Court Opinion

ID: 5558931
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:46:33.897125+00
Date Added: 2024-06-11T08:35:24.781062
License: Public Domain

Jackson, Judge,
dissenting.
The law is undoubtedly that a debtor may ordinarily give a preference to one creditor over .other creditors when he is in failing circumstances, provided he honestly owes such creditor. This he may do by sale, by mortgage, or by cutting up a large note into small ones, so that the preferred creditor may get the first judgment by suing in a court which can render judgment in a shorter time. 18 Ga., 666-22 Ib., 466; 23 Ib., 616 ; Code, §§447, 1953.
By examining these cases, it will be seen, however, that in none of them had the property of the debtor been attached and a lien created. In the contest between the banks in Savannah,in the casein 22d Ga., 466, garnishments were sued out at common law, which did not give any lien to the credit- or ; but no attachment pendente Ute or otherwise was sued out, so as to fix the lien of the creditor upon the property attached by serving the garnishment. But in attachment cases, the attachment is levied by serving the summons of garnishment just as effectually as by seizing property in the hands of the debtor, Code, §3288; and of course the lien upon the property, debts, or effects in the hands of the garnishee is as effectual and valid as if in the debtor’s own hands.
*674So that the question in this ease, under the facts made in this record, is, can a debtor, after his goods are attached, and after a lien has been fixed by the attaching creditor, divest that lien from the property attached by any act or contrivance of his own with another creditor, and give the preference to that other creditor over the more vigilant attaching creditor? It would hardly be seriously contended that he could do so by sale of the property attached to the other creditor, or by mortgage thereon. Yet if there had been no lien by attachment and its levy, he could have done so by sale or mortgage. The lien, and the lien alone, prevents him from doing so. Yet it is just as lawful for him to prefer a creditor by sale or mortgage as by dividing a large claim into small notes; and the general rule that he may give the preference is equally lawful in the one ease as in the other. So that the question comes to this : can the debtor collude with the creditor whom he wishes to prefer to do indirectly what he could not do directly ? If he could not divest the lien by a square, open, manly sale or mortgage, can he do so by the indirect means of carving the big debt into small pieces, so as to give an earlier judgment, and thereby defeat the attachment lien ?
The Code, §1952, declares as null and void, and fraudulent in law against creditors, “ every conveyance of real or personal estate, by writing or otherwise, and every bond, suit, judgment and execution, or contract of a/ivy description, had or made with intention to delay or defraud creditors, and such intention known to the party taking; a bona fide transaction on a valuable consideration, and without notice or grounds for reasonable suspicion, shall be valid.” It will be seen that a judgment is put upon the same footing as a conveyance, and whatever would set aside a conveyance would set aside a judgment; and the language is still stronger, it is any “ contract, of any description, had or made with intention to delay or defraud creditors, and such intention known to the party taking.” Here is a contract of a certain description made to cut up a large debt into *675small notes, with intent to defeat this lien; and the party talcing not only knew it, but contrived it with the debtor on purpose to' defeat the lien of his more vigilant adversary. Here is a judgment had by means of this contract, the effect of which is, and the intent of which was, to oust this lien, and take the property attached from its operation and put it into the pocket of the contractor, who did it on purpose to oust the lien.
"What sort of a transaction would stand to give the preference ? “A bona fide transaction on a valuable consideration,” without more ? No. The law says (Code, §1952) “ a bona fide transaction on a valuable consideration, and without notice or grounds for reasonable suspicion,” shall be valid. Notice of what ? Why, of the lien, of course, and the intention to defeat it. Grounds for reasonable suspicion of what ? Of the intention of the debtor to defeat this lien, of course.
So section 1953, in stating how a debtor may prefer a creditor, declares that “to that end he may bona fide give a lien by mortgage or other legal means,” showing that to mortgage is a legal means, just as legal as to carve the large debt into small notes; but whoever dreamed that the debtor, by thus giving a lien, however legal the means, could divest a prior lien ?
Rut it is argued that the attachment lien is not good as against a judgment had before the judgment in the attachment case, because, under the Code, section 3331, it is declared that “ between attachments and ordinary judgments or suits, it is the judgment, and not the levy, which fixes the lien.” Tes, between ordinary suits and judgments, obtained regularly and without collusion, and attachments such is the rule ; but not, I apprehend, between judgments col-, lusively obtained ahead of the attachment judgment by a contrivance, fixed up after the attachment, by the debtor and creditor, on purpose to defeat the lien which was fairly obtained.
The lien of this attachment was good over this large debt, *676and it would have remained good but for this new contract, made after it had vested by the levy, to cut up the old debt into small notes so as to enable that creditor to procure his judgments ahead of the attachment judgment, and thus to give him the prior lien. He could not, it is conceded, do this by mortgage or other conveyance; why, then, should he be allowed to effect his purpose by this other contract of cutting up this debt, and thus giving an earlier judgment ? What particular sanctity is there in this over the other contracts ?
Suppose this had been an attachment for purchase money aiid levied on the property purchased, could the lien be defeated by this contrivance ? I think not. If not, can it be defeated in this sort of attachment, where the lien is just as valid as in the case of purchase money?
Again, I understand that the facts in this record make the case of two attaching creditors, the hindmost of whom got ahead of his more active contestant by this contrivance, and defeated his prior lien. If so, of course the transaction is void and fraudulent as to the first attaching creditor, so far as it seeks to divest his lien.
Again, the principle ruled in 58 Ga., 94, is that this sort of thing cannot stand if done collusively, and such was the charge of the court in this case. And the facts, I think, show that it was so done.
This court has never decided that a lien could be divested by this sort of trick — this underhand, indirect endeavor to do what cannot be done directly; and the cases in the 18th, 22d and 23d Ga., can all stand consistently with the view here presented; but if they could not, I should hold that section 1952 of our Code was not before the court when those cases were decided, and that the Code had changed the law as then held. I see no trouble, however, in letting those cases stand and affirming this judgment.
My mind revolts at extending the principle ruled in 22 Ga., 466, one inch beyond what it squarely covers. I agree with Judge Stephens, in Lively vs. Harwell, 29 Ga., 515, where he says: “ But if the principle be unsound, analogy *677ought not to be allowed to carry it to a single case beyond the imperative demands of authority — the cases in which it has been already planted by decisions.” The case in the 22d does not cover a case of lien by attachment. It was service — simple service of garnishment at common law, which gave no preference or lien to the suitor over other creditors. I think the principle, ruled and applied even to such a case as that, wrong, unsound, and I would not extend it; nor is it necessary, under the operation of the rule of stare clecisis, to extend it to attachments and liens created by them. If it be so extended, a colluding creditor and debtor can defeat every attachment lien by a contract to cut up a big debt into small notes, to be sued on them in justice courts, and judgments to be there entered up. And this, I think, is in the teeth of the Code, §1952, which, in express words, places suits and judgments upon the same footing with other contracts or conveyances.
So I dissent from the judgment of reversal.