Court Opinion

ID: 7052016
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:01:42.64956+00
Date Added: 2024-06-11T16:11:47.246235
License: Public Domain

Elliott, J.
The complaint sets forth several and distinct claims in favor of the plaintiffs respectively, as creditors of the firm of Fisher Doherty & Son.
After alleging that the firm is indebted to the plaintiffs severally, and stating the amount and character of the claims distributively, the complaint charges that a conspiracy was entered into between Fisher Doherty and Marshall D. Doherty, who composed the firm of Doherty & Son, with other of the defendants, to defraud existing and subsequent creditors.
It is also alleged, with particularity, that pursuant to the conspiracy the firm of Doherty & Son fraudulently executed an assignment, that they also executed other conveyances and that they suffered judgments to be taken against them for the purpose of carrying into effect the fraudulent design of the conspirators.
The complaint prays judgment for "the amount of the several claims” of the plaintiffs, and that the conveyances be set aside as fraudulent.
In the title of the pleading, three persons are named, with many others, as plaintiffs, but in the body of the complaint no attempt is made to show that the three persons referred to are creditors of the defendants.
The appellants’ counsel contend that the complaint is *284bad because it does not show a cause of action in all who join as plaintiffs.
The general rule is this: If a complaint assumes to state a cause of action in favor of two or more parties, and states a cause of action in favor of part only of the parties thus joined, it is bad on demurrer. Nave v. Hadley, 74 Ind. 155; Peters v. Guthrie, 119 Ind. 44. See authorities cited Elliott’s App. Proced., section 664.
We are not willing, however, to hold that the general rule applies to this case, for it is one of a peculiar character. Our judgment is that where parties are designated as plaintiffs in the title of a complaint in the nature of a creditors’ bill, and there is a statement of the respective claims of creditors showing that each claim is several and distinct, and there is no attempt to state a joint cause of action in favor of those who are named in the title, the general rule does not apply. In order to determine whether the general rule governs, it is necessary to consider the general nature of the suit, and the principles by which suits of its class are controlled. The code does not sweep away former equitable rights, nor does it abrogate remedies that are essentially equitable; on the contrary, as our decisions prove, the court fully recognizes such rights and remedies. It is true that the code provides for one form of action, but this by no means implies that equitable rights and remedies have ceased to exist. In cases where the complaint states such facts as entitle the complainant to equitable relief, the court will look for guidance to the equity principles and doctrines.
The complaint in this case is in the nature of a creditors’ bill, and looking to the equity doctrine applicable to such a case, we find that the rule is that the courts let in all creditors who make seasonable and appropriate application. Pendleton v. Perkins, 49 Mo. 565; Johnson *285v. Waters, 111 U. S. 640; Hartshorn v. Eames, 91 Me. 93.
Our own court has given its sanction to the general doctrine. Field v. Holzman, 93 Ind. 205; Phelps v. Smith, 116 Ind. 387; Towns v. Smith, 115 Ind. 480.
The principle embodied in the maxim that “Equality is equity,” has been enforced by our decisions. They have given it practical effect by holding that creditors should all be permitted to participate, upon due application, in the proceeds of property fraudulently conveyed. Voorhees v. Carpenter, 127 Ind. 300; Vestal v. Allen, 94 Ind. 268, and cases cited; Barton v. Bryant, 2 Ind. 189.
As it is the chief purpose of a complaint in the nature of a creditors’ bill to secure property for the benefit of creditors and make an equal distribution of it, all creditors may unite, and in such a case the complaint ought not to be held bad because it fails to state the claims of three out of many persons, simply because the three are designated as plaintiffs in the title of the pleading. It would be carrying the general rule to an unreasonable length to apply it here, since that would give an undue importance to the formal part of the complaint denominated the title. Mississinewa Mining Co. v. Patton, 129 Ind. 472.
If the complaint had professed to state a joint cause of action, instead of stating independent claims, there might possibly be plausibility in the contention that as there was no right of action shown in all whose names appeared in the title of the complaint it should be held bad upon the ground that it does not state facts sufficient to constitute a cause of action.
The complaint charges that the assignment was fraudulent, and alleges that the assignee was a participant in the fraud, so that the rule that where there is an as*286signee under the voluntary assignment act he must sue to set aside fraudulent conveyances made by the debtor, does not apply. The rule that the assignee is ordinarily the person who must sue, we fully approve, as the court has done before. Voorhees v. Carpenter, supra, and cases cited.
