Williams v. Adler-Goldman Commission Co.

• Decision Date: 13 September 1915
• Docket Number: 4354.
• Citation: 227 F. 374
• Parties: WILLIAMS et al. v. ADLER-GOLDMAN COMMISSION CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

227 F. 374

WILLIAMS et al. v. ADLER-GOLDMAN COMMISSION CO. et al.

No. 4354.

United States Court of Appeals, Eighth Circuit.

September 13, 1915

Harry H. Myers and O. D. Longstreth, both of Little Rock, Ark., for appellants.

W. E Hemingway, G. B. Rose, D. H. Cantrell, J. F. Loughborough and V. M. Miles, all of Little Rock, Ark., for appellees.

Before SANBORN and CARLAND, Circuit Judges, and LEWIS, District Judge.

LEWIS District Judge.

This was a general creditors' bill brought by The Adler-Goldman Commission Company and Arkansas Fertilizer Company against F. S. williams and Viola, his wife appellants, to adjudicate complainants' claims, to set aside a conveyance of real property from husband to wife as fraudulent, to subject that property to the payment of the husband's debts, and to sell certain corporate shares put up by Williams as collateral security for his indebtedness to one of the complainants, and apply the proceeds. The pledgee was not given power to sell the shares. The decree gave the complainants the relief sought.

The property is in the state of Arkansas, Eastern District, and Williams had resided there, but he and his wife moved away and were residents and citizens of South Carolina when the bill was exhibited. The complainants were Missouri corporations.

Williams bought the lands in May, 1900, with his wife's money; but he took title in his own name and held it until August, 1911, when he made the deed to his wife which is the conveyance charged in the bill to be fraudulent.

The bill further charged, and the great weight of the evidence tended to establish, that Williams was insolvent on making the conveyance, and had no property whatsoever in Arkansas subject to levy and sale, nor elsewhere, so far as the record discloses.

The principal objection made below, and again presented here, is that the bill discloses that complainants are in a position that precludes them from coming into a court of equity; that their remedy is at law, which must be first exhausted by putting their claims in judgment, and utilizing, without avail, final process thereon-- judgment, execution and officer's return nulla bona.

This general rule is plain enough and well established, even statutory (R.S.U.S. Sec. 723), but we are unable to discover how 'a plain, adequate and complete remedy may be had at law' by complainants. The defendant has not pointed it out. No judgment at law could have been obtained against him. He was without the jurisdiction and insolvent.

A prior judgment at law and unavailing process are not conditions on which equitable jurisdiction is founded. They do not constitute the basis on which the right to equitable relief rests. They are rather an element in procedure and not in equitable right. The facts which they are taken to establish, by the general rule, may be made to otherwise appear, and thus exceptions to the general rule are recognized and have become as well established as the rule itself.

The main purpose of the suit was to remove the fraudulent transfer to the wife so that the lands might be applied in satisfaction of the husband's debts.

The ground for equitable relief, pleaded in the bill, is the fraudulent transfer, which the Chancellor is empowered and required to search out and remove, and which cannot be done at law.

Non-residence of the debtor and also his insolvency have each been held sufficient to dispense with prior judgment and execution at law; the first, because of the great impracticability, if not impossibility, of proceeding against the debtor in that way, and the second, because it stands for what the judgment and execution would conclusively prove.

In Case v. Beauregard, 101 U.S. 688-690 (25 L.Ed. 1004), it is said:

'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 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.' It has been decided that where it appears by the bill that the debtor is insolvent and that the issuing of an execution would be of no practical utility, the issue of an execution is not a necessary prerequisite to equitable interference. * * *

'So it has been held that a creditor, without having first obtained a judgment at law, may come into a court of equity to set aside fraudulent conveyances of his debtor, made for the purpose of hindering and delaying creditors, and to subject the property to the payment of the debt due him.'

In National Tube Works Co. v. Ballou, 146 U.S. 517-523, 13 Sup.Ct. 165, 166 (36 L.Ed. 1070), it is said:

'Where it is sought by equitable process to reach equitable interests of a debtor, the bill, unless otherwise provided by statute, must set forth a judgment in the jurisdiction where the suit in equity is brought, the issuing of an execution thereon, and its return unsatisfied, or must make allegations showing that it is impossible to obtain such a judgment in any court within such jurisdiction.'

See, also, Lazarus Jewelry Co. v. Steinhardt, 112 F. 614, 50 C.C.A. 393; Talley v. Curtain, 54 F. 43, 4 C.C.A. 177; Tank Co. v. Varnish Co. (C.C.) 45 F. 7, 16.

There is abundant state authority. That non-residence creates an exception to the rule, see Pope v. S.W. & W. Co., 36 Ga. 541; Quarl v. Abbett, 102 Ind. 233, 1 N.E. 476, 52 Am.Rep. 662; Kipper v. Glancey, 2 Blackf. (Ind.) 356; Taylor v. Branscombe, 74 Iowa, 534, 38 N.W. 400; Anderson v. Bradford, 5 J.J.Marsh. (Ky.) 69; Scott v. McMillen, 1 Litt. (Ky.) 302, 311, 13 Am.Dec. 239; Earle v. Grove, 92 Mich. 285, 52 N.W. 615; Williams v. Kemper, 99 Minn. 301, 109 N.W. 242; Burnham, M. & Co. v. Smith, 82 Mo.App. 35; Weaver v. Cressman, 21 Neb. 675, 33 N.W. 478; Peay v. Morrison, 10 Grat. (Va.) 149; Farrar v. Halselden, 9 Rich.Eq. (S.C.) 331; and that insolvency may be shown otherwise than by judgment at law and execution returned nulla bona, as creating an exception to the general rule, see Sage v. Railroad Co., 125 U.S. 361, 376, 8 Sup.Ct. 887, 31 L.Ed. 694; Austin v. Morris, 23 S.C. 393; Gordon v. Worthley, 48 Iowa, 429; Moffatt v. Tuttle, 35 Minn. 301, 28 N.W. 509; Turner v. Adams, 46 Mo. 99; Bank v. Wetmore, 124 N.Y. 241, 249, 26 N.E. 548; Schofield v. Ute C. & C. Co., 92 F. 269, 34 C.C.A. 334.

The construction and effect of the conveyance from Williams to his wife must be determined by the lex loci rei sitae. McGoon v. Scales, 9 Wall. 23, 19 L.Ed. 545; De Vaughn v. Hutchinson, 165 U.S. 566, 17 Sup.Ct. 461, 41 L.Ed. 827; Green v. Van Buskirk, 5 Wall. 307, 18 L.Ed. 599.

Williams held title...