Court Opinion

ID: 6519639
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:29:53.983295+00
Date Added: 2024-06-11T15:55:06.915953
License: Public Domain

MoCLELLAN, ‘C. J.
The bill in this case is filed by Joseph L. Hall and Louis B. Farley, the assignees of a judgment recovered for the Farley National Bank, against, the Alabama Terminal and Improvement Company — hereinafter ' called the Terminal 'Company. Within a year after the rendition of this judgment, and before the filing of the bill, execution issued on it and was duly returned “no property.” The bill was filed March 17, 1894. As originally exhibited and as prosecuted until after the evidence had been taken; the sole *490purpose of the bill was to collect from certain persons who are made: respondents the amounts which they had! severally subscribed to the capital stock of the Terminal Company, the defendant in judgment, which the bill alleged they respectively claimed to have been paid!, but which it further alleged they had not paid, and to apply the sums so. collected to. the satisfaction' pro tanto of said judgment; and the original prayer for relief, which has never been amended, nor attempted to be amended, is “that the said defend ants,-severally and-respectively, be required to pay for the satisfaction of ■ said judgment 'in’ favor of the said Hall, receiver, (of the Parley National Bank) against the said Alabama Terminal and Improvement 'Company-their-said subscription to the said capital stock of the said company • and their said' several promises in writing. And for such other and further relief as to your Honor may seem meet and the facts of'the cause require.” In respect of the claims of payment-asserted • by the several respondents it is averred in the bill, by-way of anticipating the defenses which it was supposed would he relied upon, that Wool-folk, who- was president of the Terminal Company, pretending that- als such ■ president he was. thereunto duly authorized! but not having in! fact any -such- authority proposed to the respondents severally that if they would- pay to the company them subscription notes the said company would thereupon -purchase their shares of stock at par and pay for the same in some instances, in money and ini other instances- in bonds of the Alabama Midland! Railway Co. at the market value thereof, eighty-five cents on the dollar of their face value, that, accepting and acting upon this proposition- the respondent subscribers paid their subscription notes, and thereupon sold their stock to- the Terminal Company1 and some of them took such bonds in payment therefor, and others took notes executed, by Woolf oik for and in the name of the company secured by the stock which they had thus sold, left with them for that purpose, and also secured! in some- instances, by bonds of said Midland Company, which bonds were assets of the Terminal Company. That-the point-w-e are upon- may be inore fully pre*491sented we quote the general averment of the bill with reference to all those, parties, and. the .special averment as to one of each, of the classes indicated above. The general averment .constitutes paragraph 20 of the bill, which is as follows: “Your orators further state that the defendants Charles Henderson, Jere O. -Henderson, LaFayette Henderson as surviving partner- of the late firm and partnership of L. and AY. J. Henderson, Fox Henderson and James M. Henderson, partners under the firm name and style of J. M. Henderson & Co., Gustavus Hendricks, John S. Carroll, and said John S. Carroll and Thomas E. Murphree, partners in trade under .the firm name of Carroll, Murphree & Co.,, severally and respectively, claim-that they have paid .their said subscriptions to the capital stock of the Alabama Terminal and Improvement Company, and -that -the promises in writing that they severally made as. aforesaid for the payment thereof, have been cancelled- and surrendered to them respectively. But your-orators aver that- there was not in fact any payment of the said subscriptions, or of said promises in writing, or of either- of them. Audi if said promises1 in writing, or either of them, have been cancelled and surrendered to the.said defendants, or either1 of them, s-ucli cancellation and surrender was unauthorized and illegal, and said- ‘subscriptions aud promises in writing remain dlue and unpaid.” And in paragraph 23, the. - foregoing averment is repeated -as to -the respondents- Brantley & Son. ■ Such-are the general averments as to the payments-claimed to have been jpade. The special averments- as-, to such of them as received Midland bonds for their stock are as follows : “21. Your ora torsi further aver on information and belief that the said defendant AVoolfolk, .pretending that as president o-f the Alabama. Terminal and Improvement Company, he was authorized! thereunto, hut no-t having such authority, proposed fio purchase of the said defendants!, L. & AY J. Henderson, James M.- Henderson & Co., Gustavus Hendricks, John S. Carroll, and Carroll, Murphree & Coi, severally and.-respectively, for the said company, their several and- -respective shares of stock in said .company, giving them therefor the .bonds of the *492Alabama Midland- Railway Co., a corporation organized and existing under the laws of the State of Alabama, known as the Alabama Midland Extension Bonds, at eighty-five per cent of the- par value of said bonds. These bonds Avere the property and assets of the said Alabama Terminal and Improvement Company, and that fact was Avell known to said parties respectively and) severally. And it was further proposed by said Woolfolk that said parties should pay him the amount of their said seAreral subscriptions and promises in Avriting and he Avould cancel and surrender' to them their said promises in Avriting, and. deliver to them the said! Alabama Midland Extension bonds. The said parties severally and respectively accepted the said proposition of said Woolfolk and gave, him sums of money equal to the amounts of their said several subscriptions and promises in writing, and he delivered! to them marked “can-, celled’ their several promises in Avriting and bonds of said Alabama Midland Railway Company,- known as the Alabama Midland Extension Bonds, for an amount of 85 cents on the dollar of the par value thereof, equal to the amount of money received from them. And this is the transaction in-and by which the said! parties severally and respectively claim to’ have paid their subscriptions'and promises in Avriting.” As to one of the class of persons Avhose stock was purchased by Woolfolk for money, the following is the further averment of paragraph 21: “Orators further aver on information and belief that the said defendlant Woolfolk, pretending that as president of the Alabama Terminal and Improvement Company he was thereunto authorized, but not having such authority, proposed to' purchase of the said1 defendant Charles Henderson, for the said company, his shares of stock therein at and for the sum of lien thousand dollars (the par value of said shares) to be paid for out 'of moneys belonging to said Alabama Terminal and Improvement Company, and it was further proposed by the said Woolfolk that the said Charles Henderson should pay him the amount of such subscription and promise in writing and he'would cancel and surrender to him his said promise in writing and would deliver to him the *493note of the said.' Alabama Terminal and Improvement Company for the sum of ten thousand dollars payable three months after its date secured by a deposit of ten thousand dollars or other large sum of said Alabama Midland Hallway bonds, the property and assets of the saidl Alabama Terminal and Improvement Company. The said Henderson accepted said proposition of said Woolfolk and gave him the sumí of money equal to the amount of his subscription and promise in writing, and the said Woolfolk delivered to> him marked ‘cancelled’ his said promise in Avriting, and also- the note of the Alabama Terminal and Improvement Company payable as. above stated and secured by a deposit of the said extension bonds; and this is the transaction in and by Avhich the said defendant Charles Henderson claims to have paid his said subscription and promise in Avriting. Orators are not informed as to- whether the said note has been paid, hull they aver that if the same has not been paid the said Henderson has in his possession the said bonds delivered to him as aforesaid and that saidl bonds are the property and assets of the said Alabama Terminal and Improvement Company; and orators aver that said transaction Avith the said Charles Henderson on the part of said Woolfolk was. a mere device on. their part to shield the said Henderson from payment of his subscription for stock, and was and is fraudulent -as to orators.” Like averments are made in. respect of the claim of payment on the part of Jere C. Henderson, except that! it is alleged- in the alternative that he was to receive and did receive -either money or1 bonds for his stock. And in respect of Brantley & Son the averment. is that upon and in acceptance of the aforementioned unauthorized proposition of Woolfolk, they .paid their subscription and sold their stock to him for the company, taking the company’s notes for the par value thereof, and that these notes were afterwards paid by Woolfolk with funds of the company.
It is noAArhere nor in any way averred in the hill that the Terminal Coanpany ever authorized Woolfolk to make these settlements, or any of them, with said subscribers to its stock, or that it ever ratified his action *494therein; but to the contrary such authorization is expressly negatived, as we have seen, by the averments- 'of the bill, and no fact is therein stated1 upon which could be rested a conclusion that the company itself was or is in any way bound - by either of thos-e transactions. Especially is- this true when the rale requiring the averments of the bill to' be construed on demurrer most strongly against the complainants is applied in the premises to the exclusion of every po-s-sibility of a construction whereby the averments of want of authority might be held to refer to the Terminal Company itself and not to* Woolfolk. But even without this rule the bill leaves no- room for the conclusion that the claimed payments are attacked because the transactions in which they Avere made Aver© ultra* vires the corporation itself. The passing of the money for these subscription notes to Woolfolk is conceived by the complainants to be- ineffectual as. payments thereof to the corporation because Woolfolk as president of the company had no authority to* receive such money as payments under the conditions which obtained and AAdiich he assumed to carry out. and did carry out as president: and in the name of the company. It is not even averred that the company ever received the money which Avas paid. Not having authorized these transactions, nor ratified them, nor been beneficiary of their issues so as to preclude itself, the Terminal Company Avas- in no degree hindered or estopped at the time this bill Avas; filed tot treat Wool-folk’s unauthorized action as a nullity, to repudiate the transactions as payments to it, and to institute suits at law in its OAvn name and behoof upon the subscription notes Avhich had been illegally and inefficaciously can-celled, and surrendered by Woolfolk to the makers. The Terminal Company having this- right at that time, it, of course, necessarily follows that tire complainant's had a plain, adequate and complete remedy at law for subjecting the amounts d!ue from the subscribers named to the satisfaction of their judgment! by the process of garnishment authorized by section 2972 of-the Code of 1886, then of force, and that their bill of complaint was subject to' the objections taken, in. this connection by the *495demurrers of the several respondents to whom we have referred. And even if complainants did not ha,a e this remedy at la.AV. it would by no means follow that they could come into chancery. To the contrary, on the facts a¡v< ared, as we construe them, but for the statute providing the proceeding by garnishment they would: be entirely remediless in the premises.
