Laoy v. Hurst

• Citation: 83 Ga. 223,9 S.E. 1052
• Parties: De Laoy et al. v. Hurst et al.
• Decision Date: 22 July 1889
• Court: Supreme Court of Georgia

9 S.E. 1052

(83 Ga. 223)

De Laoy et al.

v.Hurst et al.

Supreme Court of Georgia.

July 22, 1889.

Fraudulent Conveyances—Actions to Annul.

1. Under Acts Ga. 1887, p. 64, establishing a uniform procedure in actions legal and equitable, and conferring jurisdiction of both on the superior courts, an action can be maintained against a debtor and those to whom he has conveyed property to defraud his creditors, to annul such conveyances and to subject the property to the payment of the plaintiff's debt, though the latter has not recovered a judgment therefor, and exhausted his legal remedy.

2. A bill in chancery may be so amended by changing the address, the designation of the parties complainant, and the prayer for process as to render it a good petition in the superior court under the new procedure.

3. Code Ga. § 247, authorizing the hearing of demurrers in vacation, gives the judge power to allow proper amendments to the pleading to meet the grounds of demurrer.

4. An amendment to a bill attacking a fraudulent conveyance, consisting in the addition of a prayer asking that the price of the goods sold by complainants to the fraudulent grantor may be applied to their debt in preference to that of other creditors, does not amount to alleging a new cause of action.¹

5. Under Const. Ga., (Code, § 5169,) making equity causes triable in the county wherein the defendant against whom substantial relief is prayed resides, a suit to annul a fraudulent conveyance may bo brought in the county of the debtor's residence, though the alleged fraudulent grantees reside elsewhere.

Error from superior court, Meriwether county; Harris, Judge.

McNeill & Levy, for plaintiffs in error. J. M. Terrell and T. A. Atkinson, for defendants in error.

