Case Name: M'Kim and Others, Representatives of Davies v. Alexander and James Fulton
Court: Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1806-04
Citations: 6 Call 106
Docket Number: 
Parties: *M’Kim and Others, Representatives of Davies v. Alexander and James Fulton.
Judges: 
Reporter: Virginia Reports
Volume: 10
Pages: 1097–1099

Head Matter:
*M’Kim and Others, Representatives of Davies v. Alexander and James Fulton.
[April, 1806.]
Foreign Attachment in Chancery — Endorsement on Subpoena. - The endorsement, by the clerk of the court of chancery, that the suit is brought to attach the effects of the absent defendant, is sufficient to restrain the application of them to any other use. until the plaintiffs’ demand is satisfied.
This case is an appeal from the court of chancery. In the bill filed by the appellants, it is stated that a partnership in trade formerly subsisted between John Davies and Alexander Fulton, which lasted about three years. That in 1798 a dissolution of the partnership was agreed on; that Alexander Fulton in consideration that John Davies would relinquish to him all his interest in the concern, agreed to pay said Davies $36,150, and also to pay all the debts of what kind soever due from the firm, and to indemnify and keep harmless the said John Davies from said debts. That John Davies died on the 4th of November, 1798, and bequeathed his property to his widow and two infant children, who are plaintiffs in the suit. That at the time of the dissolution of the said company of Davies & Fulton, they were possessed of a capital stock, and had debts owing to them of very great value. That the said Alexander Fulton entered into partnership with his brother James, who brought no capital into the firm; and that the said Alexander, instead of applying the debts and effects of Davies & Fulton to discharge the debts due from that concern, applied them to support the trade and credit of Alexander and James Fulton. That there are debts due and unpaid from Davies & Fulton amounting to .£3,000 sterling. That the object of Alexander Fulton is to subject the estate of Davies to the payment of said debts in case he should prove insolvent. The bill then prays that sundry debts due from persons in Virginia, named in the said bill, may be attached so as to be applied to exonerate the plaintiffs from the debts due from *Davies & Fulton and for general relief. There was an endorsement on the subpoena that the object of it was to attach the effects of the defendants.
The answer of Alexander and James Fulton, admits the existence and dissolution of the firm of Davies & Fulton: and Alexander Fulton answering for himself, says, that the business of the concern in Baltimore was chiefly conducted by Davies, as the said Alexander was generally in Europe, attending to the business of the company, purchasing goods, forming connections, &c. That he was applied to and strongly urged by Davies to purchase his interest in the concern, and that Davies exhibited to him a balance sheet of the affairs of the concern, the correctness of which from the defendant’s want of acquaintance with the affairs of the concern, their unsettled state, and the urgency of the occasion, he had no opportunity to ascertain. That the said Davies represented most of the debts due to the concern to be good; and this defendant having confidence in him, agreed to the terms of the dissolution stated in the bill. That the defendant has since discovered that the representations and statement of the said Davies were fraudulently made, to deceive this defendant and lo exact from him more than in justice he ought to have paid. That Davies represented the firm to be worth upwards of $56,000, after paying all its debts, and deducting bad debts. That the defendant has discovered that Davies omitted in his statement upwards of $17,000, due'from Davies & Fulton, which he knew they would have to pay, and the greater part of which have since been paid by A. and J. Fulton. That the business of Alexander and James Fulton was chiefly supported by credit they obtained with merchants in England; and, that so far from the said firm being supported with the effects of Davies & Fulton, all the stock, effects and debts of said firm, as far as the defendants have been able to collect the said debts, together with a large proportion of the profits of Alexander and James Fulton, have been applied to discharge the debts due from Davies & Fulton. That ^Alexander and James Fulton have' actually advanced and paid for Davies & Fulton upwards of $50,000. That the whole amount of debts due from Davies & Fulton does not exceed $14,000; and there is still due, to the said concern of Da-vies & Fulton, upwards of $60,000; which Alexander Fulton has in vain endeavoured to collect. That owing to the large advances made for Davies & Fulton, and losses in trade, the defendants, in order to make a just distribution of their property, have conveyed, by deed on the 8th November, 1804, all their property to Luke Tiernan and Alexander M’Donald, for the benefit of their creditors: and that the defendants were proceeding to collect those debts under a power of attorney from the trustees of their creditors, when they were stopped by the attachments.
The supplemental answer of A. and J. Fulton states, that part of the debts attached -as the property of Alexander and James Fulton really belonged to William M’Creery of Baltimore; particularly part of the debt attached as due from William King, and the debt due from John and William Allen; the same being debts assigned as an indemnity by James Neilson to William M’Creery, who was his endorser at the bank of Baltimore: and that the plaintiffs in addition to the - debts attached in this state, which amount to at least $45,000, have levied attachments in Tennessee to the amount of at least $11,000.