Against this conclusion counsel for appellees Urge several considerations which we will examine and discuss. Chief among these contentions is this: That1 the chancery court has and all along has had jurisdiction to enforce at the suit of a creditor of a corporation the payment of subscriptions to its capital stock, and that having this original and inherent jurisdiction it was not and is not ousted of its exercise by statutes which confer like power on courts of law by process of garnishment; and, as they insist, it is well settledi, that “the enlargement of jurisdiction of courts of law, or the recognition aud enforcement by them of equitable rights and interest, even when conferred in terms by statute, does not, in the absence of statutory prohibition, take away or impair the original jurisdiction of the chancery court-.” But it is not well or at all settled, and it is not true in point of legal fact, that the chancery court ever had or has original jurisdiction at the suit of a corporation creditor to, coerce the payment by stockholders of their subscriptions to its capital. Such debts to a corporation stand upon the same footing as indebtedness generally. In.the absence of statutes on the subject, no court, whether of law or equity, has any power1 to reach and "subject this class of a debtor’s property to the satisfaction of demands against him. At the common law choses in action of the debtor were not leviable, and the. process of garnishment was unknown. There was under that system an indirect method of reaching such assets by the attachment of the debtor-defendant’s person and his incarceration until the judgment against him was satisfied, the theory being that this process would coerce him into a realization upon choses in action belonging to him and to the application of the funds arising from their collection to- the judgment under *496■which he is attached and imprisoned. But that proceeding has no place in our law; and if a creditor relies upon any other process as a means of applying the choses in action of his debtor to the payment of his claim he must be able1 to point out some statutory provision giving the process or remedy he invoices, and he must pursue such remedy either according to the terms of the statute and in the form prescribed! by it, or he must show that the legal right conferred upon him by the statute has been so clogged and impeded of enforcement in the statutory forum, the court of law in garnishment proceedings, as that he is entitled upon some recognized principle of equity jurisdiction in aid of legal. rights to call to his assistance the powers of the chancery court. And when chancery is thus invoiced it is not upon any theory that such court has or had original jurisdiction in the preanises, or could have been resorted to before the statute. giving the right at law, but upon the idea that, by reason, of fraud and the like the legal remedy to enforce the right conferred by the statute has become inadequate thereto, some ground of equity interposition has arisen. Of course, if a chose in action, belonging to the debtor has become impressed with a trust in favor of the creditor, chancery in the absence of statute has jurisdiction to subject it to the debt; and it is upon that principle, as we shall see, that the present bill is really sought to be maintained, but, as we shall further se:e, that doctrine does not obtain in this case. Recurring to' the main proposition, that chancery had no original jurisdiction to' subject choses in action of a debtor to the claims of his creditor, we refer to and collate some of the authorities1 sustaining it. In Donovan v. Finn, 1 Hopkins, Ch. 59, s. c. 14 Am. Dec. 531, there is a most able and elaborate examination and consideration of the authorities and discussion of the question, leading up to and sustaining the proposition embodied in the head note that “property not subject to execution at law, such as choses in action, cannot, be reached in equity, unless the case is otherwise of equitable, jurisdiction, as where the property was fraudu- ■ lently converted into choses in action to defraud cred*497itors.” The whole oí the very learned; opinion in that caso might be embodied here with advantage, but we content ourselves with some of the most pertinent parts of it. In stating the case before the court and the question for decision, the opinion proceeds thus: “The cause thus considered presents these facts: A creditor has obtained judgment, against liis debtor in a court of law, an execution has issued against the property of the debtor, and the sheriff has returned that none is. found. The debtor has property, consisting in a. debt, due to him, and the. creditor by judgment now asks this, court to compel the debtor of his debtor to make payment- to him in satisfaction of the judgment. Has this court jurisdiction in such a case; or power to give relief? To apply existing law's to new cases is- the duty of courts of justice, and it is not an encroachment; and the application of established principles of equity to new cases in this court, is not an extension of its jurisdiction. But this court has no povrer to assume any jurisdiction really new, and extending beyond the limits of its established authority. It. is apparent that this case does not. belong to any general head of equitable jurisdiction, such as frauds, trusts, accidents, mistakes, accounts, or the specific performance of contracts, Ilere is neither fraud, nor trust, nor accident, nor any other ingredient of equitable jurisdiction. It, is simply the case of turn debtors and two creditors, of whom one is both debtor and creditor ; a. case in which the rights and remedies of the respective parties have hitherto been enforced exclusively in the courts of law.” And after discussing English and American cases hearing on the point, Chancellor Sanford proceeds: “According to our distribution of jurisdictions, suits for the recovery of ordinary debts are appropriated to the courts, of common law; and the proceedings for enforcing the judgments rendered in such suits are alike allotted to1 those courts. In any such, case where the subject of the suit is exclusively of legal cognizance, a court of equity has no jurisdiction to enforce the judgment by its, own. methods of proceeding, or to- give a better .remedy than the law gives. If the remedies of the law are imperfect, *498equity, as lias been often said in the English chancery, has noi jurisdiction to give execution in aid of the in-, firmity of the law. When any fact giving equitable jurisdiction intervenes in, the transactions between creditor and debtor, such a fact becomes a foundation of relief in this court; but in any ordinary case, free from fraud or injustice-, the execution of the judgment and the methods of compelling satisfaction, are confined to the courts of law. When a creditor comes to this court for relief, he must come, not merely .to obtain judgment or satisfaction of a judgment, but he must present facts which foam a case of equitable jurisdiction. He must show that the debtor has made some fraudulent disposition of his property, or that the case stands, infected with some trust, collusion or injustice, against which it is the province of this court 'to give relief, in such cases this court has jurisdiction, not for the purpose of giving a species of execution which the courts of law do not afford, hut for the purpose of giving relief in the particular cases allotted to- its jurisdiction; and when the cause, by reason of such facts, is properély here, the court proceeds, upon all the, circumstances of the case, to give final and equitable relief. * * * When it is said that a debtor may now convert all his effects into stocks, credits, or other tilings in actions, and may in his own name, or in the name of a friend; hold his property in these forms, in defiance of his creditors, our laws arc reproached by a vague, assertion, which is partly true, and is to a. much greater extent erroneous. All conveyances made to defraud creditors are void both in law and equity. When the fraud appears to a court of law, the conveyance is there adjudged void. When such a fraud is presented: to- this court, it is of equitable jurisdiction; and the property of the debtor, fraudulently transferred, is subject- to the satisfaction of his dlehts, in favor of a creditor complaining of the fraud.
