Court Opinion

ID: 9682037
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:04:11.305487+00
Date Added: 2024-06-11T18:17:37.160901
License: Public Domain

Ed. F. McFaddin, Associate Justice, (dissenting in part). The Majority of this Court is holding that the Chancery Court abused its discretion in dissolving the temporary restraining order. I agree with that portion of the Opinion. But the Majority is holding that the Chancery Court should transfer the tort action to the law court. Here is the directive in the Majority Opinion: “The decree is reversed and the cause remanded with directions that the restraining order be reinstated and that the tort action be transferred to law.” I dissent from so much of the Majority Opinion in this case as directs that the tort action he transferred to lato. I think that when equity takes jurisdiction for one purpose it should grant full and complete relief, rather than have a restraining order pending in the equity court, to hang there until a damage suit is disposed of in the circuit court and judgment obtained, and then the Judgment brought back to the chancery court to see' what can be done about alleged fraudulent conveyances. I have always understood that when equity takes jurisdiction for one purpose, it takes jurisdiction for all purposes. The Majority Opinion in the present case admits that our own case of Horstmann v. LaFargue, 140 Ark. 558, 215 S. W. 729, holds in accordance with the views that I am now expressing; and the present Majority is now overruling a portion of Horstmann v. LaFargue. I dissent from so much of the Majority Opinion as overrules any part of Horstmann v. LaFargue. It is a landmark case, having been decided by this Court on November 17,1919, and cited and followed in a number of cases since that date. Back in 1919 when Horstmann v. LaFargue was decided, this. Court consisted oh Chief Justice Edgar A. McCulloch, and Associates Justices Carroll D. Wood, Jesse C. Hart, Frank Gr. Smith, and Thomas H. Humphreys; and Horstmann v. LaFargue was a unanimous decision of that Court. LaFargue filed suit in the Chancery Court against Henry Horstmann, Sr., Henry Horstmann, Jr., and the wife of the latter, to recover damages from Henry Horstmann, Jr. for personal injuries, and to uncover real estate mortgaged by Henry Horstmann, Jr. in fraud of his creditors. Jurisdiction of the Chancery Court in such a case was questioned by Horstmann, Jr., both on the theory that a claim for damages was not within the jurisdiction of chancery, and on the further claim that a tort-claim-plaintiff was not a creditor. This Court, in a unanimous Opinion delivered by Justice Frank G.-Smith, held that under the statute (which is now Ark. Stat. Ann. § 68-1308 [Eepl. 1957])1 a person holding a tort claim against a defendant was a creditor of such defendant and could sue the defendant in equity to reduce the tort claim to judgment and to uncover hidden assets of such defendant, if it be shown that the defendant was insolvent and that the remedy at law was inadequate and incomplete. The Court further held that the plaintiff’s allegation, that the defendant was insolvent, was admitted unless the defendant denied such allegation. The Opinion reviewed many of our cases and gave the history and effect of the statute that is now Ark. Stat. Ann. § 68-1308 (Repl. 1957). It is a scholarly opinion. The case of Horstmann v. LaF argue is a definite holding that a plaintiff may file a personal injury suit for damages in the Chancery Court provided (a) the plaintiff alleges that the defendant is insolvent; (b) that the defendant has secreted his property with intent to hinder, delay, and defraud the plaintiff; and (c) that the plaintiff’s remedy at law is inadequate and incomplete. Horstmann v. LaFargue has been cited a number of times on the jurisdiction of equity to render a judgment for damages where equitable relief is sought on other grounds. Some of such cases are: Sims v. Hammons, 152 Ark. 616, 239 S. W. 19; Protho v. Williams, 147 Ark. 535, 229 S. W. 38; Everist v. Wood, Judge, 204 Ark. 124, 161 S. W. 2d 18; and Eirmann v. Beck, 221 Ark. 138, 252 S. W. 2d 388. In 73 A. L. R. 2d p. 749, there is an annotation entitled: “Right of tort claimant, prior to judgment, to attack conveyance or transfer as fraudulent ”; and the holdings from nearly a score of jurisdictions (including Arkansas) are cited to sustain this text: “In most of the courts where the question has been raised it has been held that a tort claimant whose injury occurred prior to a conveyance by the person causing the injury may maintain an action to set aside such conveyance as fraudulent even though he has not obtained a judgment on his claim.” The rule is further stated in this language: “In some cases a tort claimant, having reason to believe that the tort feasor is about to convey or has conveyed property for the purpose of hindering or delaying payment of the claim, has in the same action been permitted to sue for damages for the tort and to restrain or set aside the conveyance.” The case of Horstmann v. LaFargue is also a direct holding: (a) that a tort claimant is a creditor; (b) that the defendant’s failure to deny insolvency is an admission of such status; (c) that equity has jurisdiction to reduce the tort claim to judgment and to impound assets of an insolvent debtor about to be secreted from the creditors where the remedy at law is inadequate and incomplete; and (d) that equity, having taken jurisdiction for one purpose, will retain it for all purposes. I have already listed some of the cases in which Horstmann v. LaFargue has been cited and followed, but I desire to particularly call attention to what this Court said in Cleveland v. Biggers, 163 Ark. 377, 260 S. W. 432, which was decided on March. 17, 1924 (over six years after Horstmann v. LaFargue), and after the Bench and Bar of Arkansas had considered the case of Horstmann v. LaFargue. Here is what the Court said in Cleveland v. Biggers: ‘ ‘ The action of the court in sustaining the demurrer and dismissing the complaint is defended upon the ground • that, as a suit for damages, relief could be granted only in a suit at law. The case of Horstmann v. LaFargue, 140 Ark. 558, is against that view. In that case a suit for personal injuries was brought in equity, and in the same suit it was asked that certain alleged fraudulent conveyances be uncovered. The jurisdiction of the court was challenged upon the ground that a suit for unliquidated damages could be maintained only at law; but we held that, inasmuch as it was necessary for the plaintiff to go into equity to uncover the fraudulent conveyances, all the matters in issue should be adjudged and complete relief afforded. This subject was there thoroughly considered, and need not be again reviewed. “So here the plaintiffs asked the relief of uncovering certain alleged fraudulent conveyances, which could be obtained only in a court of equity, and the court would therefore have had jurisdiction to afford complete relief, by way of granting damages, if plaintiffs had elected to pursue that remedy. ’ ’ In the present Opinion the Majority says: “If the legislature had intended to bring about such a drastic change in our law as that of permitting personal injury actions to be tried in equity as a matter of right, we think that intention would have been stated in. language too plain to be misunderstood. It certainly was not so stated.” I make the point that in 1919 this Court held that a personal injury action could be tried in equity under the conditions stated in Horstmann v. LaFargue; and that since 1919 there have been innumerable sessions of the Arkansas Legislature; and if anyone had thought that Horstmann v. LaFargue was incorrect, the statute relied on by this Court in Horstmann v. LaFargue could have been amended by the Legislature. All through the years, from 1919 to the present time, Horstmann v. LaFargue has been the law of Arkansas, and is so stated in the annotation previously herein cited; and the Legislature has never changed the statute on which Horstmann v. LaFargue was based. Now, after a lapse of more than .forty years, this Court is overruling a portion of Horstmann v. LaFargue. I stand by the Opinion of this Court in 1919, and I would leave Horstmann v. LaFargue unchanged. Therefore, I dissent.   The said statute reads: “In suits to set aside iraudulent conveyances, and to obtain equitable garnishments, it shall not be necessary for the plaintiff to obtain judgment at law in order to prove insolvency, but in such cases insolvency may be proved by any competent testimony, so that only one suit shall be necessary in order to obtain the proper relief.”