Court Opinion

ID: 6964929
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:52:06.019508+00
Date Added: 2024-06-11T16:08:34.329644
License: Public Domain

Mr. Justice Bailey delivered the opinion of the Court: It is contended by the appellant that it was error for the-Circuit Court to- order the consolidation of the creditor’s bill filed by the Chicago Trust and Savings Bank with the bill previously filed by Walker, and in hearing both bills and entering a decree thereon as consolidated cases. Assuming for-the moment that the appellant is in a position to raise that-question, we are unable to see that the order consolidating' ■said causes was in any respect erroneous. Both complainants were seeking to reach and subject to the satisfaction of their - respective judgments the equitable assets of their judgment debtor, and being thus in pursuit of the same fund, it was not only proper but highly expedient that their rights should be-litigated and determined in the same proceeding. If the bank had been content to file its bill and pursue its remedy in subordination to the prior lien acquired by Walker,, there would certainly have been no necessity for the consolidation of the two proceedings, as the remedy sought by one-would have been entirely consistent with that sought by the other, and they might therefore, without any impropriety, have been made the subjects of two independent decrees. It may be that, under such circumstances, a consolidation of the two bills, against the objection of any party to the litigation, would have been improper. . The bank, however, at the time it filed its bill, was not content with a second lien, but saw fit to contest with Walker his right to a first lien, by attacking the good faith of Walker’s-bill, and of the judgment which that bill was filed to collect. The issues thus raised brought the two proceedings into such relations with each other, as to make it difficult to prosecute them separately. The decree in each was made to depend upon the terms of the decree in the other, and neither suit could be finally and satisfactorily determined, so long as the-other remained undisposed of. There was no more impropriety in the litigation of these adverse rights in the same proceeding, than there is when any adverse claimant intervenes, and on being made a party, files a cross-bill, setting up and litigating the rights claimed by him in the same proceeding. It is no objection to the consolidation that the parties to the two bills were not identically the same. One bill was brought by Walker against Éllis and the other by the bank against Walker and Ellis. The subject matter of the two bills, however, were entirely germane to each other, the object of each being to obtain a first lien upon the same fund, for the satisfaction of its own judgment. A very different rule would doubtless apply to consolidation of suits at law, for these suits can not properly be consolidated unless the adverse parties in each are identical. But no such rule applies in chancery where the court has power to adapt and mould its relief to the particular circumstances of each party litigant however he maybe related to the subject matter of the litigation. But the appellant can not be heard in this court to question the propriety of the order of consolidation for three reasons. 1. because he was not a party to the litigation at the time said order wad entered; 2. because he made no objection to said order in the Circuit Court, and, 3. because said order is not shown to have been in any degree prejudicial to his rights. The order of consolidation was entered October 2, 1886, and no objection to it was then or has since been interposed by any person who was then a party to the litigation. Appellant was not made a party until January 24, 1887, when he was brought into the consolidated case by Walker’s supplemental bill. On the following day he filed his answer and cross-bill. He certainly had then no right, as a party, to insist upon having the litigation proceed in the form in which it was originally commenced, as he had no connection with it except in its consolidated form. But even if he had a right to object he did not do so. In his cross-bill he assailed the equities claimed by both Walker and the bank, but made no complaint that, by reason of the order of consolidation, those equities were being" liquidated in the same proceeding. From the filing of the cross-bill down to the hearing and decree, no objection was heard from him in relation to the form in which the litigation was being carried on, and it was only in the Appellate Court that the point seems first to have been made that the order of consolidation was erroneous. Under these circumstances the objection came too late. Nor is it shown that the appellant has been prejudiced by said order. The substantial objection interposed by him to the decree is that it gives the judgment in favor of the bank -.priority over his claim, and we are unable to see how such priority resulted in the least from the fact that the bills of Walker and the bank were litigated together. If the suit by the bank had been litigated alone and separately, all the facts affecting the right of the bank to have its judgment paid in preference to the claim of the appellant ahd the general creditors would have appeared in precisely the same way and have necessitated the same decree. The appellant’s next contention is that the decree, so far as it gives the bank a preference over any of the creditors of Ellis other than Walker, the complainant in the first creditor’s bill, is erroneous. This contention proceeds upon the theory that by the filing of that bill and the appointment of a receiver thereunder the entire estate of Ellis was taken into the ! custody of the law by a court whose fundamental maxim is that equality is equity, and therefore that all the creditors of Ellis, with the exception of Walker, were placed on an equal .footing, so that no one could subsequently obtain a preference .over the others by any legal proceedings outside of that case. 