But we deny that the rule has any application to such a case as this.
One who colludes with a debtor to defraud creditors, is a proper party to a suit to set aside conveyances made in furtherance of the fraudulent design of the debtor.
A grantee of property conveyed by a debtor to defraud creditors is liable for the value of the property conveyed to him if he actively participates in the fraud, and subsequently disposes of the property. The doctrine that a fraudulent grantee must account for property which his wrongful act assisted in taking from the reach of creditors, rests on solid principle and has strong support from the adjudged cases. Blair v. Smith, 114 Ind. 114; Post v. Stiger, 29 N. J. Eq. 554; Murtha v. Curley, 90 N. Y. 372; Ferguson v. Hillman, 55 Wis. 181; Williamson v. Williams, 11 Lea, 355; Smith v. Sands, 17 Neb. 498; Fullerton v. Viall, 49 How. Pr. 294.
What we have said disposes of the objections urged against the complaint and requires the conclusion that there was no error in holding it good.
The court assessed damages in favor of the parties whose names appeared in the title of the complaint, but whose claims were not set forth. In this there was no error. If those parties were creditors they had a right to come in and have their claims allowed before final distribution of the avails of the property fraudulently conveyed. Where a court possessing equity powers acquires jurisdiction of property held by fraudulent grantees or assignees, it will decree sale and distribution of proceeds *287and will protect creditors, even though, they were not original plaintiffs.
In the absence of a countervailing showing, the presumption is that the trial court proceeded regularly and rightfully. See authorities cited in Elliott’s App. Proced., sections 709, 712.
As the court had authority to let in all creditors at any time while the proceedings were pending and open, and as there is nothing in the record showing that this authority was not properly exercised, it is our plain duty to give the presumption effect and sustain the rulings of the trial court.
Objections not made in the court below are, as a general rule, not available on appeal. If there was, as is now claimed, no issue under which the evidence of the claims of some of the creditors was admissible, the objection should have been made in the trial court. Townsend v. State, 132 Ind. 315; Graves v. State, 121 Ind. 357, and cases cited. See, also, authorities cited Elliott’s App. Proced., sections 293, 476, 631.
During the September term the trial court made and entered a finding against the defendants therein named, and in favor of the plaintiffs. At the subsequent term, damages in favor of the plaintiffs respectively were assessed and the proper decree rendered. There was no error in this. A court of equity, in such a suit as this, may at one term enter a general finding of the character here made, and afterwards make the necessary specific findings and the appropriate decretal orders. It is manifest that a finding, such as that here first announced, does not end the controversy, since proof of claims and of other matters may be made at any time before the final decree terminating the suit.
Such cases as Wray v. Hill, 85 Ind. 546, are not in point here.
*288Filed Nov. 3, 1892.
The liability of a fraudulent grantee who accepts a conveyance of property for the corrupt purpose of enabling the grantor to keep it from his creditors is not remote or contingent, although it is not strictly a legal liability. It is a direct liability, as clear and strong as any legal liability can be, created by courts of equity and rested upon broad principles of natural justice. The instant such a wrong-doing grantee accepts the conveyance he becomes a trustee for creditors, and he violates his duty as trustee if he makes way with the trust property. Blair v. Smith, supra; Chamberlin v. Jones, 114 Ind. 458.
If he sells it, equity will follow the proceeds of the sale iijto his hands, or, if justice requires, charge him with the value of the property. Whether he holds as trustee or violates the trust by disposing of the property, equity will hold him liable, and make such a decree as will protect or enforce the rights of creditors. Reeg v. Burnham, 55 Mich. 39; Farlin v. Sook, 30 Kan. 401; Mason v. Pierron, 69 Wis. 585; Christian v. Greenwood, 23 Ark. 258; S. C. 79 Am. Dec. 104.
The appellant’s counsel, as is evident from what we have said, are in error in assuming that equity will not make a fraudulent grantee account for the value of property sold by him after its conveyance to him by the fraudulent grantor. It is, we may add, a familiar principle of equity jurisprudence, that where a court of chancery assumes jurisdiction of a case for one purpose it will retain jurisdiction for all purposes, and if a specific decree will not afford adequate relief it will award compensation.
The evidence fully supports the finding' of the trial court, and the record shows that the merits are entirely with the appellees.
Judgment affirmed.