Preston v. Spalding

• Decision Date: 22 March 1887
• Citation: 120 Ill. 208,10 N.E. 903
• Parties: PRESTON and others v. SPALDING and others.
• Court: Illinois Supreme Court

120 Ill. 208

10 N.E. 903

PRESTON and others

v.SPALDING and others.

Supreme Court of Illinois.

March 22, 1887.

Appeal from appellate court, Fourth district.

Bill for injunction and receiver by Jesse Spalding, one of the appellees, against Preston, Kean & Co. and others, appellants.

James A. Hair, Samuel G. Hair, and William H. Odiorne carried on the business of buying and selling lumber in the city of Chicago under the firm name of Hair & Odiorne. Becoming insolvent, they made a voluntary assignment for the benefit of their creditors, November 1, 1882. The assignee was Milton R. Freshwaters, but he subsequently resigned, and Robert E. Jenkins, one of the appellees, was appointed in his place. On the same day that the assignment was executed, Hair & Odiorne delivered judgment notes to the appellants and others of their creditors, and on the same day these notes were put into judgment by the various holders, and executions issued. It is to enjoin sale under these executions that the bill was filed by Spalding, who was an unsecured creditor. After alleging that Hair & Odiorne were largely indebted to the complainant for lumber purchased of him, and averring that the complainant had been induced to give them credit by false and fraudulent statements made to him by them as to their financial standing, the bill proceeds as follows:

‘That on or about the fifth day of May, and after further negotiations with said Hair & Odiorne, and with others who were desirous of purchasing your orator's lumber for said season of 1882, your orator, relying on said statements in writing, and believing the same to be true, submitted to said Hair & Odiorne the following proposition in writing:

‘'Jesse Spalding proposes to sell Hair & Odiorne ten million ft. lumber, average cut of Cedar River mill, (except mill culls, short inch, and short piece stuff,) at $15.50 per M. feet, delivered on H. & O. dock in Chicago. Price of short piece stuff to be $9 per M. feet; price of short inch, $10.75 per M. feet; and price mill culls to be made when received. Lath and pickets, price to be made first each mo. for that mo. If J. S. should elect to let H. & O. have entire cut of C. R. mill, it is to be at same price as ten million ft. mentioned. Hair & Odiorne will take entire cut of said Cedar River mill if J. S. wants them to take it.

“ May 5, 1882.'

‘That on or about said fifth day of May, 1882, your orator received from said Hair & Odiorne the following acceptance in writing of said proposition:

“ Jeses Spalding, Esq.-DEAR SIR: In answer to your proposition of today to sell us ten million feet of your Cedar River mill cut, (average cut of this year's logs,) would say we accept the same, and, as we talked, the same to be embodied in a written. contract.

“Respty. yours,

HAIR & ODIORNE.

“ Chicago, May 5, 1882.'

‘Your orator further shows that no further written contract was executed by the parties; but that after the date of said proposition and acceptance, and prior to the first day of June, 1882, your orator, relying on the truthe of said statements, and believing the same to be true, caused to be delivered at the dock of said Hair & Odiorne cargoes of lumber sawed at the said mill, to the amount of 1,257,724 feet; that on or about, or shortly prior to, said first day of June, 1882, the said Hair & Odiorne applied to your orator to increase the amount to be sold to them, under the said proposition and acceptance, from ten million feet to twelve million feet, average cut, and thereupon your orator, relying on the truth of said statements, and by reason thereof believing said firm to be solvent, agreed to increase said amount to twelve million feet, average cut. * * *

‘Your orator further shows that after said first day of June, 1882, your orator, relying on the truth of said several statements in writing, and believing the same to be true, caused to be delivered, at the dock of said Hair & Odiorne, other cargoes of said lumber from time to time as the same arrived in Chicago, aggregating, with said lumber delivered prior to said first of June, 1882, said amount of twelve million feet; that the course of business between your orator and said Hair & Odiorne was as follows: The said lumber was loaded into vessels at Cedar River, Michigan, consigned to said Hair & Odiorne, unless otherwise ordered, at Clark-street bridge; that, on the arrival of each cargo, an inspector, agreed upon and paid by the parties jointly, would inspect the cargo as unloaded, and, on the day following the inspection, would deliver to each party a duplicate certificate of inspection; that, on the basis of the certificate of inspection, your orator would make up a bill of the lumber in the particular cargo, and within a few days thereafter the said Hair & Odiorne would draw up and give to your orator their promissory note, payable in six months, for the amount of said cargo, as shown in the account rendered, and your orator would receipt for said note; that on the twenty-first day of September, 1882, your orator, relying on the truth of the said statements of the said Hair & Odiorne, had delivered, in the due course of business, thirty-five of said cargoes of lumber, receiving the promissory notes of said firm therefor; that said thirty-five cargoes amounted to 11,829,343 feet; that, on the twenty-fifth day of September, your orator delivered at said dock the cargo of the ‘William Jones,’ amounting to 298,302 feet, making the aggregate amount delivered up to that date 12,127,645 feet; that the said Hair & Odiorne thereupon claimed and insisted that your orator had agreed to sell and deliver to them 14,000,000 feet of said lumber, instead of 12,000,000 feet; that, although your orator denied the making of such an agreement, your orator, relying upon the truth of said statements, and believing the same to be true, caused to be delivered at the said dock for said Hair & Odiorne five additional cargoes of said lumber, the last of which was delivered on the eleventh day of October, 1882, receiving the promissory notes of the said firm therefor, making the aggregate of lumber delivered on said eleventh day of October, 14,072,285 feet; that afterwards your orator, believing the said statements of said Hair & Odiorne to be true, and relying upon the same, at the request of said Hair & Odiorne, caused to be delivered to them, under the terms and for the price agreed upon for the delivery of the previous cargoes, five additional cargoes of said lumber, the last of which was delivered on the thirty-first day of October, 1882, (receiving for all but the last two cargoes the promissory notes of said firm,) making an aggregate of 15,700,514 feet of lumber so delivered by your orator,' etc.

