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cient to sustain the judgment. Without determining this question, we are of opinion that the findings, even if sufficient as findings of fact, are contrary to the evidence. The uncontradicted evidence of the witnesses on the part of the defendant, instead of overcoming the presumption of a consideration afforded by the written instrument, showed a sufficient consideration in all respects as foundation for findings in favor of plaintiff as to that instrument, and also tended to show a sale of the goods and machinery.
The judgment and order are reversed, and cause remanded for a new trial.
Ross, J.; SHARPSTEIN, J.; MORRISON, C. J.; THORN
SUPREME COURT OF OREGON.
(12 Or. 513)
DAWSON v. DOWNING and others.
Filed November 30, 1885.
Before a creditor may file a creditors' bill to have a conveyance of personal property by the debtor set aside for fraud, he must first have exhausted his legal remedies. Wm. Ramscy, for respondent Coffey. Tilmon Ford, for respondents Gilbert and John W. Minto. Wm. Holmes and Samuel Richardson, for appellant, I. R. Dawson.
THAYER, J. This case comes here upon appeal from a decree entered upon a decision sustaining a demurrer to a complaint. It is alleged in the complaint that the respondent James Coffey had a stock of furniture and tobacco and cigars, and for a long time had been engaged in a general merchandise business, vending said articles; that he became indebted to divers parties on account of said business, amounting to $4,000, and was owing other liabilities amounting to $700; that he was indebted to the respondents A. T. and F. N. Gilbert, partners under the firm name of Gilbert Bros., in the sum of $615.50, and that he owed, or pretended to owe, the respondent Johannah Coffey, who is the wife of said James Coffey, $700; that he was insolvent, and contemplated insolvency, and while in in that condition, and on the eleventh day of December, 1884, he made a general assignment to the respondent Downing of all his property for the benefit of his creditors; that on the ninth day of December, 1884, said James Coffey, being then insolvent and intending to make the said assignment, entered into an agreement with the said Gilbert Bros., whereby, and as a part of the same transaction with the said assignment, and for the purpose of preferring the said Gilbert Bros. in the payment of their said demand over other of his creditors, he executed to the said Gilbert Bros. a chattel mortgage upon a large portion of his said property, consisting of the said furniture; that on the tenth day of December, 1884, said James Coffey, while in the condition mentioned, and intending to make the said assignment, entered into an agreement with his wife, the said Johannah Coffey, whereby, and as a part of the same transaction with said assignment, and with a similar design of preference of payment of her demand, he executed to her a bill of sale of the said stock of tobacco and cigars, and put her in nominal possession thereof; that soon after the execution of said chattel mortgage to said Gilbert Bros. the respondent John Minto, acting for them, wrongfully took possession of the property included in the said chattel mortgage, and converted it to their own use; that it was worth $2,500; that at the time said James Coffey executed said chattel mortgage and bill of sale he was in.
debted in a large amount to divers persons on account of said business as before mentioned; that said creditors last referred to assigned their claims to said appellant; that he has no property out of which to recover said claims, except the property included in said chattel mortgage and bill of sale, and that if the owner of said claims is compelled to take his distributive portion of said property in the hands of said assignee, and not allowed any portion of the property mortgaged and sold, as mentioned, he will not realize more than from 5 to 10 per cent.; that said assignee is acting in good faith so far as his said trust is concerned, but is powerless to question the validity of the said instruments; that the assignment to him was not made in good faith. Said complaint contained a prayer for an accounting for said property mortgaged and pretended to be sold, and that it be transferred into the hands of an officer of the court; that the said assignment be set aside, and the assignee account for the property in his hands and pay it over to such officer, to the end that all the property of the said James Coffey, including that mortgaged and pretended to be sold to his wife, be distributed among the creditors of the said Coffey in accordance with equity, etc.
The demurrer to the complaint was upon two grounds: First, because there were two causes of suit improperly united; and, second, because the said complaint did not state facts sufficient to constitute a cause of suit. The second ground is the more important one. It raises the question as to whether creditors at large, having mere legal claims against a debtor on account of ordinary contract debts, have a right to go into a court of equity to enforce them where the debtor has attempted to dispose of his property in order to defraud them. That a general assignment for the benefit of creditors may be set aside when made in violation of the insolvent law there can be no question; but whether it can be done by an ordinary creditor of the insolvent before he has obtained a judgment upon his claim, or in some manner secured a lien upon the debtor's property, is more serious. I am strongly of the impression that he cannot. Where a debtor attempts to dispose of his property in any way, in order to defraud his creditors, they may proceed and attach by taking it from the debtor, or by garnishment if in the hands of another party. They may pursue this remedy in case of a general assignment for the benefit of creditors if it be fraudulent. Moss v. Humphrey, 4 G. Greene, 443; Burrows v. Lehndorff, 8 Iowa, 96; Ruble v. McDonald, 18 Iowa, 493. I cite these authorities with more confidence from the fact that our insolvent law was, to a great extent, taken from the Iowa law upon that subject. The creditors may also, in such a case, proceed and recover judgment at law; and, after exhausting the ordinary legal remedy to enforce payment, commence a suit in equity in the nature of a creditors' bill to obtain satisfaction of their claims. An attempt to defraud creditors through the means of the insolvent law is as mischievous as an attempt to effect it in any other way, and a
court of equity would lend its aid to prevent it in that case as readily, no doubt, as in any other; but it would not exercise principal jurisdiction,-would only furnish the creditor auxiliary assistance to obtain his right. It would never attempt to enforce the payment of contract debts except under particular circumstances. It must be a case where a fund has been set apart, or in sorne manner devoted, to the payment of a class of debts, before equity will interfere until the legal remedy is exhausted,-such as in a case of prize money made by a privateer and required by articles to be distributed, (Good v. Blewitt, 13 Ves. Jr. 397;) the assets of a limited partnership, where the statute constituted them a special fund for the benefit of all the creditors of the partnership, (Innes v. Lansing, 7 Paige, 584;) and the like cases. I think that in this case, if the appellant had proved his claim under the provisions of the insolvent act, he could then have resorted to equity to have had the fund applied to the payment of the debts, and to prevent a fraudulent diversion or misapplication of it. The assignment vests in the assignee the title to all property belonging to the debtor at the time of making the assignment. The statute, as printed, does not read so, but it is on account of typographical error. See enrolled act. After a creditor has presented his claim under oath, as provided by the act, I think he would have such an interest in the assets of the insolvent as would enable him to enforce the remedy above suggested. He certainly ought to after its allowance. But to have the assignment set aside, and the court undertake to administer upon the estate as prayed in the said complaint, would, to my mind, be an unprecedented proceeding. The creditor's claim must be adjudicated upon, or presented and allowed in the insolvent proceedings, before the aid of equity could be invoked. I am of the opinion, therefore, that the decision sustaining the demur. rer should be affirmed.