Simmons, J. The bill in this case is made returnable to the August term, 1888, of Meriwether superior court. It was addressed to the judge of the superior courts of the Coweta circuit, holding and exercising chancery jurisdiction therein. The complainants were Hurst, Purnell & Co. and others, styling themselves creditors of John M. De Lacy and De Lacy & Tallman. The bill was a general creditors' bill, in which John M. De Lacy, of the county of Meriwether, and the firm of Swift & Hamburger, of Muscogee county, were named as parties defendant. It alleged, in substance, that De Lacy was largely engaged in a general merchandise business in Alabama, and at the White Sulphur Springs, Ga., and in a like business with Tallman at Greenville, Ga.; that in November, 1887, Tallman sold his entire interest in the firm to De Lacy, De Lacy assuming all the liabilities of the firm, and Tallman being then and now insolvent; that De Lacy carried on the last-named business in his own name from the time of the sale to the 28th of December, 1887. The complainants set forth the large indebtedness which it was alleged was then due them severally by De Lacy for the goods furnished him at the store in Alabama and at White Sulphur Springs, Ga., and alleged for goods furnished De Lacy & Tallman at Greenville, Ga.; and that the goods furnished De Lacy constituted a considerable portion of the three stocks owned by De Lacy and afterwards sold by him to Swift & Hamburger; that during the summer of 1887 De Lacy and Swift & Hamburger entered into a fraudu-lent combination against the complainants and other creditors of De Lacy, and in pursuance thereof De Lacy and De Lacy & Tail-man executed to Swift & Hamburger, at various times, mortgages, covering not only real, but fictitious and usurious, indebtedness on land and personalty in Georgia and Alabama; that these mortgages were never placed on record, but that just before the expiration of the time allowed for their record they were taken up and new ones executed in their stead; that this was repeatedly and secretly done up to December, 1887, when there were filed with the clerk for record two mortgages executed by De Lacy to Swift & Hamburger, —one to secure a debt of $34,358, and covering all the stock of goods at Greenville, the other to secure a debt of $6,350, and covering all the stock at White Sulphur Springs; that De Lacy and De Lacy & Tallman also secretly transferred and assigned to Swift & Hamburger all their merchandise, notes, accounts, and choses in action, amounting to $150,000, during the summer of 1887 The complainants alleged that, not knowing of these fraudulent transactions, and relying on the representations of De Lacy that he was solvent, and his property unincumbered, and that the firm of De Lacy & Tallman was solvent, and its property unincumbered, they sold the goods which formed the consideration of the indebtedness referred to; that Swift & Hamburger, not willing to rely upon the bona fides of their two mortgages, and the transfer and assignment of the goods, notes, accounts, etc., on the 28th of December, 1887, entered into a fraudulent agreement with De Lacy, by which he was to and did execute and deliver to them a deed and bill of sale of all of his property of every description in Alabama and Georgia, (said property amounting in the aggregate to $167,750,) to pay the nominal sum of $51,000. This deed and bill of sale were alleged to be fraudulent because the consideration was grossly inadequate, and because De Lacy had sufficient property not only to pay the just and legal claim of Swift & Hamburger, but to pay all his other indebt-edness besides, and was made to hinder, delay, and defraud his creditors. It was alleged that by this sale he became utterly insolvent. It was also charged and alleged that there was a secret reservation in this sale for the benefit of himself; also that the debt of Swift & Hamburger against De Lacy was infected with usury to the extent of $10,000, or other large sum. The bill prayed for a receiver, injunction, and the setting aside of the conveyance or conveyances above mentioned, the purging of the claim of Swift & Hamburger of usury, and that their other claims should be decreed as paid to the extent of the value of the Alabama property received by them, before they should receive any of the proceeds of the property in Georgia. The complainants also prayed for a judgment for the amount of their claim, and an equitable division of the assets of De Lacy, and for general relief. The trial judge refused to giant the injunction or to appoint a receiver. At the appearance term of the case the defendants filed several demurrers, and an order was taken to hear the demurrers in vacation. When the demurrers came on to be heard in vacation the complainants amended their bill by striking out the address and inserting in lieu of the address, "to the superior court of said county;" also by striking out the word "orators" wherever it occurred, and inserting the word "petitioner;" and by striking out the word "subpoena" wherever it occurred and inserting the word "process." They also amended by charging that by reason of the fraudulent agreement entered into by the defendants, and also by the fraudulent conduct of De Lacy in concealing his insolvency from the petitioners, the title to the goods had never passed out of them; and they asked that the money received by the defendants from the sale of said goods stand in lieu of the goods. They alleged that Swift & Hamburger were cognizant of this illegal conduct on the part of De Lacy, and used their influence to make it effective. The defendants objected to these amendments, on the grounds (1) that they could not be made at chambers; (2) that the amendments proposed to change the proceeding from a bill in equity to a proceeding at law; and (3) that they set out a new and distinct cause of action. Other objections were made, which it is unnecessary to mention now. The objections were overruled, and the amendments allowed, to which rulings the defendant excepted. The defendants then renewed their demurrer to the bill or petition as amended, on tue grounds, substantially, upon which they had originally demurred, and the additional grounds stated above as objections to the amendments. The demurrer was overruled, and the defendants excepted.

1. We do not think that the court erred in allowing the complainants to amend their petition in vacation. An order was taken in term-time for the demurrers to be heard in vacation; and, whether an order had been taken, or not, under section 247 of the Code the judge had jurisdiction to hear and determine these demurrers in vacation. The Code giving him this jurisdiction, we think it. necessarily follows that he would have authority to allow amendments to the bill in order to perfect-it, and to meet the grounds of demurrer. It would not do to hold that the judge had no authority to allow an amendment to the petition, and that he would be obliged to dismiss the action on account of some more formal defect therein, when by allowing the amendment this defect could be cured.

2. Nor do we think there is any merit in the contention of counsel for the plaintiff in error, that the defendant could not change by amendment an old bill in equity into the form of petition prescribed by the uniform procedure act of 1887. If the original bill or petition contains the necessary allegations to give the plaintiffs a cause of action, and it isaddressed to the chancellor instead of to the superior court, as the act prescribes, and prays for a subpoena instead of process as the act prescribes, we think the plaintiffs can by amendme...