Hazen v. Lyndonville Nat. Bank

• Decision Date: 02 October 1898
• Citation: 41 A. 1046,70 Vt. 543
• Parties: HAZEN et al. v. LYNDONVILLE NAT. BANK et al.
• Court: Vermont Supreme Court

41 A. 1046

70 Vt. 543

HAZEN et al.

v. LYNDONVILLE NAT. BANK et al.

Supreme Court of Vermont. Caledonia.

Oct. 2, 1898.

Appeal from chancery court, Caledonia county; Thompson, Chancellor.

Bill by L. D. Hazen and another, as assignees, against the Lyndonville National Bank and others, for hearing on pleadings, master's report, and defendant's exceptions thereto. Pro forma decree that the defendant's exceptions be overruled, and the orators recover of the defendant bank $5,576.49, and interest from December 28, 1894, with costs, and that as to the other defendants the bill be dismissed. All parties appealed. Reversed.

Henry C. Ide and Harry Blodgett, for orators.

Smith & Sloane, for defendants.

THOMPSON, J. October 28, 1893, H. E. Polsom was an insolvent debtor, and had been for some time prior thereto. His insolvency was then known to the defendants. On the date named, a creditor's petition, praying to have Folsom adjudged an insolvent debtor, was file 1 in the court of insolvency for the district of Caledonia, and such proceedings were had thereon that he was regularly adjudged an insolvent debtor by the court, November 14, 1893. November 24, 1893, the orators were duly elected assignees of his estate, and accepted the trust, gave bonds for the faithful performance of the duties thereof, and were appointed as such assignees; and November 27, 1893, said court of insolvency assigned and conveyed to them all the estate, real and personal, of said debtor, except such as was by law exempt from attachment, together with all of his deeds, books, and papers relating thereto. At the time of the filing of the petition in insolvency, Folsom was the owner of one share of stock in the Cimmaron Cattle Company, of New Mexico; and November 25, 1893, he executed and delivered an assignment thereof to the orators. In December,

1893, the Cimmaron Cattle Company was notified of the assignment of this stock to the orators, and entered a memorandum there of on its books. From the time of such notice to the company, the stock was not subject to attachment, under the laws of New Mexico, by the creditors of Folsom. October 28, 1893, the defendant the Lyndonville National Bank held a note for $1,000 against H. E. Folsom, and another note for $4,000, indorsed by him, but signed by his brother, S. M. Folsom, of New Mexico, and October 31, 1893, instituted in the district court for the county of Bernalillo, in that territory, a suit in its favor against H. E. Folsom on the note for $1,000, and a suit against him and S. M. Folsom on the note for $4,000, and November 1, 1893, attached the stock in question in these suits, which were duly entered in said district court.

The original bill in the case at bar was served on the defendants May 5, 1894, and the amended bill was filed February 25, 1895. This suit was brought after attempts by the orators at negotiation with the Lyndonville National Bank in respect to the attachment of the stock in New Mexico had failed. The bank made service by publication, as required by law, for four weeks in New Mexico, against H. E. Folsom, as an absent defendant; the first publication in the $4,000 suic being on May 12, 1894, and the first publication in the $1,000 suit being on May 15,

1894, in New Mexico papers. In June, 1894, it sold the two notes in question to A. B. McMillan, its attorney in the two suits, taking in payment therefor his note payable to itself, at the Lyndonville National Bank, in six months from date, without interest, for $5,000. The date of this note was a few days prior to June 25, 1894. The sale of the notes to McMillan was an actual and unconditional sale, the bank taking its chances of collecting the notes of McMillan, whether he should collect upon the suits by sale of the stock attached or not, and he taking his chances on his side of the trade of collecting the pay on the notes from a sale of the attached stock. At that time, not above $3,000 could have been collected by legal proceedings from Mc_- Millan, who resided in New Mexico. After June, 1894, the Lyndonville National Bank was not the owner and holder of the two notes sued upon, but McMillan was the owner and holder thereof. October 2, 1894, the Lyndonville National Bank filed, in each of the suits brought by It, its proof of publication of notice, and on the same day defaults were entered in each of the suits, against H. E. Folsom. October 9, 1894, McMillan filed, in each of said suits, a motion, verified by his affidavit, asking to be substituted as plaintiff therein, for the reason that after the commencement thereof and the public an of notice to the absent defendant, H. E. F disom, the Lyndonville National Bank, for a valuable consideration, had sold and transferred the notes sued upon to him, and that he was then the owner and the holder thereof; and, on said motion, said district court ordered that McMillan be substituted as plaintiff in each of the suits in place of the bank, and thereupon final judgment was entered in his favor, as such substituted plaintiff, in each of the suits, for the full amount of the notes sued upon, together with interest to date of judgment and costs. McMillan took out executions on said judgments, and levied the same on the stock attached; and it was sold on execution, December 28, 1894, to satisfy said executions and costs thereon, for $5,576.49. Under the laws of New Mexico, McMillan had the right to be substituted as plaintiff, as he was, and to proceed with the suits and obtain the same benefit from the attachment as though the same had been prosecuted in the name of the Lyndonville National Bank. The sale of the stock on the executions absolutely vested all title thereto in the purchaser, under the laws of New Mexico.

