Case ID: mass_24/html/0551-01.html
Source: Caselaw Access Project
Author: {"author": "Parker C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Caleb Adams et al. versus James W. Paige and Elias S. Grant.
    An action on the case for a conspiracy lies in favor of a creditor against his debtor and a third person, who have procured the property of the debtor to be attached upon a suit for a fictitious debt, and applied to the payment of the judgment obtained in the action, in order to prevent creditors from obtaining payment out of the property, the creditor having subsequently attached the same goods, and not being able to procure payment of his debt in consequence of the prior attachment, and the debtor being insolvent.
    C & G, who were partners, being in failing circumstances, G made a note in the partnership name for 1500 dollars to P, it being agreed between G and P that the stock of C & G should be attached on the note, and the proceeds of the attachment applied ratably to the payment of the debts of G and of C & G. The attachment was accordingly made, and A & Co., creditors of C & G, subsequently on the same day attached the same stock in a suit for their debt. The object of the suit of P was explained at a meeting of some of the creditors of G and of C & G on the same day, one of the firm of A & Co. being present. P afterwards obtained judgment on the note, and seasonably levied his execution on the attached property, which was not sufficient to satisfy his judgment, and distributed a part of die proceeds ratably among creditors of G and of C & G, and tendered A & Co. a like percentage of their debt, which they refused to take. A & Co. afterward obtained judgment in their action and took out execution and delivered it to the officer who made the attachment, but not until after thirty days from the time when their judgment was obtained. The officer returned it unsatisfied. In an action brought by A & Co. against G and P for a conspiracy to prevent A & Co. from obtaining payment of their debt out of the property of C & G, who still remained insolvent — Held, that the action lay : —
    
      That the proceedings in the suit on the note by P against C & G were a fraud on all creditors of C & G who did not assent to them : —
    That in order to maintain the action, it was not necessary to prove any moral-fraud on the part of G and P : —
    That the action was not defeated by A & Co’s not delivering their execution to the officer within thirty days, as he had nothing in his hands on which to levy : —-
    That A & Co. might maintain this action, whether the debt to them from C & G was payable or not at the time of their bringing their action against C & G, on which the attachment was made : —
    That the rights given to subsequent attaching creditors by St» 1823, c. 142, 2 of as- • suming the defence of actions against the debtor, do not defeat this action at common law, the remedy given by the statute being merely cumulative.
    This was an action on the case for a conspiracy to defeat the plaintiffs of obtaining a debt due to them from the firm of Carr & Grant.
    On the trial, before Parker C. J., the following facts appeared in evidence. Joseph S. Carr and the defendant Grant, were partners in business in Boston, and indebted to the plaintiffs in the sum of 425 dollars 56 cents. On March 7, 1827, their stock in trade was attached at the suit of Latimer R. Shaw, a creditor of the partnership, for a debt of 202 dollars 33 cents ; and afterwards on the same day by James W. Paige & Co., creditors of Grant alone, for a debt of 342 dollars 94 cents, and by James Read & Co., creditors of Grant alone, for a debt of 128 dollars 82 cents. Before these attachments were made, Shaw, in company with Grant, called on Paige, and informed him that Carr & Grant were in a failing condition ; and thereupon it was proposed, as Shaw had verbally guaranteed the debt of Paige & Co. and recommended Grant to Read & Co., that Carr & Grant’s stock should be attached first by Shaw, then by Paige & Co. and next by Read & Co.; and it was then proposed that Grant should make a note for 1500 dollars in the name of Carr & Grant, payable on demand to Paige, and that on this note a suit should be brought and Carr & Grant’s stock attached, and that the proceeds of this attachment should be applied, to obtain a discharge of Carr & Grant from their creditors who had not attached, by a ratable • distribution thereof. The proposition was at first general, that the note should be made to some one of the creditors. Paige at first declined taking the note to himself, but afterwards as-seated. The note was accordingly made in the form proposed, and a writ founded upon it was procured by Paige on the same day. The writs were all delivered at the same time to the officer, by Shaw, who directed the order of attachment. The foregoing facts were at the time unknown to the creditors of Grant and of Carr & Grant, but were made known to them on the afternoon of the same day, as hereafter stated.
    
