Kellogg v. Coller
| Decision Date | 28 November 1879 |
| Citation | 3 N.W. 433,47 Wis. 649 |
| Parties | KELLOGG and others v. COLLER and another. COLLER v. KELLOGG and others |
| Court | Wisconsin Supreme Court |
APPEALS from the Circuit Court for Waukesha County.
Two judgments were recovered in the circuit court against Isaac Coller--one by Henrietta A. Coller, and the other by Charles P. Kellogg and others, the appellants. Executions were duly issued upon both judgments and returned unsatisfied.
March 20, 1879, the appellants, Kellogg and others, obtained an order from a court commissioner requiring the judgment debtor to appear before him on the 27th day of the same month, to answer concerning his property, and enjoining him from making any transfer or disposition thereof. On the 21st day of March the sheriff made an affidavit of service of the order stating therein that he served it on the 20th of March, by delivering to and leaving with the judgment debtor personally, a copy of the order, and of the affidavit annexed thereto, and at the same time showing him the original order and the signature of the commissioner who signed the same. The affidavit of the sheriff was made in good faith, but was incorrect in that the name of the commissioner to the order was omitted from the copy served.
March 22, 1879, the respondent Henrietta A. Coller also instituted proceedings supplementary to her execution, against the judgment debtor, before the same commissioner, and procured from him an order for the examination of such debtor on the 24th of the same month. On the day last mentioned, the judgment debtor appeared and was examined concerning his property. On such examination he disclosed that he held an endowment policy of life insurance, upon which a certain sum would become due and payable to him in May following. The commissioner thereupon appointed one Martin receiver of the property and assets of the judgment debtor, and Martin gave bond and entered upon his duties as receiver on the following day. On the same 25th of March the judgment debtor executed to the receiver the usual assignment of all his property and effects not exempt from seizure on execution. The appellants were not made parties to Mrs. Coller's proceeding, and were not notified thereof.
Subsequently the receiver, Martin, collected of the insurance company the money payable on such policy.
The appellants and the sheriff first discovered the defect in the copy of the order served in the appellants' proceeding on the day such order was returnable, March 27th. Thereupon the sheriff applied to the judgment debtor for leave to correct the copy served, which was refused. He then served a correct copy of the order on the judgment debtor, and made due return of such service, and of all the facts, to the commissioner before the hour at which the order was returnable. The appellants prosecuted their proceeding with due diligence, and the same resulted in the appointment, by the commissioner, first of said Martin, who declined to serve, and then of one Chafin, as receiver of the property and effects of the judgment debtor. Chafin duly qualified as such receiver.
When Mrs. Coller instituted her supplementary proceeding, both she and her attorney had actual notice that the appellants had previously commenced a like proceeding on their judgment; that the order and injunction above mentioned had been issued therein; and that proper service of such order had been made upon the judgment debtor, except that the copy served wanted the name thereto of the commissioner who signed the original order.
On affidavits and records showing the above facts, the appellants moved the court for an order requiring Martin to pay over to them the money collected by him of the insurance company, and procured and served upon Mrs. Coller an order to show cause why Martin should not be ordered to pay over the money to them to be applied on their judgment. The order to show cause is entitled in the action of the appellants against Isaac Coller. Mrs. Coller appeared and resisted the motion. She also obtained an order, entitled in her action, founded upon affidavits and records showing substantially the same facts, requiring the judgment debtor and the appellants to show cause why Martin should not be ordered to pay over such money to her to be applied on her judgment. The appellants appeared and resisted the motion. The two motions were heard together. The motion of the appellants was denied, and that of Mrs. Coller was granted. These appeals are from the orders denying the one and granting the other motion.
Order reversed and motion granted.
