Nat'l Tradesmen's Bank v. Wetmore

• Decision Date: 22 January 1891
• Citation: 26 N.E. 548,124 N.Y. 241
• Parties: NATIONAL TRADESMEN'S BANK v. WETMORE.
• Court: New York Court of Appeals Court of Appeals

124 N.Y. 241

26 N.E. 548

NATIONAL TRADESMEN'S BANK

v.WETMORE.

Court of Appeals of New York,

Second Division.

Jan. 22, 1891.

Appeal from a judgment of the general term of the third judicial department, which reversed a judgment entered on a decision of the special term, and dismissed the complaint, with costs. Between August 20, 1882, and December 28, 1882, Abner C. Wetmore, a resident of the county of New Haven in the state of Connecticut, became indebted to the plaintiff, a resident of the same place, in $5,869.07, on an overdraft, and on 11 promissory notes maturing on various dates between December 24, 1882, and March 21, 1883. December 28, 1882, Wetmore conveyed to Ulysses S. Campbell, without consideration, an undivided one-third interest in 11,230 acres of land, in the county of Hamilton, in the state of New York, and he on the same day assumed to convey without consideration, and by an unsealed deed, the same land to the defendant. January 3, 1883, the deeds were recorded in the office of the clerk of that county. February 19, 1883, Wetmore made a general assignment of all of his property to Eli Ives, of the county of New Haven, in the state of Connecticut, for the benefit of creditors, which was recorded on the same day in the court of probate for that county. The assignee accepted the trust, and his appointment was confirmed by the court of probate, and he became the legal and acting assignee, and so continued until April 19, 1883, when he resigned, and Charles P. Ives, of the county of Hartford, in the state of Connecticut, was, by the court of probate, duly appointed trustee of the assigned estate, pursuant to the statutes of that state. He accepted the trust, qualified and entered upon the discharge of his duties, and has ever since remained the legal and acting trustee of said estate. The plaintiff began actions against Abner C. Wetmore in the courts of Connecticut for the recovery of the sums due from him to it, and was engaged in prosecuting them, when, in June, 1883, he died intestate, and in October, 1883, Charles P. Ives (the substituted assignee) was duly appointed administrator of the intestate's estate, accepted of the trust, and has ever since remained the legal and acting administrator and assignee of said estate. Under the statutes of Connecticut, actions for the recovery of money due on contract may be revived and prosecuted against the personal representatives of a solvent estate; but, if the estate be insolvent, the court of probate may adjudge that no actions except to recover debts due the United States, the state of Connecticut, the expenses of the decedent's last sickness or of his funeral charges, shall be prosecuted. Pursuant to this law that court on the 27th of December, 1883, adjudged that the intestate's estate should be settled as an insolvent one, and that the plaintiff's actions should be discontinued, and they were. By the statutes of Connecticut, commissioners are appointed by the probate court to adjudge and determine claims presented against insolvent estates, pursuant to which commissioners were appointed to determine the claims due from the estate of said Wetmore, and it was adjudged by them that there was due to the plaintiff from the estate on the 24th of November, 1883, the sum of $6,177.64, which adjudication became conclusive. The commissioners allowed preferred claims against the estate to the amount of $296.93, and unpreferred ones for $28,129.94. The assets of the estate are insufficient to pay the expenses of settling it and the preferred claims, so that nothing will be realized on the unpreferred ones unless the land sought to be reached in the action is eventually recovered.

FOLLETT, C. J., dissenting.

H. R. Durfee, for appellant.

S. & L. M. Brown, for respondent.

BRADLEY, J., ( after stating the facts as above.)

