Boynton v. Rawson

The Vice Chancellor.

The counsel, in their very able and ingenious argument of the questions presented by the report and exceptions in this matter, seem to me, after all, to differ more, as to the definition of terms, than to the legal principles. The leading principles, as to liens acquired by creditors’ bills upon the property of the judgment debtor, not tangible by execution, as settled by a series of decisions in our own courts, seems to be fully recognized by all parties.

The order of the liens of judgments, executions and creditors’ bills, seem to be well understood. In judgments, priority is given to the age of the docket; executi°ns> to priority of delivery to the sheriff and levy, and in creditors’ bills, to priority of filing the bill or commencement of the suit. In pursuing the remedy in this court, the vigilant is favored; and the judgment creditor who first exhausts his remedy at ^aw’ ^7 procuring an execution to be returnedunsatisfied, and files his bill in this court to pursue and hunt out the equitable or consealed assets of the judgment debtor, will, even though he be thé youngest in judgment, and the last in execution, if he comes here first, have here in this court, priority over all the others as the reward of his diligence. This is' an undoubted and undisputed proposition. Chancellor Walworth, in Corning vs. White, (2 Paige, 568,) says, also, that a creditor’s bill, under the Revised Statutes, operates as an attachment upon property which cannot be levied upon by law. The difficulty in this case is not in the principles, or in the reconciling conflicting principles, but in adapting known and settled principles to the facts before us. In this matter the complainants in the first suit filed their bill long first, but withheld service of process, or giving any notice that such bill was filed, until after process both the other suits was served. The complainants in the third suit filed their bill second, in point time, but also withheld service of process,, and giving any notice that their bill was filed, until after process in the second suit was served. The complainants in the second suit filed their bill last, but allowed it up immediately by service of process, and with so much diligence, that although their bill was filed last, process thereon was served nearly five months before any process was served in either of the other suits. Now, under the rule that the diligent creditor, who first commences his suit in this court, obtains the first lien; under the above state of facts, which of these complainants have, in judgment of law, first commenced their suit in this court? The inquiry, in point of fact, is narrowed down to what constitutes a commencement of a suit in this court, and what, in legal effect, is meant the term 66 filing a bill ?”

But though the inquiry may seem so narrow, its solution is not without its embarrassments and difficulties ; and indeed, its solution would probably be different under different circumstances. The fact of “ litis pendentis,” is in many suits an important fact, vitally affecting others who come in subsequent to the lis pendens, and are held bound thereby, even though in reality they knew nothing about the pending suit. Authorities would not therefore be likely to leave us in the dark as to what constitutes a pending suit, or “ Us pendens.” In an anonymous case (1 Vernon’s Rep. 318) it was held “ that a subpoena served and a bill filed is a lis pendens against all persons ; but a service of a subpoena without a bill being actually filed, makes no Us pendens ; but the bill ■being filed, the lis pendens comes from the service of the subpoena, though it be not returnable until the next term, and though the party lives never so remote.” Sugden on Vendors, (page 495,) also says, “ When the bill is filed, the lis pendens begins from .the service of the subpoena,” and cites the case in Vernon. Chancellor Kent, in Murray vs. Ballou, (1 Johns. Ch. Rep. 576,) also says, “ The established rule is, that a Us pendens, duly prosecuted and not collusive, is notice to a purchaser, so as to affect and bind his interest by the decree, and the lis pen-dens bee-ins from the service of the subpoena after the bill is filed.” • See, also, Jackson vs. Dickinson, (15 Johns. Rep. 309.) In Roberts vs. Jackson, (1 Wendell’s Rep. 478,) this principle received a practical application. A bill was filed on the 13th Feb. injunction granted. Four days afterwards, to wit, on the 17th Feb. other parties obtained a judgment, which was a lien upon the land,' the subject matter of the litigation. The Supreme Court held to the same doctrine laid down by Chancellor Kent in the above cited case of Murray vs. Ballou, that the Us pendens begins from the service of the subpoena after the bill is filed; and in the case before them, they held that, inasmuch as there was no proof of service of the subpoena or of actual notice before judgment docketed, the sale under the judgment docketed, four days after the filing of the bill, conveyed a valid title; in other words, that there was no Us pendens, because there was no proof that the subpoena was served, before the docketing of the judgment.