For the appellants, there was a brief by Lewis, Lewis & Hale, and Wm. Street, and oral argument by H. M. Lewis. They contended, among other things, 1. That, as the receiver was a mere custodian for the court, having no rights in the matter and not entitled to be heard (Edwards on Receivers, 12), the money was really in court, and could be disposed of by order of the court on motion of any party claiming a right to it, provided all other parties claiming it were notified and had an opportunity to be heard. 2. That under the old chancery practice, the filing of the bill and service of the subpoena, or a bona fide attempt to serve it, created a lis pendens, and in a creditor's suit gave the creditor an equitable lien upon the debtor's assets from the commencement of the action; that in analogy to this doctrine priorities between several creditors pursuing supplementary proceedings are determined by the time of the commencement of such proceedings ); and that such time of commencement is determined by the time of serving, or attempting in good faith to serve, the subpoena in a chancery action, or the order in supplementary proceedings. Riddle's Sup. Pro., 169; 4 Wait's Pr., 128 c; 16 N. Y., 543; 48 id., 27; 1 Paige, 564; 9 id., 514-15; Ross v. Clussman, 3 Sandf. S. C., 676; Gree v. Oliver, Bac. Abr., "Heir and Ancestor, F.;" Nieuwankamp v. Ullman, supra. 3. That actual notice of the pending proceedings was sufficient to subordinate thereto the rights of those commencing subsequent proceedings. Constructive notice is never held superior to actual notice. See Livingston v. Cheetham, 2 Johns., 479; Keeler v. Belts, 3 Code Rep., 183; Barker v. Cook, 16 Abb. Pr., 84; Courter v. McNamara, 9 How. Pr., 255. 4. That the defendant Isaac Coller had such actual notice of the order of March 20, 1879, that any disposition of his property in contravention thereof would render him liable to punishment for contempt (High on Inj., § 864; Mead v. Norris, 21 Wis., 310); and it was a contempt of that order to execute an assignment to the receiver under the second order. Nieuwankamp v. Ullman, supra.
For the respondents, there was a brief by Joshua, Stark and M. S Griswold, and oral argument by Mr. Stark. They contended, among other things, 1. That the commencement of a creditor's suit in chancery, giving a lien on the equitable assets of the debtor, was by the filing of the bill and service of the subpoena. Utica Ins. Co. v. Power, 3 Paige, 365; Hayden v. Bucklin, 9 id., 512; Fitch v. Smith, 10 id., 9; Roberts v. R. R. Co., 25 Barb., 662; Boynton v. Rawson, 1 Clarke's Ch., 584; 2 Barb. Ch. Pr. (2d ed.), 158, and notes. 2. That in supplementary proceedings (which are a substitute for the creditor's suit), the service of the order for examination on the judgment debtor takes the place of the commencement of the suit under the old system, and gives the lien. Lynch v. Johnson, 48 N. Y., 27; Nieuwankamp v. Ullman, ante, p. 168. Personal property is, however, subject to levy on execution in favor of other creditors, who will thereby acquire a lien free from that of the supplementary proceedings, at any time before the appointment of a receiver therein (Van Alstyne v. Cook, 25 N. Y., 489; Brown v. Nichols, 42 id., 26, 34; Davenport v. Kelly, id., 193, 199; Voorhees v. Seymour, 26 Barb., 569; and cases cited in Riddle's Sup. Pro., 162); and the reason is, that the commencement of supplementary proceedings is not a proceeding in court, and neither the order therefor, nor any other document that might serve as notice, is required to be filed until after a receiver is appointed. But as between two creditors separately pursuing such proceedings against a common debtor, he whose order for examination is first served has the prior lien. Riddle, 167. This rule in chancery (and by analogy in supplementary proceedings) was subject to the qualification, that if the creditor who first commenced his suit, abandoned it or lingered on the way before obtaining a specific lien, and permitted another creditor to outstrip him in legal diligence, he lost his priority. Riddle, 166, and cases there cited; Myrick v. Selden, 36 Barb., 15. 3. That the bona fide attempt at service which was sometimes permitted, in the creditor's chancery suit, to have the same effect as a regular service in giving priority, was not a defective or void service, but the best service practicable in the given case, followed by a regular service as soon as practicable. It meant leaving the subpoena at the defendant's dwelling when he was absent so that personal service could not be made. But when the sheriff has opportunity to serve the defendant personally, and fails solely by reason...
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