* * * In all such cases, this, court vacates the fraud, sets aside the conveyance in trust, and, acting both upon the debtor and his trustee, it does complete justice to the creditor. Thus, the jurisdiction of this court reaches, and reaches effectually, those cases of *499fraudulent conveyances and assignments in trust, which form the great and most vexatious impediment in the course of justice between creditor and debtor. * * * But this court has no power to cause stocks, credits and right's of action, held by a debtor, without fraud, to he sold or converted intO'.mjoney, to> he transferred to the creditor, or to be applied to the payment of debts. The English courts of equity have never exercised any power like Ihat now proposed, over the rights of a debtor; and it is certain that on such power has ever been exercised by any court in this State. But. is said that a failure1 of justice must take place, if such a jurisdiction should not be exercised, by some of our courts of justice. How, it is asked, is all that class of personal effects, consisting in stocks, credits and property in action, in various forms, a, class of property, which, in this community, is very great, to he subjected to the payment of debts? That such property should be made subject to the payment of the debts of its owner is not denied. That such property cannot, he seized or sold by the sheriff upon an execution, is the existing law of the State. That in the present state of our laws, a debtor sometimes holds and enjoys this species of property, while his debts remain unpaid, may he true. These reasons may show that the existing laws are imperfect; and that some convenient method of subjecting this, class of property to the payment of debts would he a desirable amendment; but they do not show that this court or any other tribunal has power to make such an amendent. The argument so strongly urged, that justice requires some new remedy in these cases, is an argument to’ be addressed to the legislature, and not to the courts of either law or equity. Our ancient law was not destitute of remedy in such cases. That law was intended and! adapted to compel the application of a,ll the property of the debtor to the discharge of judgments against him;'and for that purpose different kinds of executions were provided. By executions against his property in. possession, that species of effects was subjected directly to the discharge of a judgment; hut his things in action were reached only by an execution ■ against his person, upon which *500he was imprisoned until he should'! satisfy the judgment The execution against the person was a method of coercion intended to bring forth for the satisfaction of the judgment, all such effects of the debtor as could not be subjected to the other execution; and it was a powerful remedy. That remedy has -been gradually relaxed by the legislature until it has nearly lost- its efficacy; and while this great change respecting executions against the person has been made, the rules concerning executions' against property have remained without alteration. Thus the imprisonment of the debtor, as a remedy, has been, in effect, taken away; no effectual method of execution against his property in action has been substituted, and this change in our laws- lias been made by the legislature itself. * * * Our law of relief against absconding and absent debtors, is a law of attachment. This special statute, containing a system of provisions in detail, is alone a sufficient proof that the proceeding by attachment can be authorized only by the legislature' and that such a process of power, belongs not to- any court of this- State, in virtue of its general jurisdiction. The attachment given by this statute embraces all debts due to the debtor, is for the benefit of all his creditors; and is authorized only against absent, absconding, and concealed debtors. The legislature has not given this remedy against debtors residing or found within the State, and subject- to the full operation of its general laws. The attachment now proposed is against a, single debtor of the judg-' ment-dehtor, for the benefit of the judgment-creditor; and all the parties’ reside in the. State. Thus it is- proposed that this- court shall institute a new species of attachment against debtors within the State, a new method of justice in favor of creditors, differing’ greatly from any attachment or any execution hitherto- known, and which, however it may be recommended, has not yet been adopted by our lav-’. In several of the States of the Union there are laws of attachment, by which a creditor may sequester or attach, for his exclusive benefit, a debt due to his debtor; and it is said that tírese laws are useful and efficacious, in promoting the *501ends of justice. But in all those States, these attachments have been introduced and -established by special acts of their legislatures; this proceeding being unknown equally to the common law and! to the equity of England. But while- the attachment of the debt due to a debtor for the benefit of the creditor instituting the-suit, is a proceeding unknown to- the general system of English law and equity, it is fully established in the-city qf London, under the name of the custom of foreign attachment, and it there takes place in a local court of special jurisdiction. Thus stand both the general laAV and the exceptions to it, in England; and equity has never altered but has always followed the general law. The court is now, for the first time, asked to do- what, in England, is done, only in London, by a special custom of that ci%, what in other States of this Union is done only under the provisions of special statutes, and what, in this State, has never yet been done or authorized by any 1 aw. * * ' * Under the constitution, the course of common law, the tidal by jury, and the system of equity, must all he maintained in their respective spheres of operation. If the existing difficulty in these cases ai-ises from the rule of law, that stocks, credit, and .rights of action cannot he sold by the sheriff, is that rule salutary, since the remedy by imprisonment of the debtor has been so greatly relaxed? If some new proceeding by way of attachment or execution against the rights in action of a, debtor is requisite, on what courts or officers shall such a power be conferred, and in what, cases, and under what regulations shall it be exercised? But I forbear to pursue these inquiries and reflections; and these are suggested! merely to- show the magnitude of the innovation now proposed. Should this court take cognizance of these cases, they would form a chapter of jurisdiction far more amp-le than any one which, it now possesses, and the assumption would he a¡ holder stride of power than ivas ever made by the English chancery in any single age. The maxim which finches us that a judge should amplify his own jurisdiction, has no- place, in our1 institutions. The utility of this court, so> important in- the general structure *502of our system, will be best consulted and preserved by preserving its jurisdiction within the limits which are now established. My views of this question tempánate in the following results: 1. The cases of authority in which relief has been given to judgment-creditors were, in themselves, cases of equitable jurisdiction, involving fraud or trust, or seeking to subject to the satisfaction of a judgment property in itself liable to execution' by removing a conveyance which operated as a fraudulent impediment to- the execution. 2. This court has no power to compel the debtor of a judgment-debtor to make payment to the judgment-creditor1, in satisfaction of the judgment.”