      2 See Revised Stat. c 90, § 83, 84.
    
      The plaintiffs on the same day brought a suit for their debt against Carr & Grant, and caused the same stock to be duly attached ; their attachment being made after those before mentioned.
    Carr & Grant’s stock was sold for the net sum of 1389 dollars 44 cents.
    All the actions above mentioned were duly entered at the next April term of the Common Pleas in Suffolk, and judgment then rendered in all of them, except the plaintiffs’, and execution issued thereon. The plaintiffs’ action was continued to the July term, when judgment was rendered for their debt and costs. The executions of Shaw, Paige & Co., Read & Co., and Paige, were, within thirty days from the time of judgment, delivered to the officer who made the attachments, and Shaw’s execution was satisfied. The executions of Paige & Co. and Read & Co. were, by direction of Paige to the officer, next paid and satisfied in full, and the residue of the proceeds, amounting to 666 dollars 77 cents, was paid to Paige, in part satisfaction of his execution, and the balance of it he released and discharged. The proceeds of the property had been applied as above stated, before judgment was rendered in the plaintiffs’ suit.
    The plaintiffs took out execution on their judgment on July 11th, and delivered it on September 15th to the same officer, who returned that he had applied the proceeds of the attached property in the manner above stated, and that he could find no property of Carr & Grant, or either of them, and so returned the execution wholly unsatisfied. Carr & Grant are wholly insolvent.
    The defendants proved, that after all the attachments had been made, in the afternoon of the same day a meeting was held of part of the creditors of Grant and of Carr & Grant, at
    
      
      March 24th, 1828.
    which one of the plaintiffs was present, and James Read ex plained the purpose of Paige’s attachment, and proposed that a committee consisting of the largest creditors should be raised to investigate the matter. Charles Adams, one of the plaintiffs, who were among the largest creditors, refused to be on the committee. No vote was taken on the proposition, and no committee was raised, though Read thought that the arrangement as explained by him was assented to by the creditors. It was also proved that the plaintiffs’ clerk was employed with others a day or two in taking an account of stock.
    The defendants also proved, (the plaintiffs objecting to the evidence, which objection was overruled,) that Paige had distributed part of the sum of 666 dollars 77 cents received by him, among the creditors of Grant and of Carr & Grant, that the distribution was at the rate of 25 per cent, and that the same per centage was offered to and refused by the plaintiffs
    The defendants also offered to prove, that the debt of the plaintiffs was not due at the time when their attachment was made. The plaintiffs objected, but the judge suffered the evidence to be gone into, thinking it best to ascertain the fact.
    The defendants further proved, that Grant had some time previous done business individually, and that the stock of Grant formed part of the stock of Carr & Grant, and at the time their partnership commenced, the whole ; and it did not appear that any stock was brought into the concern by Carr individually.
    The plaintiffs then proved, that at the meeting of creditors a paper was drawn up for them to sign, the purport of which was, to raise a committee to investigate the concerns of the debtors, and that one of the plaintiffs, who was present, refused to sign "t They also proved that the .note of 1500 dollars was made without Carr’s knowledge, Grant being unwilling to communicate his doings to Carr, in whom he had no confidence.
    The jury did not agree.
    The defendants were to be defaulted and damages to be assessed by the Court, a new trial to be granted, or the plaintiffs to be nonsuited, according to the opinion of the Court.
    
      Shaw and Bartlett, for the plaintiffs.
    The note made to Paige was void, as a fraud on the creditors of Carr & Grant, who did not assent to it. Marston et al. v. Coburn, 17 Mass. R. 454. The design of the defendants in making the note and the attachment on it, was to prevent Carr & Grant’s creditors from attaching. This design was unlawful, and the suit and attachment were an abuse of the forms of law, to carry this unlawful design into effect. The plaintiffs never assented to the proceedings ; of which Paige must have been fully aware from their entering their action. Borden v. Sumner, 4 Pick. 265.
    The note was also void, on account of its having been made by Grant alone, without the assent of his partner, and being intended in part for the benefit of Grant’s separate creditors. Chazournes v. Edwards, 3 Pick. 5.
    This action is the proper remedy for the plaintiffs. Cole v. Fisher, 11 Mass. R. 137 ; Com. Dig. Action upon the Case for a Deceipt, A 4 ; Com. Dig. Action upon the Case for Conspiracy, A ; Somner v. Wilt, 4 Serg. & Rawle, 19. The plaintiffs’ having another remedy by defending the original action under the statute, does not deprive them of this action. Whitcomb v. Williams, 4 Pick. 230. The plaintiffs have an undoubted right to impeach the judgment of Paige, as they were not parties to it. Wellington v. Gale, 14 Mass. R. 483 ; Cushing v. Gore, 15 Mass. R. 74.
    Whether the. debt from Carr & Grant to the plaintiffs was due or not, when the attachment was made, cannot be questioned in this action. The objection ought to have been made in the original suit.
    The plaintiffs’ not putting their execution into the hands oí the officer within thirty days after their judgment, is of no consequence. After the officer had paid over all the proceeds of the attached property on the prior judgments, the lien of the plaintiffs was gone, and it would have been an idle ceremony to have handed him their execution.
    