So much authority it has been thought desirable to glance at, to show what was formerly deemed necessary to be done before there could be held to be a pending suit in this court, to affect those who might subsequently become connected with the subject matter of the litigation. The litis pendentis, thus perfected by the service of process, destroyed the vendible power of the defendant over the subject matter of the litigation, or, at least, rendered the exercise of such power subject to the just claims of the complainant in the pending suit. For the purposes of a wise public policy, it had the effect of notice to even strangers to the litigation.

But the counsel for the complainants in the first suit, say that all these cases were in relation to real estate, and as against subsequent bona fide purchasers; and as the doctrine of lis pendens was in any event a hard one as against bona fide purchasers, the court in such cases will not hold the Us pendens ** perfect until subpoena served. He insists that the cases here presented are different, as the contest is not between the complainant and a bona fide purchaser, but between creditor and creditor. I cannot perceive the force of this distinction, and it certainly was not taken in the case of Roberts vs. Jackson above cited, where a subsequent judgment creditor, after bill filed and before subpoena served, was held to have the better equity as against the complainant in the Chancery suit. The same counsel also seems to suppose that the statute under which these suits are brought, has a bearing upon this question. If it has, I am unable to perceive it. The statute only affirmed a previously well recognized ground of jurisdiction in this court, and was passed probably because there was, or appeared to be, some apparent conflict in former decisions. It introduces no new rule either as to principle or practice. It gives no new lien; and when the courts say that a creditor’s bill filed under it is a lien upon the property which cannot be levied upon at law, they only affirm anciently established principles, and mean to declare that, in this, as in all other cases, the party who is first in this court with a pending suit, shall first reap the rewards of his diligence. To determine what a pending su¡t or Us pendens is, we must throw upon the light of former and ancient definitions. This we have attempted to do. The same counsel seem at least to suppose that the present Chancellor, when p¡s various decisions upon questions of this character, speaks of “ filing a bill” and “ commencement of the suit,” as creating a lien, that he at least means ]jterally, that the bare filing a bill in the clerk’s office, without any thing farther done, does of itself operate as such lien in the nature of an attachment, If such is the fair import of the language of the present Chancellor, I shall certainly defer to the greater experience and ability, and higher authority of the head of this court. Some examination of his decisions may be necessary.

The first case is that of Weed vs. Pierce, (9 Cowen, 729,) decided by the present Chancellor when equity judge of the 4th circuit, In that case he lays down the rule, that the commencement of the first suit in equity by a judgment creditor, gives him a preference over other judgment creditors, even if the other judgments are elder. But he intimates, in the same case,, that he must pursue his remedy with diligence, and quotes with approbation the case of Edgell vs. Haywood, (3 Atkins, 357,) where Lord ■ Hardwicke speaks of a bill brought, and lis pendens created, as necessary to prevail over an assignment. This would seem to be sufficient to enlighten us as to the meaning of the term “ commencement of the suit,” in this case. In Beck vs. Burdett, (1 Paige, 309,) the same case in Atkins is referred to, to show what is necessary to give a specific lien. In Corning vs. White, (2 Paige, 568,) the Chancellor reiterates the doctrine that the filing of the bill here gives the preference; but to show what is intended by that phrase, he says, subsequently, that the defendant, after the service oí the injunction, can only make an assignment subject to the prior equity of the —evidently contemplating the service of process as necessary to secure the lien. Utica Insurance Company vs. Power, (3 Paige, 367,) was a case of set off; but the case gave the opportunity for the remark, that after the creation of a lis pendens here by the filing of a creditor’s bill, the subsequent assignee of the defendant’s choses in action, cannot be permitted to retain them against the complainant’s prior equity. We have seen before, that Us pendens has a legal, definite meaning; and it must be supposed that the term is here used in reference to such meaning. It was hardly necessary, in such a place, to give it a definition. In Wakeman vs. Grover, (4 Paige, 42,) he merely reiterates the doctrine, that it is the filing of the bill here which gives the lien.

In Ames vs. Blunt, (5 Paige, 13,) the same idea is reiterated. In Burrall vs. Leslie, (6 Paige, 445,) he seems to approve of the principle, that the decrees were paid according to the times in which the bills were filed. In Trotter vs. Bunce, (1 Edward’s Rep. 573,) there was an exception to the answer, because the defendant answered in the present tense as to his property. The Vice Chancellor of the 1st circuit sustained the exception, because, he said, the answer might be true, and yet the defendant have had property when the bill was filed and injunction served.