This caise of Donovan v. Finn was decided in 1832. In 1880 it was published in 14 Am: Dec. pp. 531 et seq., with the following note, by Mr. Freeman: “It, is doubtful, where there has been no legislation upon the subject, whether in the absence- of fraud, or any other'well known ground for supporting the 'exercise of its jurisdiction, equity will assist a creditor to reach those assets of his debtor which under no circumstances could have been subject to- execution at law. This- question has been most debated with reference to- stocks and dioses in action. Notwithstanding a- contrary opinion expressed by some very eminent American jurists, we' judge that the weight of the authorities is in support of the view that equity-has no power in ordinary cases to compel the appropriation of dioses in action to- the payment of their owner’s debts.- — Watkins v. Dorsett, 1 Bland. Ch. 533; Stewart v. English, 6 Ind. 176; Wallace v. Lawyer, 46 Ind. 501; McFerran v. Jones, 2 Litt. 219; Dundas v. Dutens, 1 Ves. Jr. 196; Nantes v. Carrock, 9 Ves. 188; Rider v. Kidder, 10 Ves. 368; Grogan v. Cook, 2 Ball & B. 233.’’
Another able and exhaustive opinion on this subject was delivered1 by the Supreme Court of Rhode Island (1884) in the case of Greene v. Keene; (14 R. I. 38, s. c. 51 Am. Rep. 400), in which the authorities are examined, the case of Donovan v. Finn, supra, is discussed and approved, and the- conclusion is reached that “in the absence of fraud, trust or other ground of equi*503table relief, or special statutory jurisdiction, judgment creditors cannot reach dioses in action of their debtors by equity proceedings.” The same doctrine is announced in tlie carefully considered case of Shaw v. Aveline, 5 Ind. 380; and in Dayle v. Sleeper, 1 Dana. (Ky.) 531, 534, in McFerran, v. Jones, 2 Litt. (Ky.) 219, and. doubtless in many other cases; and its soundness is so obvious upon elementary principles that it 'would seem, lo require no citation of adjudged cases to demonstrate and sustain it.
As under our statutes dioses- in action belonging to a debtor a.re leviable in a sense by process of garnishment, they may be reached in equity, as we have intimated and as follows from the principles declared above., when they have been fraudulently disposed of -by the debtor in judgment to hinder, delay or defraud his creditors, because such fraud gives equity jurisdiction whether-there he a remedy at law or not by which the chose in action could be reached in the hands of the transferee. But as a transaction in form a transfer or disposition of dioses in action and even made in the name of the defendant in judgment, hut which is wholly unauthorized! by him and hen.ce of no- binding efficacy upon him, can neither involve fraud on his part nor prevent him to proceed to reduce the chose» in action to possession disregarding the transfer, there is in such case no ground of equitable interference — there is no fraud imputable to the defendant in judgment — nor is there any obstacle between the judgment creditor and the subjection of the dioses in action to_ liis judgment by process of garnisment at law: He not only has no remedy in chancery, nor -would have in the absence of statute1, but lie has an adequate, plain and complete remedy at law. Assuming that the present bill shows that Woolfolk ini fact cancelled the notes of Henderson and others as paid and surrendered them to the makers without consideration, the case supposed is the case presented by this bill, with a distinction without a difference to 'be presently considered. And, Woolfolk having no -authority fromi the Terminal 'Company to d!o what he. did, his act is not binding on the company, it *504can now sue ithe makers of these notes just as if no such action had been taken by Woolf oik, and complainants had their remedy by garnishment. And, not only so, but as the judgment debtor, the'Terminial Company, has been guilty of no fraud, has.not disposed of its chases in action, has done nothing in fact, complainants have no standing in equity, and would) have none even- if there was no statute giving them a remedy by garnishment.
The c.ases cited and collated above were cases of individual parties, of natural' persons' whose dioses in action were sought toi be subjected in equity to the satisfaction of judgments- against them.
'Tire party here whose dioses in action a,re sought to be subjected to complainants’ judgment against it is a oorporatiomi, and the claim in its favor to be readied are debts which the other respondents, the Hendersons and others, owe the corporation as subscription for or to its capital stock, evidenced by promises under seal to pay stipulated sums severally. And this is the distinction adverted to next above, and which at the time the present bill was filed wais supposed, indeed) had been held to be a material one. It was at that time supposed and had been in effect held that the capital stock of a corporation was a trust fund for creditors, and it is fair to assume that this bill was filed anld prosecuted on that theory. Of course, if the theory is sound, if the capital stock of a. corporation is a trust fund, subscriptions to the stock, dtehts due the fund have a, trust character impressed upon them also, and courts of equity, whether there be a remedy at law or not, may under their general jurisdiction to administer trust estates- enforce the payment of such debts to the cestui que trust} the creditors of the corporation. This doctrine considered in and of itself has- in times past received the recognition of this court in dicta at least, and, as part of the broader proposition that the property of a corporation under certain conditions constitutes a trust fund for its creditors, it was at one time supported by express decisions of this court. It is- the established doctrine now in many jurisdictions. But not so with us. To- the contrary, the proposition as a whole and in every part has been re*505pudiated by this cc-urt, and it lias been directly ruled, adjudged! and settled: that the assets of a corporation— anal its capital and subscriptions due to its capital are in part its assets — under no circumstances constitute a trust fund for its creditors, but that so far as creditor's are concerned all its property inclu ling its chose» in action of all kinds, is held and owned by it just as property — dioses in action or wins not — is held and owned by an individual debtor, subject to no trust resting on the artificial character of the debtor entity. — O’Bear Jewelry Co. v. Volfer, 106 Ala. 205, s. c. 28 L. R. A. 707, 54 Am. St. Rep. 31; Corey v. Wadsworth, 118 Ala. 488.
There being then no such fraud averred in the- bill as gives equity jurisdiction, and no- element of trust in favor of the complainants being presented, the case made is not one of which the chancery court ever had jurisdiction, not one of which it, would now have jurisdiction if there were no. remedy at law, and, there being a remedy at la,w, the bill cannot be maintained on the doctrine that original chancery jurisdiction of a subject matter, or to administer a remedy is mot taken away or impaired by the statutory provision of a, legal remedy in the premises.
