Grunsfeld Bros. v. Brownell
| Decision Date | 03 March 1904 |
| Citation | 76 P. 310,12 N.M. 192,1904 -NMSC- 014 |
| Parties | GRUNSFELD BROS. v. BROWNELL et al. |
| Court | New Mexico Supreme Court |
Syllabus by the Court.
1. An allegation in a complaint that the defendant "is insolvent," when the complaint is demurred to, is equivalent to saying that such defendant does not own property enough to pay his debts.
2. A plaintiff does not have to reduce his debt to judgment before he can go into a court of equity to attack and set aside a fraudulent conveyance made by his debtor. Affirming Early Times Distillery Co. v. Zeiger, 49 P. 723, 9 N.M. 31.
3. Chapter 67, Sess. Laws 1889, which is entitled "An act to prevent debtors in contemplation of insolvency from preferring, one or more creditors to the exclusion in whole or in part of others," is not a bankruptcy law, and was not suspended by the enactment of the national bankruptcy law, so far as proceeding under it to set aside any alleged fraudulent conveyance made prior to July 1, 1898, that being the day when the national bankruptcy law was passed by Congress.
Appeal from District Court, Bernalillo County; before Justice Benjamin S. Baker.
Action by Grunsfeld Bros. against D. R. Brownell and others. Judgment for plaintiffs. Defendants appeal. Affirmed.
The appellees in this case were engaged in business in the city of Albuquerque, in this territory, under the firm name of Grunsfeld Bros. The appellant D. R. Brownell resided in the southern part of this territory, and on the 5th day of July 1898, was indebted to the appellees in the sum of upwards of $1,700. On January 29, 1898, appellee D. R. Brownell, being indebted to one Robert Brownell, of Nova Scotia, one of the appellants herein, executed a bill of sale by which he conveyed to said Robert Brownell all his right, title, and interest in and to a herd of about 1,200 Angora goats, which goats were subject to a chattel mortgage to one C. P. Bailey of San José, Cal., in the sum of $1,452. Bailey, who was one of the defendants in this suit, afterwards filed a disclaimer, in which he sets up that he had no interest in the goats, having sold the mortgage held by him on them to one Howard previous to the bringing of this suit. The record discloses that on the 3d day of February, 1898, D. R Brownell was the owner of a certain stock of goods, wares and merchandise of the value of several thousand dollars, and that on said day he sold and delivered to one of the appellants--Gillett & Son--all of said goods, wares, and merchandise in payment of the whole or a part of a prior indebtedness due by him to said Gillett & Son. The complaint alleges that each of the above transfers were made by D. R Brownell in contemplation of insolvency, and with the design to prefer the several parties to whom they were made. The complaint further alleges that the defendant D. R. Brownell is insolvent, and asks that an injunction issue restraining D. R. Brownell from transferring or assigning any other property which he might have in the territory of New Mexico; that a receiver be appointed to take charge of all of the property of said D. R. Brownell, except such as is exempt from execution; and that the court decree that the several transfers mentioned above were made by D. R. Brownell in contemplation of insolvency, and with the design to prefer one or more of his creditors, and that they be compelled to surrender to the said receiver the property and effects of said D. R. Brownell so transferred and conveyed to them by the said D. R. Brownell, the same to be held by the said receiver to await the further order of the court. The injunction issued as prayed for in the complaint. The defendants Gillett & Son and D. R. Brownell filed separate demurrers to the bill of complaint, which were overruled, and they then filed separate answers, which they afterwards asked to withdraw, which motion does not appear to have been granted, and they and Robert Brownell filed motions to dismiss on the ground that the district court had no jurisdiction, because the territorial law under which the action was brought was suspended by the national bankruptcy act of July 1, 1898. These several motions to dismiss were heard and overruled, and the defendant Robert Brownell then filed an answer. Proofs were taken, and on August 13, 1903, a final decree was entered sustaining the bill of complaint as to the transfer of the goods, wares, and merchandise to Gillett & Son; declaring that such sale and transfer was made by D. R. Brownell in contemplation of insolvency, and with the design to prefer the said Gillett & Son to the exclusion in whole or in part of said Grunsfeld Bros., and the other creditors of said D. R. Brownell, and that the sale to Gillett & Son operated as an assignment and transfer of all the property and effects of D. R. Brownell, and inures to the benefit of all his creditors in proportion to the amount of their respective demands. Samuel Neustadt was appointed receiver, and ordered to take possession of all of the property of said D. R. Brownell, and Gillett & Son were ordered to deliver to said receiver all property and effects of said D. R. Brownell in their possession or under their control, etc. Exceptions were duly saved to the overruling of the demurrers, motions to dismiss, and to the final decree, and an appeal was duly prayed and taken to the Supreme Court of this territory.
S. B. Gillett, for appellants.
B. F. Adams and Frank W. Clancy, for appellees.
MILLS, C.J. (after stating the facts).
The complaint in this case was filed on July 25, 1898, and was brought under chapter 67, Sess. Laws 1889, which is entitled "An act to prevent debtors in contemplation of insolvency from preferring one or more creditors to the exclusion in whole or in part of others." This law has been complied as sections 2818 to 2826, inclusive, of the Complied Laws of 1897. The principal grounds set up in the several demurrers are that the complaint does not allege (1) that the defendant D. R. Brownell is not possessed of and does not own property enough to satisfy plaintiff's claim; and (2) because plaintiffs are not judgment creditors of the defendant D. R. Brownell.
The eighth section of the complaint alleges "that the defendant D. R. Brownell is insolvent," and it seems to us that this is an allegation that he (Brownell) did not own property enough to pay his debts. The term "insolvency," as used in bankruptcy and insolvency laws, means the inability of a person to pay his debts as they mature in the ordinary course of business; but, as used in a general sense, it means a substantial excess of a person's liabilities over the fair cash value of his property. 5 Cyc. 237, note 1. It is true that the answer of D. R. Brownell denies that he is insolvent, but the answer was not filed until after the demurrer was disposed of, and it is a well-settled principle of law that a demurrer to any pleading admits everything contained in it to be true that is well pleaded.
The other objection that the plaintiffs are not judgment creditors of the defendant D. R. Brownell has been passed upon by this court in an able and exhaustive opinion written by the late Judge Hamilton in the year 1897. In that case the ground of attack made upon the bill of complaint, which sought to set aside a conveyance of property, was that the complainants were simply general, and not judgment creditors and that a general creditor will not be heard in a court of equity to attack and set aside a fraudulent conveyance made by his debtor until he has first obtained a judgment. But our Supreme Court held otherwise, and...
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