Case ID: colo_5/html/0222-01.html
Source: Caselaw Access Project
Author: {"author": "Elbert, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Allen v. Tritch et al.
    1. The Code (section 57), authorizes the filing of a cross-complaint, asking affirmative relief.
    2. The “ supplemental proceedingsprovided by the Code, appear to be chiefly directed to discovery, and in this respect at least, they are to be regarded as taking the place of the former bill of discovery.
    They are not, however, adapted to reach the disputed property of the judgment debtor; no contested title to property can be determined.
    The judgment creditor may maintain his action to cancel a fraudulent conveyance before execution.
    3. The general rule as to parties in chancery is, that all ought to be made parties who are interested in the controversy, in order that there may be an end to litigation.
    4. It is understood that the legislature intended by a cross-complaint, the equivalent of the cross-bill as known to equity practice, and under that practice it was competent to make a person not a party to the original bill, a party defendant, to the cross-bill.
    5. The doctrine of res adjudicate requires that the same . identical matter should have been in question.
    
      Appeal from District Court of Arapahoe County.
    
    
      Alexander_ P. Allen, filed his complaint in the District Court of Boulder County, against George Tritch and others, creditors of Gay S. Allen; the cause was brought by change of venue to Arapahoe county, and there tried. The complaint was to the effect following:
    It alleged that on May 7th, 1876, Alexander P. Allen became the owner of the undivided one-half of certain real estate in Boulder county, describing it; that he derived title from Gay S. Allen May 17, 1876, who was then owner of the fee; that plaintiff was possessed from date of conveyance to the filing of complaint; avers payment of consideration, without notice of any adverse claims; that Tritch, on the 6th day of October, 1876, caused a writ of attachment to issue from the District Court of Boulder County, for $7,712.68, and levied the same on said property, as the property of Gay S. Allen. Avers plea in abatement by Gay S. Allen in said cause, and judgment thereon in favor of Tritch; final judgment against Gay S: Allen in said cause for plaintiff, Tritch, for $8,307.00 damages and costs; issue of execution Nov. 5, 1877, and levy on said real estate and notice of sale; that Gay S. Allen never had any interest in said lots after May 17,1876; that said levy and its record is a cloud on title of plaintiff; that Tritch will proceed to sell if not restrained, and thereby further cloud title.
    Demand for injunction to restrain sale and to restrain further issue and levy of execution, and for cancellation of levy and record of same.
    An injunction was allowed.
    Defendants filed a demurrer to complaint, and moved to dissolve the injunction.
    The motion was denied, and defendants ruled to answer.
    Defendants answered substantially as'follows :
    “Deny on information and belief that plaintiff, May 17, 1876, or ever was seized in fee of said lots; deny plaintiff derived title from Gay S. Allen, and avers that the title was conveyed without any consideration and fraudulently; deny that plaintiff paid Gay S. Allen full value for said real estate without knowledge of any claim thereon, and deny that he paid any value for same; deny that Gay S. Allen has never had any claim to said real estate since May 17, 1876, but avers that he was at all times since seized in fee thereof; deny that plaintiff has been in possession of said property, and avers possession in Gay S. Allen since pretended sale, and has received the rents and profits; deny that Gay S. Alien has never had any claim or title since May 17,1876, and allegé that said sale and conveyance was fraudulently made to hinder and delay creditors, and that plaintiff had such notice, and that the sale was void.”
    Defendants also filed a counter-claim or cross-complaint, averring that on 6th of Oct., 1876, Triteh commenced action vs. Gay S. Allen by attachment, in Boulder District Court for $7,-712.68, caused it, to be levied on said lots as property of Gay S. Allen; that said Gay filed plea in abatement, which was found against him; that judgment followed verdict; that in said suit Ti’itch alleged that Gay S. Allen had sold and conveyed his property fraudulently, and to hinder and delay creditors, which was denied and found true by said verdict.
    That Oct. 30, 1877, final judgment on merits was rendered in favor of Triteh v. Gay S. Allen, for $8,307.00 and costs; that Nov. 5th, Triteh caused execution to issue to sheriff of Boulder County; that execution has been returned by sheriff unsatisfied; that at and for a long time before the levy, and at the date of the judgment and return of the execution, Gay S. Allen was owner and entitled to the equitable and beneficial interest in said real estate; that May 17, 1876, and before Gay was insolvent, that he made the deed to plaintiff to defraud and hinder and delay creditors; that the deed was without valuable consideration shown voluntary and fictitious; that plaintiff holds the title in secret trust for Gay—so to aid him in defrauding creditors, and that plaintiff knew all these facts at time deed was made; that at date of deed plaintiff did not pay Gay anything in money or property; that he did give Gay a mortgage purporting to secure 10 notes, payable in 1 to 10 years each, for $1,300; that Oct. 6, 1876, plaintiff had not paid any of said notes, but now fraudulently pretends that he has paid all, though notified of said levy; that July 21th, 1876, plaintiff made to Gay power of attorney, empowering him to sell and convey, or lease said property, or to exchange it for other property, and receive the purchase-money and rents, and giving him full power over property as before sale, and averring that the sale, deed, notes, mortgage and power were all made to defraud creditors, and especially Tritch; averring a legal lien by his levy against said property; that his judgment is due and unpaid; that Gay has no property subject to execution except that described above.
    Demands judgment canceling deed to plaintiff, power of attorney and mortgage, for an account for all property received from Gay; that h'e be restrained from interfering with saicL property, and that Tritch’s judgment be satisfied out of proceeds of said property.
    The plaintiff filed a special replication. Subsequently judgment was rendered in pursuance of the prayer of the cross-complaint, canceling the deed, mortgage and power of attorney, enjoining the plaintiff from conveying, incumbering, or interfering with the property, and dissolving the injunction, .which had been issued in behalf of plaintiff. To reverse that judgment, Alexander P. Allen prosecutes this appeal.
    Messrs. Browne & Putnam, for appellant.
    Messrs. Symes & Foot, for appellee.
   Elbert, C. J.