A court of equity will not entertain jurisdiction of a bill by a creditor, whose debt is merely a legal one, to enjoin a sale under an execution against his debtor under a judgment fraudulently confessed, when the complainant has not obtained judgment, even though his debt be not due. Shufeldt v. Boehm, 96 Ill. 560;Freydendall v. Baldwin, 103 Ill. 325, and 10 Bradw. 106. None but judgment creditors can obtain an injunction to prevent a fraudulent disposition by a debtor of his property; nor to impeach a conveyance made by him, even though fraudulent. Bump, Fraud. Conv. (3d Ed.) pp. 527, 533, 534, 461, 462; Goembel v. Arnett, 100 Ill. 42;Phelps v. Foster, 18 Ill. 309;Horner v. Zimmerman, 45 Ill. 14;McConnel v. Dickson, 43 Ill. 100;Newman v. Willetts, 52 Ill. 98. Application to set aside a fraudulent judgment can only be made by a judgment creditor. Bump, Fraud. Conv. (3d Ed.) 521; Wintringham v. Wintringham, 20 Johns. 296.

The duty of the assignee, under the act of 1877, is confined to the distribution of the proceeds of the property assigned to him. Lund v. Skane's Bank, 96 Ill. 183. The following cases sustain the general doctrine as established in Illinois: Farrington v. Sexton, 43 Mich. 457, 5 N. W. Rep. 654;Roberts v. Austin, 26 Iowa, 327;Williams v. Winsor, 12 R. I. 9;James v. Mechanics' Nat. Bank, Id. 460; Stockett v. Goodman, 47 Md. 60;Mann v. Flower, 25 Minn. 501;Hodgson v. Barrett, 33 Ohio St. 67;Morris' Appeal, 88 Pa. St. 382; Walker v. Miller, 11 Ala. 1067;Wright v. Zeigler, 70 Ga. 512. See, also, Strong v. Goldman, 8 Biss. 554;O'Hara v. Jones, 46 Ill. 292;Eames v. Mayo, 6 Bradw. 338;Hardin v. Osborne, 94 Ill. 576;Jenkins' Assignee v. Pierce, 98 Ill. 651.

The general object of all the various statutory provisions being the same,-to break up the practice of giving preferences in an assignment,-the decisions rendered in the other states, under their own statutes, are applicable in principle to cases arising under our statute, especially as the decisions turn in the main upon general principles, and not upon technicalities of statutory construction. The Pennsylvania statute is construed in Blakey's Appeal, 7 Pa. St. 449; Hutchinson v. McClure, 20 Pa. St. 63; Worman v. Wolfersberger's Ex'rs, 19 Pa. St. 59; and these cases are followed by Wilson v. Berg, 88 Pa. St. 167; Johnson's Appeal, 14 Wkly. Notes Cas. 441; and Lake Share Banking Co. v. Fuller, 1 Atl. Rep. 731; the New Jersey statute, in Garretson v. Brown, 26 N. J. Law, 425, the Connecticut statute, in Bates v. Coe, 10 Conn. 280; the Massachusetts statute, in Perry v. Holden, 22 Pick. 269;Fairbanks v. Haynes, 23 Pick. 323; and Housatonic & Lee Banks v. Martin, 1 Metc. 294; the Iowa statute, in Lampson v. Arnold, 19 Iowa, 479; and Van Patten v. Burr, 52 Iowa, 518, 3 N. W Rep. 524; the Nebraska statute, in Nelson v. Garey, 15 Neb. 531, 19 N. W Rep. 630; the Kansas statute, in Bailey v. Kansas Manuf'g Co., 32 Kan. 73,3 Pac. Rep. 756; the Maine statute, in Berry v. Cutts, 42 Me. 445; and the Alabama statute, in Holt v. Bancroft, 30 Ala. 193.

A voluntary assignment creates a trust, and any creditor who is beneficially interested in the assignment may file a bill to protect the trust property, on the refusal of the trustee to...