Court Opinion

ID: 7950387
Source: CourtListenerOpinion
Date Created: 2022-09-08 23:25:52.684654+00
Date Added: 2024-06-11T16:34:07.093662
License: Public Domain

Brooke, J.
(after stating the facts). We are unable to agree with the contention of appellant that the plaintiff is denied the right to attack this conveyance of property in violation of the sales in bulk act because the transfer was made on September 22d and his claim was not reduced to judgment until about two weeks later, October 6th. The rule as stated in 20 Cyc. p. 421 is as follows:
“Existing creditors are, as the words imply, persons having subsisting obligations against the debtor at the time the fraudulent alienation was made or the secret trust created although their claims may not have matured or been reduced to judgment until after such conveyance.” Citing cases.
*90In the case of Coffey v. McGahey, 181 Mich. 225, this court said:
“We find from the authorities it is not an inflexible rule that a judgment at law must be obtained by a creditor before resort to equity.”
Plaintiff in the case at bar, however, did reduce his claim to judgment and exhausted his legal remedy thereunder before filing his bill. The claim of appellant that in the course taken, plaintiff is following a double remedy is without force. He proceeded in his law case to judgment. Defendant a few days before said judgment was taken transferred his property to the four individuals who afterwards organized the defendant West Michigan Garage Co. in violation of the sales in bulk statute. Plaintiff was not, as suggested by counsel for defendants, obliged at that time to discontinue his suit at law and file his bill in equity, but might very properly continue to judgment in the law case, thus fixing the legal liability of his debtor and then proceed in equity to establish the illegality of the sale which his debtor had recently undertaken to make without complying with the act.
What we have said above applies to the second claim of appellants, but in addition thereto it may be noticed that defendants answered issuably and took proofs upon the merits of the bill. They did not demur to the bill of complaint on jurisdictional grounds. Such an objection comes too late if made for the first time at the hearing of the cause. Coffey v. McGahey, supra, at page 229, and cases cited. See, also, Humiston, Keeling & Co. v. Yore, 181 Mich. 629.
With reference to the third contention the trial court found that the mortgage from son to father bearing date March 3, 1914, was given for a fraudulent purpose and that if any consideration for said mortgage existed it was covered by the mortgage of October 5, *911914, for the same debt; we are of opinion that the evidence fully justifies the opinion of the learned trial judge. It was given but a few days before the trial of the law case which had been pending for some weeks. The entire dealings of the defendants, father and son, with the garage property are such as to indicate a studied attempt on the part of‘both to place those assets beyond the reach of judgment creditors, including the plaintiff.
Touching the fourth contention, we are of opinion that by executing the bond in question the defendant Joseph A. Montague, in effect, released the garage property from the lien created by his mortgage. We have no doubt that the subsequent foreclosure of the mortgage was in furtherance of the general plan to defeat and defraud creditors. It is in evidence, too, that in foreclosing said mortgage the right of the defendant the West Michigan Garage Co. to continue the business was not abridged. A son of defendant Joseph A. Montague was nominally in possession, but the business proceeded as usual.
As to the fifth contention of appellant it may be said that the inventory of equipment and stock sold shows a value of something over $2,300. There is evidence that an exaggerated value was placed upon the stock and equipment, but that this was offset by an over-valuation of the land contract assigned in part payment thereof. There is no dispute that $1,200 of the consideration was paid in cash to the defendant Herbert B. Montague, and this sum is largely in excess of the plaintiff’s claim. It may be noticed in passing that the decree charging the West Michigan Garage Co., as receivers, with the payment of the plaintiff’s unsatisfied judgment will not affect that company by reason of the undertaking of the defendant Joseph A. Montague to hold the purchaser of the *92garage property harmless by reason of any infirmity of title.
The result reached was proper and the decree is. affirmed.
Bird, C. J., and Ostrander, Moore, Steere, Fellows, Stone, and Kuhn, JJ., concurred.