Court Opinion

ID: 8184902
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:07:15.53962+00
Date Added: 2024-06-11T16:40:22.542985
License: Public Domain

Newman, J.
The plaintiff’s attorney defines this to be “ a common-law creditor’s bill, brought at the instance of a judgment creditor, to administer the assets of an insolvent corporation for the benefit of all its creditors, and to enforce its unpaid stock subscriptions and the statutory liability of .stockholders, and also to discover and reach its equitable .assets for the satisfaction of its debts.” The first question raised by the demurrer is the jurisdiction of the court to entertain a creditors’ bill, under the general equity powers of the court, upon the facts stated in the complaint. It clearly has no jurisdiction under the statute providing for “ proceedings against insolvent corporations ” (R. S. secs. 3216-3228), for the statute itself limits these proceedings to corporations incorporated under the laws of this state. It is no part of the general function of a court of equity to enforce the. payment of debts. A creditor at large has no standing in a *577court of equity for that purpose. It is only after the creditor has taken and exhausted all the means within his power, at law, that he has standing to ask the aid of equity to discover and apply the debtor’s property to satisfy his claims. So it is necessary to the jurisdiction of a court of equity, in actions .of this nature, that it shall be made to appear that the creditor is unable to obtain satisfaction of his debt by seizing property under an execution. To this end it must appear, not only that he has recovered a judgment, but that he has made an effort to collect his judgment by execution, and that his effort has been unavailing. The court must be satisfied that there has been an effort in good faith made by the creditor to collect his judgment, and that he has fairly exhausted, without avail, his remedy at law. Ordinarily the issue of an execution on the judgment, and its return unsatisfied, are sufficient to show, in the first instance, that the remedy at law has been exhausted. But if it shall appear that no effort in good faith was made to find property whereon to levy, and that the debtor owned property subject to levy within the state which might with reasonable diligence have been found, the case does not call for the interposition of a court of equity. To furnish satisfactory evidence that the remedy at law has been in good faith exhausted, the execution must be issued to some proper county, either to the county of the debtor’s residence or where he has a place of business, if he has such within the state, or, at least, to some county, if any, where the creditor has reason to believe there is property of his debtor subject to levy. Eor to issue an execution to a county which is not the place of the residence of the debtor, and where the creditor has no reason to expect to find property of his debtor, does not show an effort in good faith to collect the debt by execution. This would be especially true in a case where the creditor knew that in another county the debtor had a place of residence and business and a large amount of property subject to levy *578under bis judgment. In re Remington, 7 Wis. 643; Clark v. Bergenthal, 52 Wis. 103; Ahlhauser v. Doud, 74 Wis. 400; Child v. Brace, 4 Paige, 309; Dunlevy v. Tallmadge, 32 N. Y. 457; Bassett v. Orr, 7 Biss. 296; Durand v. Gray, 129 Ill. 9; 2 Van Santv. Eq. Prac. (2d ed.), 130; 2 Barb. Ch. Prac. (2d ed.), 150, note 6, and cases cited.
In the instant case the debtor is a foreign corporation. It.has a place of business, and a residence for business purposes, in Douglas county within this state. It has in that county a large amount of property, both real and personal. It does not appear that it has a place of business or property in any other of the counties of this state. The plaintiff was not ignorant of this situation. It docketed its judgment promptly in Douglas county, so that it became a lien on its debtor’s real property in that county’'. But, for some reason which does not appear, it issued the execution on its judgment to Milwaukee county, where, so far as appears, it had no reason to expect to find property of its debtor whereon to levy, and had it returned on the same day of its issue. This is not affirmative evidence of an attempt in good faith to collect its judgment on execution. , The debtor had a large amount of property in Douglas county, which was subject to the lien of the judgment and the levy of an execution upon it. True, the property was subject to prior levies. But the plaintiff alleges that some of those were fraudulent and void as against its judgment. It does not appear what was the probable amount and value of the debtor’s property, nor whether it would probably be sufficient to pay the valid levies upon it with the plaintiff’s judgment. So it cannot be known whether a levy would have produced satisfaction of the plaintiff’s judgment. On this showing the court cannot be satisfied that the plaintiff has no adequate remedy at law, for it has not in good faith tried to enforce its remedy at law. So a case for the interference of a court of equity by creditors’ bill is not made by the complaint.
*579N or does the complaint state a cause of action for equitable intervention in aid of its judgment lien upon its debtor’s real property, or in aid of the enforcement of its judgment by execution against its personal property. It has the lien of its judgment upon the real property, but it states no reason why the lien of its judgment should be preferred, in equity, to the prior liens upon it, and it' asks no such relief, and it has no lien upon the personal property to be either perfected or aided. Galloway v. Hamilton, 68 Wis. 651; Ahlhauser v. Doud, 74 Wis. 400; Gilbert v. Stockman, 81 Wis. 602; Rozek v. Redzinski, 87 Wis. 525. The complaint states no cause of action calling for the intervention of a court of equity for that purpose.
So the complaint is found to state no case for a common-law creditors’ action, nor for equitable inteference in aid of its lien upon its debtor’s property; nor does it state a cause of action under the statute which provides for “ proceedings against insolvent corporations.” R. S. secs. 3216-3228. While those sections give a remedy seemingly equivalent to that desired by the plaintiff, the case is not within the statute, because, by the terms of the statute itself, the remedy which it provides is limited to the case of “ corporations incorporated under the laws of this state,” while the debtor is a foreign corporation. Perhaps equivalent relief could be given in a common-law creditors’ action against a foreign corporation. The authorities are at variance on that question. Many able courts are -ranged upon either side of it. It is not clear upon which side is the weight of authority. But its decision is not necessary to the decision of this case. For, as already seen, no case is made by the complaint for a common-law creditors’ action.
The demurrer to the complaint should have been sustained, and leave should have been given to the Central Trust Company to serve process upon the receiver.
By the Court.— Both orders of the superior court of Milwaukee county appealed from are reversed, and the cause *580remanded witb directions to grant an order sustaining tbe demurrer and for leave to tbe appellant to bring suit to foreclose its mortgages, and for further proceedings according to law.
PiNNey, J., took no part.
Tbe following opinion was filed September 26, 1895:
Pee Curiam.
This is a motion by “the respondent to dismiss tbe appeal of tbe Central Trust Company. Tbe appeal itself was from two orders made by tbe superior court of Milwaukee county, tbe one overruling tbe appellant’s demurrer, and tbe other denying tbe appellant’s motion for leave to serve process upon tbe receiver of tbe defendant "West Superior Iron & Steel Company. This court reversed both orders June 20, 1895. Upon affidavits showing that tbe defendant Central Trust Company bad filed a claim as a creditor against tbe defendant "West Superior Iron & Steel Company in this action, tbe respondent on tbe 18th day of July made this motion to dismiss tbe appeal of tbe Central Trust Company for tbe reason that by filing its claim it bad adopted tbe complaint herein as its own and was estopped from questioning tbe validity of tbe complaint.
This motion must be denied. On demurrer, only tbe pleadings can be considered. Magdeburg v. Uihlein, 53 Wis. 165. Even if tbe facts alleged in tbe affidavits could be considered at all, they only make against tbe right to demur and not against tbe right to appeal. They tend to show that the appeal was wrongly decided, not that it should be dismissed. Motion should have been made in tbe court below to strike out tbe demurrer on tbe facts stated in tbe affidavits, and if tbe motion were denied, then, upon appeal, tbe question would be before us.
Tbe motion is denied.