the judgment or decree sought to be reached must be one rendered by the court in which the creditors' suit is brought, for that would make the statute add nothing to the legal remedy already available in such a case. Any limitation imposed upon the applicability of the statute, as a matter of public policy, is accordingly one of judicial fostering and not...
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