      Hubbard and Sumner, for the defendants,
    contended, that the plaintiffs assented to the note which was made to Paige. If they did not, Adams’s silence at the meeting of creditors showed fraud and duplicity. The plaintiffs, if they ever had any right of action, have lost it by not delivering their execution to the officer within thirty days from the rendition of judgment. Knap v. Sprague, 9 Mass. R. 258 ; Bridge v. Wy
      
      man, 14 Mass. R. 190. In order to support this action of trespass on the case for a conspiracy, a fraudulent intention on • the part of the defendants must be proved. But it is admitted on the other side, that in this case there was no actual fraud. The intention was fair and honest, to distribute the proceeds of Carr & Grant’s stock ratably among their creditors, and the transaction became valid after it received the assent of the creditors. Hempstead v. Starr, 3 Day, 340. Grant had a right to act for the partnership, in assigning the partnership effects. Harrison v. Sterry, 5 Cranch, 289 ; Parker v. Pistor, 3 Bos. & Pul. 288. The plaintiffs have mistaken their remedy. Their proper course, if they wished to defeat the attachment on the note, was, by notifying the officer not to pay over to Paige, but to satisfy their execution first. Pierce v. Jackson, 6 Mass. R. 242.
    
      March 16th, 1829.
   Parker C. J.

delivered the opinion of the Court. This action proceeds on the ground, that the defendants fraudulently agreed together to institute and prosecute to a judgment a suit against the debtors of the plaintiffs and cause their property to be attached and finally sold on execution, to the exclusion of an attachment made on the same goods by the plaintiffs to secure their debt, which attachment was superseded and supplanted by the proceedings of the defendants.

The complaint is, that the attachment made by Paige to secure the note given to him was fraudulent, there being nothing due to him, — no consideration for the note, it being fabricated by Grant and Paige for the sole purpose of delaying and defeating such creditors as might intend to attach the property, in order to compel all but those who had previously attached, to take a pro raid share of the proceeds, and discharge Grant from their demands. This undoubtedly was the intent and purpose for which the note for 1500 dollars was made; whether it would have been effectual if the plaintiffs had pursued the right course to try its validity, it is not necessary to say. We have only to decide whether it was fraudulent, so as to charge the defendants in this action of tort, founded on an alleged conspiracy to do an unlawful act.

It is clear that but for this attachment the plaintiffs’ debt would have been secured ; the debt of Shaw, on which the first attai hment was made, would alone have stood in the way ; for the debts of Paige & Co. and Read & Co., being against Grant alone, must have given place to that of the plaintiffs against the firm, the funds raised by the sale of the goods being copartnership funds.

The effect of this arrangement, therefore, was to pay out of the joint fund the whole demands of Paige & Co. and Read & Co. against Grant, and to oblige the creditors of the firm to accept only a dividend of the residue. This was an unlawful agreement, and directly in violation of the rights of the copartnership creditors. The plaintiffs however might have resisted this, had they taken the proper measures for that purpose ; they might, under a late statute, have defended the action brought by Paige on the note for 1500 dollars. Showing, as might have been done, that this note was given at the suggestion of Shaw, without the knowledge or consent of any of the copartnership creditors for whose use it was made, that no debt was discharged by it, and no express assent of those creditors proved, the note would have been declared void, the action would have failed, and the attachment upon it removed out of the plaintiffs’ way. The plaintiffs might also have obtained precedence of the attachments for the private debts of Grant alone, by giving notice to the officer who held the proceeds, of the priority of their claim upon the copartnership funds.

Having neglected this remedy, have they a right to seek relief in this action ?

By the scheme adopted, their attachment, otherwise good, has failed. They have been intercepted by a surreptitious iudgment, and the funds have been placed in the hands of Paige, who has no right to hold them. The form given to the demand, and the action, were calculated to deceive the plaintiffs, and they may have found it difficult, or perhaps have been unable, to prove the facts on trial, so as to defeat the action. There was an actual wrong done, and a certain injurious consequence. It was an attempt to lock up the effects from attachment, and to compel creditors to a compromise, after misapplying a considerable portion of the funds to the payment of Paige’s own debt and that of Read &Co., diverting them from their legal course, which was to pay partnership debts ; foi part of the agreement was, that the proceeds should be so mar-shaded. Now, although it were lawful for Grant, on expectation of failure, to prefer one class of creditors to another, it was not lawful for him, otherwise than by actual payment, to appropriate the partnership funds by assignment, without the knowledge and consent of his partner, to pay his private debts. Nor was the transaction actually adopted an effectual assignment, for the creditors were not parties to it, nor were they bound by any act to release their demands in consequence. It seems to have been an attempt to make an assignment with preferences to the creditors of Grant, against the will of Carr.