We are of course considering the question of the equity vcl non of this bill with reference- to our statutory law as it existed at the time the bill was filed. The act of February 18, 1895, (Acts, 1894-5, p. 881) now embodied in p-art in section 823 and, for the rest, in section! 1282 of the Code, was not then of force, this bill having been filed March 17, 1894. That act, therefore, can have no application, here, and would not have even without its express provision, that it should not apply to any suits pending at the timie of its enactment. The bill in the case of Hall & Henderson, Trustees, v. Fox Henderson was filed under that act o-n June 23, 1896; and so far as any point! decided in that case on the first appeal, (114 Ala. 601), or upon fihe second appeal, recently -dletermined, boars an analogy to the point under consideration, the decisions of it on those appeals favorable to- the equity of that bill must he rested upon that act
*506It is comtenjded further that even if the present bill did not have equity when iti wasi filed, or has, no equity now abstractedly speaking, equity has injected into it, soi to say, or the respondents have estopped themselves to- now deny its equity by having on motion in the court below procured an order putting the complainants to an election whether they would further prosecute this suit or certain garnishment proceedings then pending a.t their suit against the respondents in a court of law and compelling them to dismiss this bill curt those proceedings, which order complainants complied with by dismissing the garnishment proceedings. We do not think there is any merit in this position. It would seem to be necessary to say only, in the first place, that jurisdiction of the subject matter cannot be conferred upon any court by estoppel or even by affirmative agreement. But if that could be done, tire exercise by a respondent, of his right to comped the complainant, to dismiss one of two proceedings against him on the same cause of action cannot operate to, cut him off from, any defense he would otherwise have against the suit the complainants elect to prosecute. The right is given the respondent solely as a means of protecting himself from double prosecution, and he is entitled to that protection wholly irrespective of and apart from the character of his defenses against either suit and without prejudice to them,1. The night would he of little’, if any, value in any case, and a, resort to it in many cases at least would be fatal to the x^espondeut’s, ultimate rights, if he is to be held by its exercise to insure the jurisdiction of the court in which the complainant elects to proceed, or to forego any other defense. He canot be so held. He insures nothing. He waives no defense. The complainant elects at his peril. His: choice is free and unfettered; and he must take the consequences of making it ill-advised and unwisely.
The fact that complainants a,re assignees of the judgment to the satisfaction of which they seek to subject unpaid stock subscriptions does not prevent their suing at law or give them a standing in equity. — Farmers & Merchants Bank et al. v. Hall, 120 Ala. 14, s. c. 122 *507Ala. 668. It is of no consequence tbait! they would have to use the name of the assignor in the legal action. They hald the absolute right to do this; and though resorting ’t!o this form, they would be in contemplation of law the sole parties to the record. — 'Code, § 29.
The bill is not multifarious or objectionable for misjoinder of parties ¡respondent. The rights complainants attempt to assert are the same against .each one of the respondents against whom appropriate relief is sought and the obligation, if any, of each of them is to pay complainants as creditors, of the Terminal Company their several subscriptions to the capital stock of the corporation. In such case in avoidance of a multiplicity of suits the bill, bad it been otherwise unobjectionable, was properly filed against them all notwithstanding their interests and obligations as among themselves were entirely independent and distinct. — Allen et al. v. Montgomery Railroad Co., 11 Ala. 437.
The chancellor seems to have entertained some 'doubt as to whether the cause was submitted on the demurrers which raise the objections-to the bill we have been d:s-cussing. We think it is clear that the demurrers were embraced in the submission. It is true that, they are not mentioned in the note of testimony of several of the respondents, hut it was not necessary or even proper that they should have been, there set down; and besides they are mentioned in Hie note of testimony of one or more, of the respondents1. But there was a written submission of the cause to a, special chancellor which clearly embraces a,ll questions and issues in the case both of law and fact, as well on the pleadings as on the evidence; and the chancellor properly concltiled that these demurrers were to be passed upon by him.
