Talley v. Curtain

• Decision Date: 07 February 1893
• Docket Number: 33.
• Parties: TALLEY et al. v. CURTAIN et al.
• Court: U.S. Court of Appeals — Fourth Circuit

54 F. 43

TALLEY et al. v. CURTAIN et al.

No. 33.

United States Court of Appeals, Fourth Circuit.

February 7, 1893

J Alston Cabell and Legh R. Page, for appellants.

A. L Holladay and Wm. Flegenheimer, for appellee.

Before BOND and GOFF, Circuit Judges, and SIMONTON, District Judge.

SIMONTON District Judge.

Ernest H. Chalkley, a citizen of Virginia, resident in Richmond became insolvent. He thereupon executed his deed, with the expressed desire to convey all of his property of every kind and description in trust to secure the payment of his debts. Carrying out this intent, he conveyed certain property described to Williamson Talley, as trustee in fee, and adds these general words:

'All other property of every kind and description, whether real or personal, and all debts, claims, rights, and securities to which said Ernest H. Chalkley may be entitled, as fully and effectually as if the same were specifically mentioned herein and were hereby specifically conveyed.'

Among the creditors whose names are mentioned as cestuis que trustent of the deed, and whose claims are specifically admitted, are Curtain & Corner. The notes due to them are set out in detail. Being dissatisfied with the terms of the assignment, they filed a creditors' bill, seeking to set it aside as fraudulent and void. The assignor and assignee answer severally. Each denies the fraud. No objection is made to the form of the bill or to the jurisdiction of the court in the pleadings. At the hearing the jurisdiction of the court was challenged. The court below overruled the objection, and this (which is the ground of the first exception) meets us at the threshold of the case. Can a general creditor institute proceedings in equity to set aside as fraudulent the deed of his debtor, there being no judgment at law on his claim, and no unsatisfied execution?

Two reasons are suggested in argument why this question should be answered in the negative: First. That the practice of the court of equity always has been to refuse its assistance to a creditor seeking to set aside the deed of his debtor for fraud until he has first secured a judgment at law, issued his execution thereon, and has procured a return of nulla bona. Second. That by the constitution of the United States the right of trial by jury is preserved in suits at common law when the value in controversy exceeds $20. And that, inasmuch as the court of equity has no jury, it cannot give relief in cases in which the basis of relief is a money demand exceeding that sum, the court being called upon, in the first instance, to establish the validity of the debt.

We will examine these. Stated as a general proposition, there can be no doubt that courts of equity require a judgment and execution and return as a condition precedent to setting aside the deed of a debtor for fraud. Day v. Washburn, 24 How. 355; Jones v. Green, the rule is this: Before one can come into the court of equity, it must appear that he has not a plain, adequate, and complete remedy at law. If he have a legal remedy, he must exhaust it. The requirement of the judgment at law, execution and return thereon, is the best evidence of this. Can it be shown in any other way? Equity will never require an act to be done which necessarily will result in failure, or which would be but an idle effort. 'When the tender or performance of an act is necessary to the establishment of a right against another party, this tender or offer of performance is waived or becomes unnecessary when it is reasonably certain that the offer will be refused. ' U.S. v. Lee, 106 U.S. 202, 1 S.Ct. 240. In Sage v. Railroad Co., 125 U.S. 376, 8 S.Ct. 887, a suit by a creditor to set aside a deed, it was objected that he had not sued out his execution, and that return thereon had not been made. The court overruled the objection. 'Suing out the execution would, according to the facts and the admission of the parties, have been an idle ceremony. ' In Case v. Beauregard, 101 U.S. 691, the general question is discussed, and the conclusion is reached that a judgment at law is not necessary if the necessity of the resort to a court of equity can be otherwise made to appear. 'But, after all, the judgment and fruitless execution are only evidence that his legal remedies have been exhausted, or that he is without remedy at law. They are not the only possible means of proof. The necessity of a resort to a court of equity may be made otherwise to appear. Accordingly the rule, though general, is not without many exceptions. Neither law nor equity requires a meaningless form, 'bona sed impossibilia non cogit lex.' ' Now, in the deed before us the debtor not only professes to convey and assign, but in fact in express words does convey and assign, all his property and rights of property to a trustee in fee. He has thus parted irrevocably, as far as he is concerned, with all his assets. They are, under this deed, converted into equitable assets, and can be reached only in a court of equity. A judgment at law could create no lien on them; an execution consequent on such a judgment could not reach them. The return of nulla bona is not only a foregone conclusion; it would be an idle ceremony. The complainant not only can have no plain, adequate, and complete remedy at law; he has no remedy at law at all. The language of the supreme court in Oelrichs v. Spain, 15 Wall. 228, is not inappropriate:

