Mann v. Appel
| Decision Date | 04 June 1887 |
| Citation | 31 F. 378 |
| Parties | MANN and others v. APPEL and others. |
| Court | U.S. District Court — Southern District of Georgia |
Syllabus by the Court
A court of equity has jurisdiction to reach the property of a judgment debtor justly applicable to the payment of his debts, which cannot be reached by an execution at law.
For the exercise of this jurisdiction the debt must be clear and undisputed, and there must exist special circumstances requiring the interposition of equity, and it must generally be shown that legal means for its collection have been exhausted.
In order to defeat and oust equity jurisdiction, where such 'special circumstances' and other grounds for its interposition exist, it is not enough to show that it is not absolutely necessary to appeal to equity, and that there is a legal remedy, but the remedy at law must be in all respects as satisfactory and as ample as the relief furnished by a court of equity.
Where A. fraudulently transfers property to B., to avoid the payment of his debts, the remedy by garnishment against B. is not so full and complete as a proceeding in chancery; and this is especially true where there are several complainants and a fund to be distributed according to the priority of their liens.
The equity jurisdiction in cases of fraud, misrepresentation, and concealment does not depend on discovery.
The allegation in the bill, if true, create a trust in the hands of Perlinski for the benefit of the creditors of Appel Bros.
Charles Nephew West, for complainants.
Garard & Meldrim, R. R. Richards, and J. J. Abrams, for defendants.
The complainants, Mann & Co. and Tucker & Co., citizens and merchants of the state of Maryland, bring their bill against Appel Bros. and Julius Perlinski, of the city of Savannah, in this district, and allege that on the twelfth day of November, 1885, Appel Bros. were dealers in clothing and notions in the city of Savannah. Their stock was largely composed of goods purchased on credit. In a short time, -- the latter part of the summer and in the early fall of that year, -- such purchases, amounting to the sum of $20,000 were added to a stock worth $2,000; that these purchases were made at a time of depression and great stagnation in business, and were bought by Appel Bros. with fraudulent intent not to pay for them; that at the date aforesaid, having received the goods, and before the bills therefor were due, Appel Bros., combining with Julius Perlinski, (who was the uncle of the members of the firm,) to defraud their creditors, gave various notes, of different dates, for fictitious debts, to Perlinski, to-wit: one note of $1,000, due February 4, 1885; one note of $1,000, due December 15, 1885; one note of $200, due March 15, 1885; one note of $2,000, due October 15, 1885; one note of $900, due March 13, 1885, -- the whole aggregating $5,100; that on the day following the execution of these notes they fraudulently made a note of $2,000, due to one Charles S. Deutsch, their brother-in-law, and for five days they contracted mortgages in divers amounts to sundry persons, and one mortgage to their counsel, who prepared the assignments, for $250.
The bill further alleges that on the eighteenth day of November 1885, the Appel Bros. executed an assignment of their property, with preferences to the mortgagees before mentioned; and on the twentieth day of November, two days thereafter, Julius Perlinski foreclosed his mortgage on the stock of goods, and had execution issue for the sum of $5,100 principal, with interest and costs, which, on the twentieth day of November, was levied on the stock of goods. Immediate application was made by the attorneys of Appel Bros. and Perlinski to have a speedy sale of the goods, on the ground that they were subject to great expense in keeping, and liable to deterioration in value; and the entire stock of goods, having been carried to the court-house of Chatham county, were, on the fourth day of December, 1885, sold, and were bought by Perlinski for the sum of $6,600, nearly all of which was appropriated to his alleged debt, charges, and attorney's fees.
Complainants charge that the whole of the transaction, except the employment of counsel, was fraudulent; that there was no debt to Perlinski; that the sale was hurried to anticipate the maturity of the bills for the goods, the interference and action of the creditors; that the value of the stock was fully $20,000, but that it was sold hastily and in bulk; was absorbed by Perlinski in the manner above recounted, so that the general creditors from whom the goods had been purchased were unable to derive any payment from them. Appel Bros. were indebted to Mann & Co. $1,121, for the price of some of the goods thus acquired by Perlinski, which demand was sued to judgment on the tenth day of May, 1886. They were likewise indebted to Tucker & Co. $576.38, which was sued to judgment the same day.
The bill also alleges that Appel Bros. were insolvent, and that nulla bona has been returned upon the executions of Mann & Co. and Tucker & Co. by the sheriff of the state court; and charges that Perlinski converted all of these goods to his own use, fraudulently, and contrary to equity. The prayers are that all the creditors of Appel Bros. may be made parties to the bill, and that Julius Perlinski may be decreed to be a trustee for the creditors of the trust, to be fixed by the decree at the full value of the property acquired by him at the sale, and for a decree against him for the full value of the trust, to be divided according to the priorities of the several demands of the creditors of Appel Bros. Discovery is waived.
To this bill the defendants demur-- First, because the complainants have an adequate remedy at law.
Second, because there is no equity in the bill; and upon the demurrer counsel have been fully heard.
It is insisted by the defendants that there must exist special circumstances, which they assert do not appear in the bill before the court, to authorize equitable interference in behalf of a creditor seeking to collect his debt, and quite an array of decisions are marshaled in support of this proposition.
The case of Bessman v. Cronan, 65 Ga. 559, is cited. In that case, however, there had been a fraudulent transfer of real estate, and equitable jurisdiction was not entertained, because the creditor could readily levy his execution on the land, and test the validity of the transfer, and the remedy at law was held ample.
In Huff v. Ripley, 58 Ga. 12, the defendants brought a lot of bacon, giving for it a note made by one of their creditors, who was known by them to be insolvent. There a simple action of trover was held adequate. There no equitable relief was sought save the recovery of the bacon; and, besides, the court in that case declares that the policy of the legislation in Georgia has been to restrict the jurisdiction of equity courts. In Buzard v. Houston, 119 U.S. 347, 7 S.Ct. 249, the defendants having agreed to sell the plaintiffs 1,500 cows and 50 bulls, palmed off on them, in lieu, an agreement previously made with one Mosty, representing that Mosty was solvent, and able to perform his contract, when in fact Mosty had no bulls or cows, and was insolvent. In that case it was held, Mr. Justice GRAY delivering the opinion of the court, that an action of deceit could be maintained, and would afford a plain, adequate, and complete remedy. There this well-settled rule is announced:
'Whenever a court of law is competent to take cognizance of a right, and has power to proceed to a judgment, which affords a plain, adequate, and complete remedy, without the aid of a court of equity, the plaintiff must proceed at law, because the defendant has a constitutional right to a trial by jury.'
And Mr. Justice STORY announced in Bean v. Smith, 2 Mason, 270, 'that the judiciary act is in no sense intended to narrow the jurisdiction of courts of equity of the United States, which depends upon what is a proper subject of relief in courts of equity in England, the great reservoir from which we have extracted our principles of jurisprudence;' citing Robinson v. Campbell, 3 Wheat. 212, 221; U.S. v. Howland, 4 Wheat. 108, 115.
In Public Works v. Columbia College, 17 Wall. 530, the supreme court, Mr. Justice FIELD pronouncing the opinion with his usual felicity of diction, declares:
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