Under section 57 of the Code, the defendants were entitled to file their cross-complaint, asking affirmative relief.’ It is claimed, however, tha.t the cross-complaint here interposed is substantially a creditor’s bill, and that a judgment creditor’s remedy by creditor’s bill no longer exists, the framers of the Code having substituted therefor “ proceedings supplemental to execution.” Chap. 20. Hexter v. Clifford et al. Decided at the present term.

The supplemental proceedings provided by the Code appear to be chiefly directed to discovery, and in this respect at least they are to be regarded as taking the place of the former bill of discovery. They are not adapted, however, to reach the disputed property of the judgment debtor; no contested title to property can be determined. Gasper & Seymore v. Bennet, 12 How. Pr. 307, and cases cited. The cross-complaint here seeks the cancellation of a deed and mortgage made in fraud of creditors. The right of a judgment creditor to equitable relief in case of the fraudulent transfer of real estate by the judgment debtor is well settled. ITe may maintain his action to cancel the fraudulent conveyance before execution. Ward v. Enders, 29 Ill. 519; Loomis v. Tifft, 16 Barb. 541; Wilson v. Forsyth, 24 Barb. 105; Payne v. Sheldon, 63 Barb. 169.

No like or equivalent remedy can be had by proceedings supplemental to execution, and it exists unimpaired as before the adoption of the Code.

It is objected that Gay S. Allen was a necessary party to the cross-complaint. He was the judgment debtor whose conveyance to the complainant, Alexander P. Allen, the cross-complaint sought to set.aside as made with intent to hinder, delay and defraud his creditors; he was the mortgagee in the mortgage from the complainant, which it was also sought to cancel for the like reason.

Section 12 of the Code provides that “ any person may be made a defendant who has, or claims an interest in the controversy adverse to the plaintiff, or who is á necessary party to a complete determination or settlement of the question involved therein.” . '

This is substantially the old rule of equity pleading. Mr. Story states the general rule as to parties, as follows: “ All persons materially interested in the subject-matter ought to be made parties to the suit, either as plaintiffs or defendants, however numerous they may be, in order, not only that compíete justice may be done, but that multiplicity of suits may be prevented; or, as the rule was once stated by Lord Hardwicke, that all persons ought to be made parties before the court who are necessary to make the determination complete and to quiet the question. * * * It has also been suggested that it would be a more just exposition of the general rule to declare that all persons interested in the object of the suit ought to be made parties.” Story’s Eq. PI. Sec. 76, et seq.