The question in limine is whether the plaintiff had any standing in court to enable it to attack as fraudulent, against the creditors of the grantor, the conveyance made by Abner C. Wetmore to his wife, the defendant, through a third person, of the land in question, situated in this state; and that proposition arises on the fact that no execution had been issued and returned unsatisfied, founded upon any judgment recovered by the plaintiff upon the debt due to it from such grantor. The action certainly could not, as a creditors' bill under the statute, be maintained, because recovery of a judgment and the return unsatisfied of an execution issued upon it are essential prerequisites for that purpose. 2 Rev. St. p. 173, § 38; Code, § 1871. And it has become the settled rule in this state not to dispense with those preliminary proceedings at law, although it may be made to appear by evidence that no benefit could result to the creditor from them. Estes v. Wilcox, 67 N. Y. 264;Adsit v. Butler, 87 N. Y. 585. This is not founded upon any purpose of the statute to repeal or curtail the common-law equity powers of the court, not inconsistent with the statute, to investigate the conduct of debtors in respect to their property in fraud of creditors, and to grant relief. The statute did not purport to do that, but provided that ‘the powers and jurisdiction of the court of chancery are co-extensive with the powers and jurisdiction of the court of chancery in England, with the exceptions, additions, and limitations created and imposed by the constitution and laws of this state.’ 2 Rev. St. p. 173, § 36. In some of the states the issue and return of execution preliminarily to the action in equity is not required when it clearly appears that it would be utterly fruitless; and the same doctrine has been declared in the United States supreme court. Case v. Beauregard, 101 U. S. 690. The rule in this state, in some sense limiting the exercise of jurisdiction of the court so as to bring within its application all cases having in their purpose or relief sought the nature of statutory creditors' bills, does not necessarily rest upon a want of equitable power of the court or its denial, but rather is adopted as a rule governing and regulating the exercise by the court of jurisdiction within its equitable powers. It has the merit of uniformity, and in effect relieves a case from any uncertainty as to what would have resulted from the use of an execution if one had been issued; and it is founded upon the doctrine that a court of equity will not take cognizance of a controversy which can be determined at law, and not until the remedy there is exhausted. Such has quite uniformly been the rule of the common law applicable to equitable jurisdictions. McDermutt v. Strong, 4 Johns. Ch. 687;Hadden v. Spader, 20 Johns. 554. But this rule is not so unrelenting as to deny to a party the interposition of the equity powers of the court, when the situation is such as to render impossible the aid of a court of law, to there take the preliminary steps, and produce what ordinarily may be treated as the condition precedent to the application for equitable relief. This seems to be the position of the plaintiff in its relation to the remedy which it seeks by this action. The plaintiff is a bank in the state of Connecticut, and Abner C. Wetmore, who also resided there, was indebted to it. He became insolvent, and made an assignment for the benefit of his creditors to a person residing in that state. The plaintiff commenced actions there to recover judgments on such debts against Wetmore, who died while they were pending, and the assignee was appointed administrator of his estate. The plaintiff sought to revive and continue the actions against the administrator, and thereupon the latter, as permitted by the law of that state, filed a plea in abatement, alleging that the estate of Wetmore was an insolvent estate in the course of settlement in the probate court; and that the plaintiff's causes of action were not for debts due the United States or the state of Connecticut, or for the expenses of his last sickness or funeral charges. The court in which those actions were pending found that the allegations in abatement were true, and directed that the actions abate and be dismissed. This was a denial pursuant to the law of Connecticut¹ of any right of the plaintiff to continue or maintain any action there against the administrator; and the only determination he could have of the claim against the estate was through the action taken in that respect by the probate court, in which jurisdiction, exercised in the manner provided by statute, was exclusive. According to the prescribed practice, that court appointed commissioners in insolvency upon Wetmore's estate, to whom the plaintiff's claim was presented, and they by their report allowed it at the sum of $6,177.64. This determination of the commissioners became conclusive and binding upon the trustee as effectually as if it had been a recovery by action against him in a court of law. Loomis v. Eaton, 32 Conn. 550; Bailey v. Bussing, 37 Conn. 349; First National Bank v. Hartford Life, etc., Ins. Co., 45 Conn. 22. Nothing more remained for the plaintiff to do in that state. There was a small amount of preferred claims, while those unpreferred amounted to upwards of $28,000, and the assets were insufficient to pay the expenses of the settlement of the estate and the preferred claims. The trial court finding these facts also found that the conveyance before mentioned was made by Wetmore after his indebtedness to the plaintiff accrued, and was made without consideration, and with the intent to defraud his creditors; and that, at the time of his death, Wetmore had no title to any property, real or personal, in the state of New York. The case presented is one in which the plaintiff could recover upon his claim no judgment entitling him to have an execution issued and returned. It is not, therefore, a case within the contemplation of the statute relating to creditors' actions, and the support of the action is dependent upon the...