Howard v. Sheldon

The Chancellor.

I think the vice chancellor arrived at the correct conclusion in. relation to the title to the property which by the decree is declared to belong to the defendant Benedict; and that the bill was properly dismissed upon the merits, so far as related to that property. The evidence shows that the goods furnished for the store in Rochester, were intended to be and remain the property of Benedict, and that Sheldon transacted the business merely, as his agent. I admit that if this property had originally belonged to X Sheldon, and had been nominally sold to Benedict by him, and he had thus retained the possession and control thereof, there would have been prima facie evidence of fraud, and that the transaction was intended as a mere cover to keep the property beyond the reach of creditors. No such prima facie evidence of fraud, however, arises where the goods are purchased by a third person, with his own funds, and placed in the hands pjf a person who is insolvent, as the agent of such purchaser. For the presumption in such a case is the other way; and the party alleging fraud in the transaction is bound to sustain the charge, by affirmative proof on his part. In relation to the furniture, and horses and carriages, if the vice chancellor was right in supposing that they were the property of J. Sheldon, he should not have dismissed the bill generally and absolutely, as to Benedict, who claimed that part of the property also. For that was inconsistent with the part of the decree which directed the furniture and horses and carriages to be transferred to a receiver, to be applied in satisfaction of the complainant’s judgment. For the reasons stated by the vice chancellor in his opinion, I think the furniture and horses and carriages must be considered as property taken by J. Sheldon, for the use of his family, and paid for out of the store, as a part compensation for his services; and that they therefore belonged to him, and not to the defendant Benedict, at the time of filing the bill in this cause.

The objection that Bull and Shearer, who appear to be jointly and equally liable for the payment of the complainant’s debt, were not made parties, and that there is no averment in the bill that they are destitute of property, would have been a valid one, if taken at the proper time. But it should have been made either by a demurrer to the bill, or in the answer of these defendants; so that the complainant could have had an opportunity to obviate the objection by an amendment. It was too late, therefore, to turn the complainant around to a new suit upon that technical objection, taken for the first time at the hearing. The answer of the defendants does, however, distinctly raise the objection that the complainant had not exhausted his remedy at law, by execution against the property of Bull and Shearer, in the county where they resided; and that he, therefore, had no right to institute this suit. The answer also alleges, upon the information and belief of the defendants, that Shearer and Bull, or one of them, had property liable to execution, in the county of Washington, where they resided, sufficient to satisfy the original judgment recovered against them jointly with the defendant J. Sheldon, and that it was well known to the complain ant; and that no attempt was made to serve the declaration in the action brought against them and J. Sheldon, upon that judgment, on Shearer and Bull, although their residence in the state was known to the complainant. The question is therefore fairly presented by the answer, whether the complainant had exhausted his remedy at law against the judgment debtors, so as to authorize him to file a creditor’s bill, in this court, to obtain satisfaction of his judgment out of the property of J. Sheldon, which the complainant had not been able to reach by execution at law.

The excuse for not issuing an execution against Shearer and Bull, to the county in which they resided, is that the bill alleges that they had no property jointly with J. Sheldon, and that they were not served with the declaration by which the second suit was commenced. But the supreme court has frequently decided that the recovery of a second judgment is no bar to the issuing of an execution upon the first, to obtain satisfaction of the debt. (Andrews v. Smith, 9 Wend. Rep. 53. Jackson v. Shaffer, 11 John. 513. Bates v. Lyons, 7 Paige, 85.) The neglect of the complainant to serve the declaration upon Shearer and Bull, in the second suit, so as to enable him to exhaust his remedy against their individual property, by the issuing of an execution in that suit, to the county where they resided, was, therefore, no excuse for not proceeding against their individual property, by an execution upon the original judgment for the same debt. It is true, that the last judgment included a bill of costs which could not have been collected on an execution upon the first judgment. But it no where appears that the amount of such costs exceeded one hundred dollars, so as to have given this court jurisdiction of the case, upon a creditor’s bill, if the amount of the original judgment had been collected by executions against all the defendants in that judgment, issued to the proper county. No excuse is stated in the bill for the commencement of the action upon the first judgment, and serving the declaration upon one of the defendants only, instead of issuing an execution or executions to the proper counties; but it probably was to try the experiment of filing a creditor’s bill to obtain satisfaction out of the individ•ual property of one of the judgment debtors only. If the other judgment debtors were mere sureties for J. Sheldon, or if there was any other reason why it would have been inequitable to proceed to obtain satisfaction of the complainant’s debt out of the property of Bull and Shearer, instead of coming into this court to reach the individual property of J. Sheldon only, it should have been stated in the bill. And if the facts were contested by the defendants in this suit, the complainant should have established the same by proof. The objection was, therefore, well taken by the defendants, in their answer, that the complainant had not exhausted his remedy at law, for the recovery of his debt, either within the letter or the spirit of the law on the subject of creditors’ bills. For this reason, the decree is erroneous, even as to the defendant J. Sheldon, and as to the property which the vice chancellor decreed to belong to him, and to be properly applicable to the satisfaction of the complainant’s judgment.

The part of the decree appealed from by the complainant must, therefore, be modified, so as to declare that the general dismissal of the bill as to the defendant Benedict, shall be without prejudice to the rights of the complainant in any future litigation in reference to the furniture, horses and carriages mentioned in the pleadings in this case. And upon the cross-appeal the bill, as to all the other matters in controversy in this suit, must be dismissed without prejudice to either of the parties in any future litigation. The appellants Benedict and Sheldon are also to recover their costs upon the cross-appeal; but neither party is to have costs as against the'other upon the complainant’s appeal.