In the case of Williams v. Baakhead, 19 Wal. 673, Bradley, J., says: “The general rule as to parties in chancery is, that all ought to be made parties who are interested in the controversy, in order that there may be an end of litigation. But there are qualifications of this rule arising out of public policy and the necessities of particular cases. The true distinction appears to be as follows :

“ First. Where a party will be directly affected by a decree, he is an indispensable party, unless the parties are too numerous to be brought before the court, when the case is subject to a special rule.

“ Second. Where a party is interested in the controversy, but will not be directly affected by the decree made in his absence, he is not an indispensable party, but he should be made a party if possible, and the court will not proceed to a decree without him, if he can be reached.

“ Third. Where he is not interested in the controversy between the immediate litigants, but has an interest in the subject-matter which may be conveniently settled by the suit, and thereby prevent further litigation, he may be a party or not, at the option of the complainant.”

Mr. Bliss, in his work on Code Pleading (Secs. 96, 97), cites these equity rules in connection with the provision of the Code above quoted, and says that “ the phrase £ may be made dependent ’ should be treated as imperative or directory, according to the nature of the interest.” He further says (Sec. 11): “Keeping in view the object of the action, understanding the interests and claims to be affected, remembering that the rights of no one can be concluded until he shall have had an opportunity to be heard in regard to them, and noting further, that courts will discourage many suits where one will suffice; that they will not give remedies piecemeal, but will require such persons to be brought into court as will enable them to make a full and complete settlement of the question or interests involved, the pleader in this regard will be seldom wrong.”

Considering the nature and object of the cross-complaint, Gay S. Allen was an indispensable party.

I do not regard the language of section 57, touching a cross-complaint as excluding parties not parties to the original bill. Such an interpretation would unreasonably limit the uses of the cross-complaint and multiply litigation. I take it that the legislature intended by a cross-complaint the equivalent of the cross-bill as known to equity practice, and under that practice it was competent to make a person not a party to the original bill, a party defendant to the cross-bill. Jones et al. v. Smith, 14 Ill. 232; Hurd v. Case, 32 Ill. 49.

In the first case cited, Catón, J., says: “Such a case may not often arise, making it necessary to bring in new parties to a cross-bill; but when it does arise, the well established and universally recognized rule of chancery pleading, requires that the new parties shall be brought in and allowed to controvert the new allegations, and resist a decree prejudicial to their interests. We have not looked for precedents for a practice so imperatively required by the reason of the law and the law itself.”

Independently of the equity rule, section 57 is to be read in connection with the provisions of section 12, already quoted, as also .section 16, which provides that “ the court may determine any controversy between parties before it when it can be done without prejudice to the rights of others, or by saving their rights; but when a complete determination of the controversy cannot be had without the presence of other parties, the court shall order them to be brought ip.”

Although the decree in this case saved the rights of Allen’ it was not a case where the rights could be saved, and any determination of the controversy be had. In answer to this it is urged that the issue as to the fraudulent character of the deed and mortgage, as between Triteh, the defendant, and Gay S. Allen, had antecedently been determined in the attachment suit, andthat these issues as toGay S. Allen wete res judioatep.

In the original attachment suit brought by Triteh against Gay S. Allen, the affidavit required by the statute alleged “ that the said Gay S. Allen had sold, conveyed, transferred and assigned his property and effects so as to hinder and delay his creditors.” Upon this, issue was joined by Allen by plea in abatement, and found by the jury for Triteh. This is alleged by the cross-complaint.

Without considering the effect of the fact that the issue here made was in a collateral proceeding having for its object solely the dissolution of the attachment, it is manifest that it did not necessarily involve the issues made by the cross-complaint-The record does not show that there was a definite and specific issue made upon the fraudulent character of the deed and mortgage here sought to be set aside. For aught that appears, the issue may have been found as alleged, upon other and entirely independent transactions of Allen. The doctrine of res judieates requires that the same identical matter should have been in question. Broom’s Leg. Max. 331.* The point is not well taken.

Although the objection of the non-joinder of Gay S. Allen, was not taken at the trial below, the rights of parties and the due administration of justice, require that we notice it sua suponte.

The decree of the court below is reversed and the cause remanded, with leave to amend the cross-complaint.

Reversed.

Mr. -Justice Beck did not sit in this case.