If the bill had .averred that the payments made by the respondents on account of subscriptions to the capital stock of the company were made to the corporation itself and received by it in such a way as; would preclude the company and estop it to sue at law on the notes evidencing the subscriptions, it is clear, we think, on this assumption, in connection with the averments in the bill *508that these complainants could not proceed at law or in equity to enforce such payment over again. The subscription notes were past due when they were paid in the manner detailed in the bill. The obligation of immediate payment wa¡s then upon these respondents, lr cannot be'doubted, and is not questioned, that Woolf oik as president of the Terminal Company them had full power and authority to accept and it was his- duty to enforce payment of these notes in money. The bill avers that they were paid in money to Woolf oik. Taking’ this averment, in connection with the obligation of the respondents to' pay money to the company and Wool-folk’s duty and authority to receive the money for the company, as meaning that the payments were made to the company, and looking also to the further averment of the hill that. Woolf oik had no power or authority from the company to induce these payments by agreeing as a parti of the transaction in which they were severally made to purchase thei stock thus paid up from the subscribers- for the company and with the assets of the company, we have the case simply of an officer of the corporation inducing payments to- he; m-alde which the Corporation had the absolute light to have presently made without conditions, and ivhich it was Woolfo-lk’s duty to coerce to be made presently and without conditions, by falsely pretending that he had authority to receive payments upon conditions which he then entered into and thereupon fulfilled and carried out by purchasing the; subscribers’ stock for and in the name of the company and with itis assets without the shadow of authority. On the assumption upon which ive are now proceeding, it is to be considered! that the money thus paid to the company was legitimately used by the company in the prosecution or ivinlding up of its business, in the- payment! of necessary current expenses and the debts of toe corporation, and that toe company and its creditors profitted so far as the money itself is concerned as fully upon toe payments thus rightfully made upon illegal and unauthorized conditions a.s if they had been made absolutely and without such conditions. Audi it is not conceivable that toe rightfulness and *509efficaciousness of payments so made and so enuring to the benefit of the corporation and its creditors .can be impeached by the circumstance that to induce them to be made the president of the company without authority from it or'the semblance thereof,' fraudulently and unlawfully purchased in its name the stock of these subscribers and, likewise without authority or the semblance of authority, • fraudulently and unlawfully, executed bonds in the name of the company, secured by deposits of dioses in action belongingtothecompany, or appropriated bonds belonging to- the company in payment of the purchase price of such stock. So that the company and its creditors had the full benefit of 'these payments, and the wrong and injury which i-esulted from the transactions to the company and through it to its creditors is referable in no degree to the payment of their subscription notes by these respondents, nor to, the cancellation of said notes, nor to- the manner of such payments, hut solely to the unauthorized and illegal diversion of choses in action belonging to- thei company in payment, or to secure the payment, of the price Woolf oik .agreed to give for the stock. And it necessarily follows upon the construction of the hill which we have assumed for the purposes of this dismission that neither the company nor its creditors have any standing at law or in equity to, enforce the payment over again of this money which has been- rightfully paid to and received by the corporation and used by it, in the legitimate prosecution of its business; hut both the company and its creditors have, or had when, this hill ivas filed, a remedy a.t law to, recover its assets illegally and without corporate authorization or attempted authorization misappropriate! by Woolfolk to the purchase of the shares of stock held by these respondents.
As to some of the respondents, O. O. Wiley and Wiley & Murphree, the averment of the hill is that their subscriptions and promises in writing have, never been paid at all, by anybody or in any way; the allegation being in substance and almost literally that these respondents assert that they sold and transferred their stock in the Terminal Company to, the defendants Sa*510portas, tlie latter promising and agreeing, to1 pay said company their said subscriptions, therefor and the promises in writing made for the payment thereof, that if said sales and transfers were made it was with the intent to defraud the corporation and to' hinder, delay and defraud its creditors, that said, respondents were amply able to pay and satisfy said debts, but were desirous. to relieve thoins-elves. froaw liability to pay the same; and if such sale's and transfers, were made, they wore mere contrivances by which O. O. Wiley and Wiley & Murphree sought to evade and escape from such liability, that they knew said Saportas was not a resident citizen of Alabama, and they did not believe and had no good! reason to1 believe that he was of ability to. pay for said stock, and that said subscriptions and debts of said respondents are yet. due and unpaid to said company, and said company has never- agreed to accept, any other person as debtors in their places and steal!. It is entirely clear on these facts. — so clear- indeed as to render discussion superfluous — that the complainants had! a plain, adequate and complete remedy at law by garnishment against these respondents, and that, therefore, the bill presents no ground of equitable cognizance as to them. The complainants, .at one time conceived that their remedy against O. O. Wiley and tlrei members of the firm- of Wiley & Murphree was at law and summoned them in garnishment. They answered and the; complainants as plaintiffs in- judgment contested their answer. When that cause had taken on this status a judgment teas entered therein discharging the garnishees. That judgment is pleaded here by said respondents in bar of the relief prayed in the bill. Thej plea properly presents the. issue of res adjudicaba: It is claimed for complainants that certain infirmities attach to- and inhere in this judgment growing out of the circumstances under which it was taken. They are not such as. will avail on collateral attack. There was nodirect proceeding to vacate the judgment; and it stands unimpeached on the records of a competent court. On the averments of the present bill to which we have adverted, the plaintiffs in that Cause, complainants; here, were entitled! to *511judgment against the garnishee. Upon, or after the institution of a contest there judgment was passed for1 the garnishees. The issue in that case was necessarily indebtedness vel non of the garnishees to1 the Terminal Company. And the judgment foreclosed that issue in favor of the garnishees. That adjudication is a bar to the relief now prayed on the case made by the bill, and the plea which set. it up should have been held sufficient. If there are other facts which preclude the conclusion that the issue of indebtedness was determinable in that proceeding, they are not averred in the bill; and the sufficiency of the plea is, of course; to be determined upon its averments: with reference to the allegar linns of the bill.
LaFayette Henderson as surviving partner, etc., was a party defendant to the bill. He died February 24, 1895. J. 1). Henderson was appointed his administrator May 4, 1895. An order of revivor against J. I). Henderson as such administrator was entered May 20, 1895, and notice was served on him May 27, 1895. On August 26, 1895, a, decree pro confesso was entered against him. This was set aside and leave granted him to answer on October 8, 1895. He filed his answer on July 3, 1897, as of April 8, 1897. George B. Shellhorn, a witness for complainants, was examined oaallv on Jnne 3, 1895, under an order made May 27, 1895, after Henderson had been made a party and served with notice and before the decree pro confesso had been entered against him and before he had answered. InteiTogatories- were filed to Woolfolk by complainants August 2, 1895, before answer by or decree pro confesso against said Henderson; he had no notice of these interrogatories. On August 26, 1895, the day on which the decree pro confesso was entered, a, commission issued to take Woolfolk’s deposition, and this commission was executed and the deposition taken on October 18, 1895, after the decree pro confesso against said Henderson had been set aside and before his answer ivas filed. La Fayette Henderson filed no answer to the bill and there was no decree pro confesso against him at the time of his death — none had ever been entered. ■ The depositions of Ghew and Jessup *512were taken on April 17, 1896, and the depositions of J. L. Hall, Farley, Joseph, Roman and Tennil'le were tala-.n in July, 1896, after the; decree pro confesso against J. D. Henderson, administrator, etc., hadi been set aside and before he had answered. It is clear on the foregoing farts that the several depositions referred to were taken when, the case was not a,t issue as to the respondent J. I). Henderson, as administrator of LaFayette Henderson, deceased, in palpable violation of rule 49 of chancery practice, which provides, with the force and effect of a statute, that “testimony cannot he taken by either party until the cause is at issue by sufficient answer or decree pro oonfosso as to all the defendants.” Code, p. 1211. We do not find1 that the motions made by the several respondents and J. 11. Henderson as such administrator to suppress these depositions were waived,. To the contrary, they were insisted upon, and should have been granted.