I cannot see any thing in all these decisions, cited by the counsel for the complainants in the first suit, to satisfy me that the present Chancellor has ever entertained or expressed the idea, that the mere filing 0f a creditor’s bill, is of itself sufficient to give the complainant in such suit, a preference over others, in the defendant’s equitable assets. In laying down the rule, that he who first comes into this court, in cases 0f this kind, shall have a preference, he uses promiscuously the terms “ filing the bill,” “ commencement of the suit,” and “ Us pendens,” all evidently intended by him as synonimous, and meaning the same thing. They are clearly used as short terms to which a legal meaning is attached, and all intended to convey the same idea. In some of the cases, he has given us no clue in the case to the meaning he there attaches to the term used ; in others, we are enabled to see that either or all of the terms embrace the idea that process must follow the filing of the bill, before the suit can be deemed commenced for the purpose of creating a specific lien. A legal definition belongs to the term Us pendens; and I apprehend all the terms so used have reference to such legal meaning, at least, I can see nothing to the contrary.

Upon filing a creditor’s bill, it is usual to take out both an injunction and subpoena—an injunction to restrain the defendant from disposing of his property, a subpoena to' compel him to answer the charge and discover his concealed property. By the service of this process, the defendant is notified, in an emphatic manner, of the commencement of the suit. He is able to give notice of it to others. It would be the means of great wrong and injustice, if a party could, by merely placing a bill on file among the mass of papers in the clerk’s office, acquire a lien in this secret way, to defeat subsequent bona fide purchasers, honest assignees, or even subsequent creditors litigating in good faith. The filing of the bill should be ‘ followed up by service of process, to acquire a lien; and its prosecution should be pursued with reasonable diligence, to retain it. Executions at law are a lien upon the personal property of the defendant, in the order they are delivered to the sheriff; but an execution issued and delivered to a sheriff, with directions not to serve it, would create no Men. Creditor’s bills are said to operate like an attachment upon the property of the defendant not tangible by execution. But the mere issuing of an attachment, creates no lien. That process must be served fore it can hold the property. So of these creditors’ bills—there must be a service of the consequent process, to render it a lien.

The complainants in both the first and third suits, therefore, misapprehended their rights and position. They should, upon filing their bill and obtaining the allowance of injunction thereon, have persevered in their diligence, by the immediate service.of process. The excuse that other bills were filed and pending, is not sufficient to protect them, even though it was done for the praise-worthy motive of saving costs. Others might be misled by this holding back; and in this case, the complainants in the second suit, before they commenced their proceedings, very properly inquired of the defendants if any other bills had been filed than the two then pending, with a view of ascertaining if they could reap any thing by diligence on their part. When they ascertained there had not been, they commenced proceedings, and speedily acquired a lien in a proper way; and they should have the fruits of it. Again: upon an order of reference to|a master to appoint a receiver, he is required to ascertain what other creditors’ bills have been filed against the same defendants. If such reference had ' made previous to the service of process in either of these causes, the defendants, who would have been Persons naturally inquired of, could have given no information in relation to such suits ; and it seems lo me that this circumstance would furnish some indication that the complainants in such suits, could with propriety prefer no prior claim upon the fund.

One other view. If the defendants, during the pendency of the two suits which were compromised, and after the filing of the bill in the first suit, had made an assignment under the insolvent act, what interest would the assignees have taken ? It seems to me, clearly, that they would have taken the whole interest of the defendants in all their property, subject only to the claims in the two suits then pending, and not subject to the claim of the complainants in the first suit. If, then, the complainants in the first Suit would.be postponed to the claim of such assignees, it would seem to show that they had acquired no lien by merely filing a bill, without serving process.

Circumstances may point out exceptions to the rule indicated in this opinion, as when the complainants in a second bill, misled the complainants in the first bill, so that they should fail in getting their process first served ; or when the complainants in the first suit could not, with all diligence, find the defendants. But such cases, if they should arise, would be mere exceptions, and do not come within the facts . of this case, where the defendants and all the solicitors resided in the same village.

The master has adopted the correct principle for settling the priority of claims, and his report must be confirmed, and an order entered in conformity thereto, providing1 for the payment of the expenses of the refcrence out of the fund; and the complainants m the first and third suit must pay to the complainants in the second suit, the costs of their respective exceptions, to be taxed.