George Day, Bowen Matlock, Isaac Frothingham, and George Warner, Plaintiffs In Error v. William Washburn and John Keith

• Decision Date: 01 December 1860
• Citation: 65 U.S. 352,16 L.Ed. 712,24 How. 352
• Parties: GEORGE W. DAY, BOWEN MATLOCK, ISAAC H. FROTHINGHAM, AND GEORGE W. WARNER, PLAINTIFFS IN ERROR, v. WILLIAM A. WASHBURN AND JOHN A. KEITH
• Court: U.S. Supreme Court

65 U.S. 352

24 How. 352

16 L.Ed. 712

GEORGE W. DAY, BOWEN MATLOCK, ISAAC H. FROTHINGHAM, AND GEORGE W. WARNER, PLAINTIFFS IN ERROR, v. WILLIAM A. WASHBURN AND JOHN A. KEITH.

December Term, 1860

THIS was an appeal from the Circuit Court of the United States for the district of Indiana, sitting in equity.

Washburn made an assignment of his property to Keith, for the benefit of his creditors.

Day and Matlock, and Frothingham and Warner, citizens of Ohio and New York, filed a bill in the Circuit Court of the United States to set aside this deed as fraudulent. They alleged, as a reason for not sueing him at law, that he had no property upon which a judgment would be a lien, nor any that an execution would reach.

Other creditors of Washburn, upon simple contract debts, came in by a supplemental bill, and applied to be admitted to a distributive share of the assets.

The court ordered them to be distributed equally amongst the parties to the record, from which decree Day, &c., appealed to this court.

The case was submitted on printed arguments by Mr. Henderson for the appellants, and by Mr. Macdonald and Mr. Porter for the appellees. Mr. Henderson contended for a preference in favor of Day, &c., which the counsel for the appellees opposed.

Mr. Henderson's point upon this branch of the case was as follows:

3. The complainants contend that by filing their bill to avoid the assignment, they thereby obtained a specific lien on the assets in the hands of the assignee, and were, under the law of the case, entitled to be fully paid to the exclusion of the other creditors, whose equity is not superior to complainants. It is a well-established rule in equity 'that when the equities are equal, that title which is prior in time shall prevail.'

1 Story's Equity Jurisprudence, 400.

This rule applies as well to a case like the one before the court as to equities growing out of conveyances. With regard to cases like this, the general rule is laid down by numerous adjudications that a creditor may file a bill in his own name and behalf, and for his sole benefit, or he may file in behalf of himself and all others who may be entitled and may choose to come in. If he proceeds on his own account alone, and no lien has been gained or can be acquired at law, he acquires a specific lien by filing the bill, and is entitled to priority over other creditors.

1 American Leading Cases, 85.

Edmondson v. Lyde, (before referred to,) 1 Page R., 637.

Corning v. White, 2 Page R., 567.

Butler et al. v. Jaffray et al., 12 Ind. R., (now in press.)

Farnham v. Campbell, 10 Page R., 598-601.

Weed v. Pierce, 9 Cowen, 722-728.

U. S. Bank v. Burk, 4 Blackf., 141.

Miers and another v. the Maysville Turnpike Co., 13 Ohio R., 197.

Douglass v. Hamilton, 6 Ohio R., 156.

Wakeman v. Grover, 4 Page R., 23.

Russel v. Lasher, 4 Barbour S. C. R., 232.

Burrell on Assignment, 600, 601.

Hobbs v. Bancraft et al., 4 Ind. R., 388.

1 Kent, note to 263-4.

Messrs. Macdonald and Porter opposed this view of the case, and added:

Whether the decree, so far as it directs a ratable distribution of the assets, was right or not, is not now before the court. The appellees do not and did not object to such ratable distribution. The question, so far as relates to that, is a question between the appellants and their co-complainants, and the latter are not made parties to the appeal. Of course, therefore, nothing affecting their interest will be adjudicated by this court.

7 Pet., 399; 16 Id., 521; 14 Curtis, 406.

Mr. Justice NELSON delivered the opinion of the court.

This is an appeal from a decree of the Circuit Court of the United States for the district of Indiana.

The bill was filed in the court below by two mercantile firms, creditors of Washburn, against him and the assignee of his property, for the purpose of setting aside the assignment as fraudulent against creditors, and that the property might be applied in satisfaction of the complainants' demands. These demands were simple contract debts, not reduced to judgment.

The defendants demurred to the bill, and assigned, as the ground of the demurrer, the want of equity.

The court overruled the demurrer, and the defendants answered separately, among other things denying all fraud in the assignment. Replications were filed to the answers.

In this stage of the case, the other creditors of Washburn applied by petition to the court to be made parties to the bill charging fraud in the assignment, and praying that it might be set aside, and the property and effects of the debtor be subjected to the payment of all his debts, and be divided equally among all the creditors.

The court ordered that these petitioning creditors become co-complainants, and referred the case to a master to take an account of what was due to each of the complainants, which account was duly taken, and a report made to the court; and afterwards the...