We consider the remedy provided by the statute, to be founded upon supposed collusion between the parties to the record, to obtain and suffer judgment for the purpose of making an unlawful disposition of the property of the debtor to the prejudice of creditors. This is a mode of concealing the debt- or’s effects, so that they may be drawn from the reach of creditors who might wish to avail themselves of their legal right to attach or levy. It is certainly true, that a failing debtor may dispose of his effects in payment or security of certain of his creditors in preference to others. This is justifiable under our law, and under the English law in cases where the statutes of bankruptcy do not apply, as appears by the very strong cases here cited. Holbird v. Anderson, 5 T. R. 235 ; Estwick v. Caillaud, ibid. 424 ; Pickstock v. Lyster, 3 Maule & Selw. 37 ; Tolput v. Wells, 1 Maule & Selw. 408. But it is not true, that after a lien has been created by attachment, the debtor can, with the aid of another creditor or any person not a creditor, lawfully make any arrangement with the aid of legal proceedings, to intercept or defeat such lien. The attachment of the plaintiffs, being on the partnership effects, created a lien in their favor subject only to prior attachment by partnership creditors. The effect and purpose of the suit upon the note for 1500 dollars, given without consideration, and in the partnership name without the knowledge of one of the partners, were to defeat all other attachments than those which the parties who suggested and aided in this transaction had caused to be made : and although this large attachment preceded in point of time the attachment of the plaintiffs, yet the prosecution of the scheme, entering the action, suffering judgment and levying execution, were all unlawful acts, tending to the wrong and injury of the plaintiffs and to the defeating of their attachment, which but for this contrivance would have been available. The effect, as well as the object of the whole, was to defeat the plaintiffs’ attachment, and compel them and other creditors to come into a compromise or lose the whole of their debts. If such a course can be sanctioned, a' new mode of voluntary bankruptcy will be established more mischievous than those which already exist.

Now we think that such proceedings lay the foundation for an action at common law against the parties to a judicial process thus abused. There is an unlawful act and a direct injury. This remedy at common law is not taken away by the statute which provides another, either ■ expressly or by implication. The new remedy is merely cumulative. Nor is it a defence, that the defendants’ execution might have been superseded by notice to the officer and a demand upon him to levy the plaintiffs’ execution in preference. The officer might refuse, not knowing which had the legal preference, and although an action might lie against him, upon such refusal, yet that does not purge the wrong of the defendants, and it is better that they who caused the wrong should be held answerable, than that the officer, who may be innocently though officially liable, should be made to suffer.

It is not necessary, to maintain an action of the case, that there should be any moral turpitude in the act complained of. It lies whenever a damage is occasioned by a wrong done. It is founded upon the mere justice and conscience of the case, and is in the nature of a bill in equity. Bird v. Randall, 3 Burr. 1353. “ The action of trespass on the case is a universal remedy given for all personal wrongs and injuries without force ; so called because the plaintiff’s whole case or cause of complaint is set forth at length in the original writ.” 3 Bl. Comm. 122. {< Where any special consequential damage arises, which could not be foreseen and provided for in the o'rdinary course of justice, the party injured is allowed to bring a special action on his own case by a writ formed according to the peculiar circumstances of his own particular grievance. For wherever the common law gives a right or prohibits an injury, it also gives a remedy by action; and therefore, wherever a new injury is done, a new method of remedy must be pursued.” 3 Bl. Com. 123 ; Millar v. Taylor, 4 Burr. 2345 ; Webb's Case, 8 Co. 96.

This, to be sure, is familiar law ; but it was objected that this action would not lie, without proving a real fraudulent intent partaking of moral turpitude, and this principally because of the strong terms made use of in the declaration. We see no necessity of proving, nor do we impute to the defendants, any wicked or corrupt design to cheat or defraud the plaintiffs. It is enough that they associated together and aided each other to do an unlawful act prejudicial to the plaintiffs, so that in regard to the law of debtor and creditor it is fraudulent. The expletives in the declaration may all be struck uut, and yet the action remain, for the facts stated and proved sustain it.

In regard to the objection, that the plaintiffs’ debt was not due, or rather not payable, when his action against Carr & Grant was commenced, we think it immaterial in ‘this action. That was an affair between the plaintiffs and defendants in that action ; or if the judgment was obtained by collusion between them to the prejudice of subsequent attachments, the law is open to those who have suffered. The defendants in this action were not injured by it.

Judgment for the plaintiffs. 
      
      
        See Livermore v. Herschell, 3 Pick. (2nd ed.) 38, note 3, and cases cited.
     
      See Livermore v. Herschell, 3 Pick. (2nd ed.) 38, note 3; Allen v. Addington, 7 Wendell, 9 ; Moore v. Tracy, 7 Wendell, 229 ; Addington v. Allen, 11 Wendell, 374; Lamb v. Stone, 11 Pick. 535.