'The rule here contended for undoubtedly applies to cases where courts of equity take into their custody funds, and especially trust funds, with a view to their complete administration and distribution among the various parties entitled thereto. Such. was the case in Roseboom v. Whittaker, 132 Ill. 81. That was a bill by certain stockholders of a corporation praying to have certain judgments by confession against the corporation and in favor of certain of its officers set aside as fraudulent, and for the appointment of a receiver, and the distribution of the assets of the corporation, which was then insolvent, to the parties entitled thereto. We there held that after a court of equity had taken possession of the estate of such insolvent corporation, such estate was so far in the custody of the law, that no creditor could by subsequent proceedings by creditor’s bill, establish such a lien upon the assets of the corporation as to give him a" preference over other creditors. We there said: “After the aid of a court of equity has been invoked and that court has taken the assets of' the insolvent into its hands, its jurisdiction becomes necessarily exclusive, and it will proceed, in administering the insolvent estate, upon the maxim that equality is equity. After the jurisdiction has attached, ordinarily, no creditor can pursue a legal remedy, at least, in such way as to obtain for himself a preference.” Where, however, a court of equity takes jurisdiction of a fund, not for the purpose of complete administration and distribution to all parties having an interest therein, but only for the purpose of affording a specific remedy to a particular claimant, a different rule must prevail. A creditor’s bill, filed by a particular creditor for the purpose of enforcing the collection of his own judgment, and not on behalf of creditors generally, gives the court jurisdiction of the equitable assets of the judgment debtor for that particular purpose, and does not necessarily involve a complete and final distribution of said assets among all the creditors. In such case, therefore, the custody of the fund by the court would seem to present no obstacle in the way of another creditor’s obtaining a lien, subordinate to that of the bill already filed but superior to all other creditors, by exhausting his remedy» at law in filing a second creditor’s bill. We are not therefore disposed to hold that the. race of diligence between creditors which courts of equity will recognize and reward, must end when'the first judgment creditor files his creditor’s bill and secures the appointment of a receiver. The better rule and the one more in accordance with established principles of equity is, to give to each of complainants in several successive creditors’ bills against the same defendant, priority over all creditors whose debts have not been reduced to judgment, and priority among themselves in the order of the time of the filing of their respective bills. In New York where the statute in relation to creditors’ bills is substantially identical with ours, this has long been the settled rule. Storm v. Waddell, 2 Sanf. Ch. 494; Corning v. White, 2 Paige, 567; Burrell v. Leslie, 6 id. 445; Safford v. Douglas, 4 Edw. Ch. 538. We are of the opinion then that the bank, by filing its bill, obtained a lien on the fund in the hands of the receiver, subordinate to that already acquired by Walker, but one which gave the bank priority over the appellant and over all the other creditors of the same debtor. This conclusion, however, involves of course the supposition that the creditor’s bill filed by the bank was sustained by. the evidence adduced at the hearing. However sufficient the bill may be to entitle the complainant therein to relief, the decree based thereon, to be sustained, must b'e supported by the evidence. By its bill the bank alleged, as it was compelled to allege in order to obtain any footing in a court of equity, that it had exhausted its legal remedies by obtaining judgment, suing out execution, having the sheriff make proper efforts to collect the judgment by that means, and such efforts proving unavailing, by having him return the execution unsatisfied. This is required by the provisions of section 49, chapter 22, of the Bevised Statutes, and under that statute it has been the uniform doctrine of this court, that a creditor who seeks by his bill to reach equitable estate of his debtor, which can not be reached at law, must» first recover judgment at law and have execution returned unsatisfied, to give jurisdiction to - equity. Dormueil v. Ward, 108 Ill. 216; Heckling v. Wilson, 104 id. 54; Scripps v. King, 103 id. 469; Mann v. Ruby, 102 id. 348; G. D. & V. R. R. Co. v. Town of St. Anne, 101 id. 151; Moshier v. Meek, 80 id. 79; Dewey v. Eckert, 62 id. 218; Mugge v. Ewing, 54 id. 236; McConnel v. Dickson, 43 id. 99; Steere v. Hoagland, 39 id. 264; Bay v. Cook, 31 id. 336; Bigelow v. Andress, id. 322; Greenway v. Thomas, 14 id. 271; Ishmael v. Parker, 13 id. 324; McDowell v. Cochran, 11 id. 31; Miller v. Davidson, 3 Gilm. 518. The allegations in the bill by the bank in relation to the issuing and return of execution are not admitted by the appellant in the pleadings, and on examination of the certificate of evidence, which purports expressly to set forth all the evidence adduced at the hearing, we fail to find any reference whatever to the issuance or return of execution. There is absolutely no evidence in the record tending to sustain the allegations of the bill in that behalf. This necessary proof being . absent, the decree can not be sustained. The defect of proof here pointed out is not remedied by the ■ consolidation of this bill with the bill filed by Walker. The rights and equities of the two complainants, notwithstanding the consolidation are several, and the title of each complainant to relief must depend upon the allegations of his own bill . and the proofs adduced in support of such allegations. There being a total failure by the bank in the respect above pointed out, to sustain the material allegations of its bill, the decree -of the Circuit Court and the judgment of the Appellate Court as to it will be reversed and the cause will be remanded to the Circuit Court for further proceedings not inconsistent with this opinion, leave being given to the parties to introduce further evidence if they shall be so advised. Judgment reversed.