It is averred in the bill that the judgment against the Terminal Company was recovered by one Hall, as receiver of the Farley National Bank, and that, said 'receiver was afterwards discharged and all the assets of the- bank were, surrendered and delivered to. it, including this judgment. This turning over of its assets including the; judgment is admitted by most of the. respondent., hurt, one or more deny it, and one or more neither admit nor deny it hut demand proof of the fact. Such proof was not maide. Tn our opinion it should have bemi. We are inclined also to think that the transfer of this judgment by the hank to the complainants should have been proved.
There is a variance between the allegations' of the original bill and the evidence as to the means used by several of the respondents in the alleged satisfaction of their subscriptions and promises in writing. The bill avers that money to the amount of the subscription notes severally was paid to Woolfolk. The evidence shows that in several instances Woolfolk accepted as payments claims Avhich the subscribers had against the Terminal Company for brokerage and* in one or more instances claims which they had against the Alabama *513Midland. Hallway Company for services rendered to that company. This variance Avould have been cured by the amendment of April 8, 1897, called the “Bed Ink Amendment,” and that is one reason Avhy this amendment should not have been stricken.
There appears also to be a variance betAveen the averments and proof in respect of thei date of the note executed by J. C. Henderson. The bill alleges that this note Ava.s executed March 9, 1887. The answer of said Henderson alleges and the proof shows that it Avas executed March 9, 1888.
Then, too, the bill alleges that the Terminal Company was organized Avith an authorized capital of $100,000. The fact appears to be that at organization the capital, was $250,000 and that soon afterwards it was increased to $500,000. An amendment of the bill should be made in this connection.
The cross-bill of J. M. Henderson & Co. fails to aver any facts AAdiich import a liability to them on the part of J. C. Henderson, the respondent therein. The demurrer to it Avas properly sustained.
The conclusions Ave have reached on the; several questions that have be:en considered on the appeal of Henderson et al. leave the case in such condition that a discussion. of its merits: on the evidence Avould lead to no practical results, and as that AAre deem it more conservative. of justice to render no decree here except to reverse the decree below and to remand the cause.
On the cross-appeal of J. L. Hall and L. B. Farley there are only two assignments of error. The first of these challenges the chancellor’s'action in striking the amendment referred to above as the “Held Ink Amendment” from the files. We construe that amendment to aver that in the settlement of their subscriptions and promises in AAuiting Avith Woolfolk the respondents instead of paying 'exclusively in money as is alleged in the original bill Avere alloAved' as credits thereon claims which they asserted were due them from the Terminal Company as commissions for endorsing the company’s paper and for other alleged services and also claims *514which they asserted against other corporations for services to such corporations, for Avhich the Terminal Company Avas not responsible. The facts concerning the payments made -by Woolfolk in the purchase of the stock subscribed for by certain of the respondents Avith Midland bonds, etie., belonging to the Terminal Company aré sufficiently stated in the original bill, and this amendment has no reference to- those transactions, and it Avould be superfluous had it referred to them. And assuming for the purposes, of the cross-appeal that the original bill had equity to the coercion of the payment of the stock- subscriptions from the respondents who had settled their- notes with Woolfolk by taking credits thereon for the claims referred1-to- asserted by them against the. Terminal Company or attempted to be allowed by Woolfolk as claims against that company albeit some of them Avere for services rendered to other corporations, and paying the balance in money, and who as a part of the same transactions- sold their stock to Woolfolk for the Terminal Company and were paid therefor with Midland bonds and other assets of said company, this- amendment Avas proper, not alone -for the puipose of curing the variance between the averments of the original-bill and the proof as to how the alleged settlements Avere made with Woolfolk by them in respect of AAhat Farley paid or parted Avith to secure the cancellation and surrender of their notes, but also' foir the further purpose of affording a basis for recovery against them for the amounts of such illegal credits in addition to and cwmUatwe upon the collection of the amounts they had severally subscribed and promised to pay. For not! having paid money to the full amount to. secure the cancellation and surrender of their notes, but, at the same time and as a part of the sarnie transaction, having received assets of the company equal in- AraJue to the face of the stock for Avbick they had thus settled Avith Woolfolk, it is manifest that a decree against them severally for the amounts of their stock notes Avould not' malee the company or its creditors whole, but would leave it and the-complainants out of pocket in each instance in the suin-of- the credits illegally allowed on the *515notes for the brokerage commissions and claims against other corporations. Hence our conclusions that the amendment should have been allowed to remain in the bill both as curing the variance adverted, to and as a basis for an accounting by these respondents for a sum equal to tire illegal credits allowed them by Woodfolk. And, considering the cross-appeal separately and as distinct from tlm original appeal, the decree striking said amendment will be reversed, and a decree will be here entered overruling and denying the) motion to strike..
Therefore, on the main appeal the decree will be reversed and the. cause remanded, and on the cross-appeal the decree will be reversed- and a decree here rendered.