Waldo, C. J., (concurring.) This is a suit brought in the interest of certain alleged creditors of James Coffey to set aside certain conveyances of personal property made by Coffey to defraud, as alleged, the said creditors. There is a fatal objection to the suit in its inception. The claims of the complaining creditors have not been reduced to judgments and executions returned unsatisfied. They are all simply contract creditors, alleging a simple indebtedness to them on the part of the alleged debtor. Such suits cannot be maintained. The ground of equitable jurisdiction in such cases is fraud in the disposal of the debtor's property, and which, unless equitable remedies are applied, will defeat the collection of the debt. But before the fraud can be set up, the legal facts which are conditions precedent must be established. That they must be established at law is implied in the nature of the facts themselves. It is exclusively the province of a court of law to say that there is a legal debt and that it cannot be made at law. Therefore a creditors' bill “must be preceded by a
judgment at law establishing the measure and validity of the demand of the complainant for which he seeks satisfaction in chancery.” Smith v. Railroad Co., 99 U. S. 401; and see Baxter v. Moses, Sup. Ct. Maine, 1885. So, in Parish v. Lewis, Freem. Ch. (Miss.) 306, the
“But, if you wish to reach equitable assets, or other things not subject to execution at law, you must show that you have exhausted your remedies at law by a return of an execution unsatisfied as the foundation of your right to come into this court. In such case the complainant's right to relief in this court depends upon his having run his execution at law without being able to satisfy his judgment. It is not a mere technical objection, but goes to the very foundation of the suit, and is not waived even by a general answer. The complainant must show an execution returned unsatisfied, and no state of facts will excuse such a return. Brinkerhoff v. Brown, 4 Johns. Ch.671, 687; McElwain v.Willis, 9 Wend. 548; Screven v. Bostick, 2 McCord, Ch. 416; Hadden v. Spader, 20 Johns. 554; Moore v. Young, 1 Dana, 516.”
Hodges v. Silver Hill Mining Co., 9 Ore. 200, was not a suit to reach equitable assets of the debtor. There the stochholders were primarily liable in equity. Their liability may be likened to that of a guarantor after insolvency of the principal debtor, in which insolvency may be proved like any other fact in the cause of suit. Pars. Bills & Notes, 142, and cases cited.
The judgment must be affirmed.
(13 Or. 69)
SCHNEIDER V. SEARS.
Filed November 30, 1885. 1. SHERIFF-PRIORITY OF LIENS-RIGHT TO DISCRIMINATE.
As between two judgment liens the sheriff has no right to decide the ques
tion of priority, but should refer the matter to the court. 2. SAME-REIMBURSEMENT FOR MONEY SPENT-EXTRAVAGANCE.
A sheriff should be recompensed for any expense reasonably incurred by him in watching and taking care of property in his custody, but this does not warrant his doing any act not absolutely necessary in this connection, at the
expense of the parties. 3. SAME-EXPENSES, HOW CHARGED.
The reasonable expenses, above the ordinary caption' fee, of a sheriff do not abide the result of the trial, but constitute a charge upon the assets. F.V. Drake, for respondent, H. Schneider. D. Goodsell and J. V. Beach, for appellant, Geo. C. Sears.
THAYER, J. Appeal from a judgment of the circuit court for the county of Multnomah. The respondent brought an action against the appellant in said court to recover money collected by respondent as sheriff upon execution issued from a judgment in favor of respondent against Bachman Bros., and which the respondent had failed to pay over. The judgment against Bachman Bros. amounted to $2,016.55. The sheriff realized, by the sale of personal property upon the execution, $2,034.18, and only paid over $1,349.21. The balance he retained for fees and charges, and $157.36 thereof to satisfy a judgment recovered by Stearns Bros. against said Bachman Bros. in justice's court, and which he alleged had priority over the