'Where the remedy at law is of this character, (plain, adequate, and complete,) the party seeking redress must pursue it. In such cases the adverse party has a constitutional right to a trial of the issues of fact by a jury. But this principle has no application to the case before us. Upon looking into the record, it is clear to our minds, not only that the remedy at law would not be as effectual as the remedy in equity, but we do not see that there is any effectual remedy at all at law. Besides, there is an element of trust in the case which, wherever it exists, always confers jurisdiction in equity.'

This brings us to the second objection to the jurisdiction,-- that the court of equity, having no jury, cannot pass upon this money demand which exceeds $20. Upon this branch of the case Scott v. Neely, 140 U.S. 112, 11 S.Ct. 712, is relied on. The case of Scott v. Neely came from the circuit court of the United States for the district of Mississippi. Scott had been engaged in planting, having for his factors Neely's firm. He was not successful, and the complainants alleged that he owed them as his factors $2,000 on a note, and on a balance or open account for advances, $6,264.89. Scott, during his planting operations, had purchased real estate, the title of which he put in the name of his wife. Complainants, without establishing their claim at law, filed their bill setting up their demand, claiming judgment for it, and that the conveyance to the wife be set aside, the property sold, and the proceeds of sale first applied to their claim. There is a statute in Mississippi which authorizes the court of equity in that state to entertain such a suit and to give such relief. Scott v. Neely held that the Mississippi statute could not create or confer such a jurisdiction on a court of equity of the United States, and that a court of equity of the United States could not entertain such a suit, because, upon a demand like this, the adverse party had the right, under the constitution, to his trial by jury. The claim of complainants was strictly on a money demand, the larger portion not liquidated, consisting of an account of advances, interest, credits, and charges. No part of the debt was admitted. It had to be established and proved after opposition and litigation. The contract itself must have been proved. There was nothing to show why the remedy at law was not plain, adequate, and complete. The complainants had first to prove their case, then to set aside the deed; and they claimed that they could enter judgment and secure the first lien. The complainants had no lien on or interest in the property. The main issue in the case was whether the courts of the United States could and would enforce the state statute. It seemed to be admitted on all sides that without such a statute the court had no jurisdiction. The inevitable conclusion was reached that, as state legislatures cannot take away, so they cannot confer, jurisdiction on the courts of the United States. In the present case we have an acknowledged debt, admitted in the most formal way, binding grantor and grantee. The pleadings dispute it in no way. The deed conveys all the property of the debtor in trust for many creditors, among them these complainants, by name and amount. The assignor cannot recall this act of his. The assignee cannot divest himself of the trusts, or diminish the interest of the complainants in them. Indeed, the interest inheres in the complainants themselves; and, although they deny the validity of the deed, and declare it void, if they fail in their contention, it would seem that they can receive their interest under it. The question made in this court-- the only question-- is the validity of certain trusts in this deed. They are to be passed upon and adjudicated. If their validity be sustained, they will be administered under the supervision of the court. If any of them be held invalid, they will be disregarded. If all the special trusts are invalid, one remains, and that is for all creditors, and that the court can administer with that equality, which is equity. It is true that the complainants deny the validity of the deed. But this denial cannot defeat the trusts, if any exist, nor affect creditors who have come in under this creditors' bill, nor defeat the jurisdiction, which does not defend on the attitude of the complainants. The...