There are severál depositions as to the manner in which the affairs of Davies & Fulton were conducted, and the circumstances attending the ' dissolution of that firm. Sundry evidence and documents to prove part of the debts attached to be the property of William M’Creery. A receipt from the representatives of Davies for the $36,150; which, according to the terms of dissolution, Alexander Fulton was to advance to Davies. The indenture of dissolution between Fulton & Davies. Several accounts, and a deposition to support them.
An abstract of those accounts making it appear that, after crediting Davies & Fulton with all their cash on hand, at *the dissolution, merchandize and debts, deducting from the debts such
as appear to be insolvent, and sundry losses on bills of exchange; and debiting them with the payments made by Alexander and James Fulton of the debts due from Davies & Fulton; Alexander and James Fulton are actually in advance for Davies & Fulton $58,329 12 cts. .
On the 4th of October, 1805, on motion of the defendants, the court of chancery, without deciding the question, whether the endorsements on the subpoenas in this cause amount to attachments, is of opinion that, if there be any attachments in the cause, they ought to be discharged, and discharged them accordingly. The plaintiffs appealed to the court of appeals.
Wickham, for the appellants.
The plaintiffs had a right to attach ; for when Davies transferred his interest to Fulton, the latter became the real debtor; and as the creditors might have attached, the security has a right to stand in their place, Eppes v. Randolph, 2 Call, 188; Tinsley v. Anderson, 3 Call, 329. It is not material, whether the endorsement on the writ be conformable to the strict letter of the act of assembly: It is sufficient that it has been sanctified, by long practice; especially as it is a means of preventing mischief; for otherwise the debtor will remove .the effects. If it be said, that the court should make the order, the answer is, that it is but form, and never has been attended to in practice. There is a receiver appointed bj' consent; and that impounds the.effects; for it was a substitution for the order of attachment. The effects are liable to the plaintiff’s demand; for they came from Davies & Fulton, and may be pursued in equity. It is not true, that they have all been exhausted in paying the debts of Davies & Fulton. There is. no evidence of it; for if the books themselves were here, they would not be evidence; and the statement, said to be taken from them, is weaker still. The Fultons have merely transferred the debts of Davies & Fulton to their own books; and we have a right to enquire into the fact. 2 Ch. Rep. 595. is,Young is interested as endorser for the Fultons at bank; and although he says he is indemnified, that does not remove the objection; for the question is, whether the deed o.f indemnity be not void. It is void. That it would be so under the bankrupt laws of England, is very clear; and it ought to be so here upon common law principles; for every trader ought to observe equality among his creditors; but these gentlemen have given an absolute preference. Besides, none are to have any benefit, but those who sign within eight months; which is monstrous injustice, as those in Europe, or other distant regions could know nothing of.it. The deed does not, at law, assign more than the specialty debts; and a court of equity will not, in such a case, carry it further than the law does. The deed has not been recorded in Virginia; and, therefore, it is void against creditors. But it is void as to the plaintiffs for another reason, namely, that it was executed after the date of the attachment; and therefore the donees in it are lite pendente purchasers. That it was so executedis clear; for, although the Fultons might have acknowledged it on the day it bears date, yet it does not appear to have been delivered until some time afterwards; or that the creditors had even then assented to it. Consequently, it was the mere private act of the Fultons, who always considered themselves as having full power over it. The proof of assent must come from the appellees; for we are not bound to prove the negative. At all events, the attachment ought not to have been discharged Until a reasonable time for obtaining testimony had been allowed to the plaintiffs.
Nicholas, attorney general, Hay and Randolph, contra.
It is absolutely necessary, according to the act of assembly, that the court itself should make the order for attachment; and the endorsement by the clerk, at the instance of the plaintiff, is not sufficient; for the court has not power to dispense with the requisition of the law. The plaintiff, in all such cases, must be a creditor at the time, or he cannot attach; *for the legislature did not intend that it should be used as a preventive remedy against contingent cases. The plaintiff ought to be an inhabitant of Virginia; and it is questionable whether if the creditor and debtor be both nonresidents, one of them can come here and attach the effects of the other. The partnership debts ought to be first paid, before the partnership effects can be applied to the discharge of demands against the individual members of the firm. Coop. Bank. Law, 39S, 398. But, in the face of this equitable rule, the plaintiffs contend that the debts due to the Fultons should be applied to the payment of those due from Davies & Fulton. If the Fultons were liable, it would only be to the extent of the effects received from Davies & Fulton; and therefore when they shew them to have been all applied, they are discharged. The deed of trust is valid; for it was given for a valuable consideration, and was, in fact, executed at the time it bears date. It is not true that a deed preferring particular creditors is void; for such deeds are made every day, and never have been questioned before. 8 T. Rep. 520. It will appear upon a fair settlement, that Davies was indebted to the Fultons; and that the dissolution of the partnership between Davies and Fulton, was effected by fraud, to the great injury of the Fultons. There was no necessity that the deed should be recorded in Virginia; for deeds of personal property may be recorded in the place where the grantor resides. 2 H. Black. 404; 4 T. Rep. 407. The Fultons had no control over the deed after it was acknowledged; and the creditors having accepted it, the right was complete, and the title fixed ab initio, by relation. But, as no proof with respect to the execution of the deed was called for in the court of chancery, none can be required here.
