Case ID: ohio-cc_9/html/0245-01.html
Source: Caselaw Access Project
Author: {"author": "Smith, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(First Circuit — Hamilton Co., O., Circuit Court —
    Jan. Term, 1894.)
    Befóse Smith, Swing and Cox, J.T.
    Israel H. Pendery et al. v. Albert C. Allen et al.
    1. Where a plaintiff commenced an action to set aside a conveyance as fraudulent against the creditors of the vendor, and publishes, in conformity with section 6344, Revised Statutes, a notice to the other creditors, of such suit, and some of such creditors came in by cross-petition setting up their claims, and gave the security required by the section, and others of said creditors did not, and on the trial of the case in the circuit court, to which it had been appealed, leave was given the plaintiff to file an amended petition, setting up that the grantee by reason of the facts alleged became the trustee for all of the creditors of. the grantor, (no notice of which was ever published), and which contention was finally sustained ; does this give the plaintiff and those joining with him and giving bond, preference in the distribution of the fund produced. Quere: We incline to the opinion that it does not,' but it is not necessary notv to decide the question.
    2. The Supreme Court, by the final judgment rendered in the case, having held that such transaction made the grantee a trustee of the property mortgaged for the equal benefit of all the creditors, of the grantor in proportion to the amount of their respective claims, distribution must be made among them in accordance therewith.
    Error to the Court of Common Pleas of Hamilton County.
   Smith, J.

The court of common pleas having rendered a judgment that the funds in the hands of the sheriff and of Lowe Emerson, trustee, the proceeds of the property formerly belonging to Edward P. Allen, should be distributed and paid to all of the creditors of said Allen in proportion to the amount of their respective claims against him, the plaintiffs in error, who claim to have a preferred and prior claim thereto, file this proceeding in error to reverse such judgment. The facts in the case, briefly stated, are these: On February 1, 1886, Pendery filed his petition in the court of common pleas against Albert C. Allen, Edward P. Allen, Lowe Emerson, and others, alleging that on July 16, 1885, said Edward P. Allen, without an adequate consideration, mortgaged to said Emerson certain real estate, and that, at the time, said Emerson held a chattel mortgage on a large amount of personal property, amply suffiqient to secure his entire claim against A. C. and E. P. Allen. Wherefore it was prayed that said fraudulent conveyance and mortgage to Emerson be set aside, and the property sold to pay a debt of the Allens to the plaintiff, which is set up.

On the second of February, 1886, Pendery published a notice in conformity with section 6344, Revised Statutes, of the pendency and object of said suit. Some of the other creditors of Allen came in by cross-petition, and gave the security required by the section — others did not — an answer was filed by Emerson April 14, 1886, denying all the allegations of the petition as to the fraud and want of consideration of the mortgages.

At the trial of the cáse, March 12,1889, in the circuit court, the plaintiff was allowed to file an amended petition, in which it was alleged that the mortgage mentioned in the original petition was made by Emerson when Edward P. and Albert C. Allen were insolvent, and in contemplation of insolvency, and for the purpose of securing a debt of E. P. Allen to Rone, on which Emerson was surety, and a debt of Allen to the Merchants’ National Bank, on which Emerson was not surety, and that Emerson thereby became a trustee for all of the creditors of said E. P. Allen. This court then held that such was not the case, and a petition in error was filed in the Supreme Court which resulted in a reversal of our judgment, and there being a finding of facts by the circuit court, the Supreme Court proceeded to render the judgment that this court should have rendered, and declared Emerson to be a trustee of the property covered by the mortgage executed to him by Allen, for the equal benefit of all the creditors of said E. P. Allen in proportion to the amount of their respective claims ; and that said trust be administered in accordance with the provisions of the chapter of the Revised Statutes regulating assignments by insolvent debtors; and it was “further ordered and adjudged that the plaintiff in that court recover of the defendants such part of his costs as wore created in establishing his claim as to the character of said mortgage, to be taxed.”

We think that it is exceedingly questionable whether the notice of pendency and object of the original petition and what was done under it, gave to the plaintiff and those who came in as cross-petitioners, and gave the bond or security mentioned in this section, 6344, the right to be first paid from the funds realized in the ease. The plaintiff failed in his original claim, which was that the mortgage given by Allen to Emerson was fraudulent in fact. At the trial he obtained leave to amend, setting up an entirely different ground for relief. No notice of this was ever given to creditors. If it had been the ground of the original proceeding, who can say that many of the creditors who refused to come in on the claim as first made, would not have done so ?

But, however this may be, we are of the opinion that the final judgment of the Supreme Court, which must govern, has adjudged that the property in question was held by Emerson for the equal benefit of all of the creditors of said Edward P. Allen, in proportion to the amount of their respective claims. It is true that the judgment also provided that the trust was to be administered in accordance with the provisions of the chapter of the Revised Statutes regulating assignments by insolvent debtors. But this, we think, points out only the mode in which it is to be done, and does not alter or modify the express statement that the property is held for the equal benefit of all the creditors of Allen. The whole record must bepresumed to have been before the Supreme Court* showing the notice as given, the amendment of the petition, and all that was done; and if it had been the purpose and intent of the court to hold that such notice and what was done under it, gave priority to the plaintiff and part only of the creditors, it would seem that wholly different language would have been used.

We think, then, that there was no eri’or in the judgment of the court of common pleas distributing the fund, and it will be affirmed, with costs.