At the time of the sale of the stock on execution, the orator L. D. Hazen was the president of the Merchants' National Bank, a creditor of H. E. Folsom, and he, by the direction of that bank, caused the stock to be bid off at the execution sale, for it, at the price named. At the time it was sold, the stock, with unpaid dividends, was worth $20,000. McMillan paid his note, or the renewal thereof, to the Lyndonville National Bank, from the avails of the sale of the stock, January 11, 1895. The debts now proved against H. E. Folsom's insolvent estate amount to $25,500. His assets which have come to the hands of the orators amount to about $8,000, besides any interest which they may have in the stock in question.

At the time of the bringing of this suit, the Individual defendants were the officers of the defendant the Lyndonville National Bank, and were such officers to and including the time of the sale of the notes to McMillan; and during all that time they and the orators were, and now are, resident citizens of Vermont. The Lyndonville National Bank is a national bank, located and doing busines at Lyndonville in this state, and, for the purposes of this suit, is to be considered a citizen of Vermont. 25 Stat 433; Petri v. Bank, 142 U. S. 644, 12 Sup. Ct. 325.

The master further finds that in making the attachment of the stock, and in the sale of the notes to McMillan, the defendants had the intent which is to be legally presumed from their acts. The individual defendants admit in their answer that they directed the suit to be brought in which the stock was attached. Neither of the defendants took any steps to discontinue any of the suits in New Mexico The master finds that, at the time the suits were brought in New Mexico, the Lyndonville National Bank knew that insolvency proceedings against H. E. Folsom were imminent, and that this fact was known to its cashier, the defendant L. B. Harris, when he went to New Mexico, and instituted the suits for it, under Instructions from the defendants to do so if he thought best. It is clear from the master's report that all the defendants must have then known of Folsom's financial condition at that time. The finding of the master in respect to the intent of the defendants must be construed to be a finding that they attached the stock to prevent its coming into the hands of the orators as assignees, and to obtain an advantage over the other creditors of H. E. Folsom, and that they sold the notes to McMillan for a like purpose, and to defeat the purpose for which this suit of the orators was brought. When an intelligent person does an act, the law presumes that, in so doing, he intends that the natural and legal consequences of his act shall result. Lawson, Pres. Ev. 262; Holmes v. Manufacturing Co., 37 Conn. 278; Keyser v. Rice, 47 Md. 203: Larkin v. Hapgood, 56 Vt. 597.

The suit in equity brought in New Mexico by the Merchants' National Bank against McMillan and the sheriff, to enjoin the sale of the stock on the executions, to which it is claimed that the orators became parties as intervening petitioners, does not in any way affect the rights of the parties to this litigation, for the reason that the defendants were not parties to that suit, and for the further reason that it was dismissed without prejudice, after the orators and so-called intervening petitioners in that suit had filed a notice that it would not be further prosecuted, and that it might be dismissed without prejudice to any of their rights, respectively, in the premises. Standing thus, the suit was, in effect, dismissed for want of prosecution, which, in an equity suit, is no more than a nonsuit. Porter v. Vaughn, 26 Vt 624. A decree in equity dismissing the bill, without prejudice, only puts an end to the suit then pending, and is not a bar to a subsequent suit for the same cause of action. Story, Eq. Pl. (8th Ed.) § 793; Mltf. & T. Pl. & Prac. 330; Seymor v. Nosworthy, 1 Cas. Ch. 155: note to Lea v. Lea, 96 Am. Dec. 778; Mobile Co. v. Kimball, 102 U. S. 705; House v. Mullen, 22 Wall. 42; Durant v. Essex Co., 7 Wall. 107; Foote v. Gibbs, 1 Gray, 412; Coop. Eq Pl. 270; 1 Smith, Ch. Prac. (2d Am. Ed.) 222. It only has the effect of a nonsuit in...