Wickham, in reply.
The benefit of this kind of process is not confined to actual creditors at the time it emanates; for the fifth section of the act of assembly extends it to all who have équitable claims. Foreigners as well as inhabitants *have a right to attach ; and the law has always been so understood, and practised on. There is no imputation upon the conduct of Davies; for so far from making out the balance sheet himself, he was unable to do it: And the Fultons had long been in possession of the books.
Cur. adv. vult.
Foreign Attachment in Chancery — Endorsement on Subpoena. -In foreign attachments in chancery, the subpoena endorsed by the clerk, according to the practice of the country, will be sufficient notice to the home defendants, not to part with the debts or effects in their hands without leave of the court, and is a substitute lor the formal order required by the words of the statute ; a subpoona so endorsed, operates from the date of its service, to inhibit any alienation by the absent debtor, and the lien acquired by tile service of the subpoena cannot be defeated by any act of the debtor, except in the manner prescribed by the statute. In support of this proposition, see the principal case cited in Erskine v. Staley. 12 Leigh 424 ; Smith v. Jenny, 4 Hen. & M. 441. See Williamson v. Bowie. 6 Munf. 176.
Same — Sassse - Previous Affidavit of Nonresidence.— It is not necessary that the plaintiff in a foreign attachment shall file with the clerk an affidavit of the nonresidence of his debtor before the process is issued, in order to constitute it. with the endorsement in the nature of an attachment, a. lien when served. Moore v. Holt. 10 Gratt. 284 , 287. In this case, .J i;i)GU j.niu delivering the opinion of the court said: "It has never been the practice, so lar as 1 have been a.bie to learn, to file an affidavit of non-residence with the clerk, in order to authorise him to issue the subpoena and to make such an endorsement in the nature of an attachment thereon as the Plaintiff’s counsel may direct. According to fhe long established usage of the stale, such an endorsement without a previous affidavit, serves as a notice to the home defendant not to part with the effects of the debtor in his hands without leave of the court, and when served upon the home defendant, creates a lien in favor of the creditor, of which neither the absent debtor nor the garnishee, by any a.ct of theirs, nor any third person, by any attachment or other process of law subsequently levied, could deprive him. This practice has been repeatedly recognized as regular, both by the chancery courts and the court of appeals. Smith v. Jenny, 4 Hen. & Munf. 410 ; McKim v. Fulton, 6 Call 106 ; Williamson v. Bowie, 6 Munf. 176 ; Erskine v. Staley, 12 Leigh 406.” The principal case is cited in Chapman v. Railroad, 26 W. Va. 314 ; Moore v. Holt, 10 Gratt. 293. See monographic note on ‘‘Attachments’’ appended to Lancaster v. Wilson, 27 Gratt. 624.

Opinion:
LYONS, President.
The court is of opinion, that the decree is to be reversed ; and the following is to be the entry:
"This day came the parties by their « counsel, and the court having maturely considered the transcript of the record of the order aforesaid, and the arguments of counsel, (without deciding what ought to be the final decree in this cause), is of opinion, that the said order is erroneous in this, that the bill should have been dismissed as to all the debtors of James C. Neil-son and William M'Creerj, in the second answer of the defendants, Alexander and James Fulton, mentioned, the said debts having been assigned to the said Alexander and James Fulton, for collection only, and not liable to be attached for their debts: And, in not directing bond and security for fourteen thousand dollars, with condition to account faithfully for the money which they may receive from their debtors, so that fourteen thousand dollars, if so much be collected by them, shall be forthcoming to satisfy such decree as may be pronounced in this cause, before the other attachments were discharged. Therefore it is decreed and ordered, that the said order be reversed and annulled, and- that the appellees pay to the appellants their costs by them expended in the prosecution of their appeal aforesaid here. And it is ordered, that the said cause be remanded to the said superior court of chancery, to be proceeded in according to the opinion herein before mentioned, and for other proceedings to be had therein."