Court Opinion

ID: 8184887
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:07:14.407477+00
Date Added: 2024-06-11T16:40:22.768685
License: Public Domain

Cassoday, J.
The circumstances under which the several judgments were confessed, entered, and docketed, and the several executions issued and levied, and this action commenced, and the receiver appointed and qualified, were well calculated to invite thorough judicial investigation. Assuming that such judgments, executions, and levies were the result of collusive and fraudulent purposes of giving and obtaining unlawful preferences and to defraud other creditors, still the questions recur whether the receiver, or Stearns & Spingarn as mere creditors at large, were in a position to successfully invoke the equity powers of the trial court, to set aside such judgments, executions, and levies, in whole or in part. The statute prescribes five classes of cases in *474each of which, a receiver may be appointed. R. S. sec. 2787. The case at bar falls within none of these classes, except the fifth, which provides, in effect, that “ a receiver may be appointed ... in such cases as are now provided by law, «or may be in accordance with the existing practice, except as otherwise provided ” in the statutes. So the statutes and rules of court provide for actions and supplementary proceedings by judgment creditors who have had executions returned unsatisfied, in whole or in part, and for the appointment of receivers therein. R. S. secs. 3029, 3035, 3036; Circuit Court Rule XXVIII, secs. 1-7; Schuerman v. Matthews, 78 Wis. 309; Holton v. Burton, 78 Wis. 321.
Where a receiver is appointed in such an action or proceeding, he may, as the representative of such judgment creditor or creditors, successfully invoke the equity powers -of a court in setting aside fraudulent transfers previously made by such judgment debtor. But here the receiver was not appointed in any such action or proceeding, and there is no claim that he represents any such judgment creditor. He was appointed in a suit by two of the partners of an insolvent firm against the other partner for the ostensible purpose of winding up the business of the firm. By such appointment he succeeded to all rights of action belonging to the firm, and occupies, in general, substantially the same relation to the creditors of the firm and those claiming liens upon firm property which was previously occupied by the firm. 20 Am. & Eng. Ency. of Law, 235; Beach, Receivers, § 576; High, Receivers, § 495. The judgments, executions,- and levies were certainly binding as against Weber Bros. Clemens v. Clemens, 28 Wis. 637; Dietrich v. Koch, 35 Wis. 618; Davy v. Kelley, 66 Wis. 452. Upon the principle already stated, the same is true as against the -receiver in this .-action. But the receiver was not a necessary party to a suit or proceeding by other creditors than those having such judgments, to set aside the levies made before his appoint*475ment, or to establish their superior right to assets or funds in his hands. Mechanics' Nat. Bank v. Landauer, 68 Wis. 44. But Stearns & Spingarn, being mere creditors at large, were in no position to attack the validity of those judgments, executions, and levies on the ground that they were procured by collusion and fraud. Gregory v. Rosenkrans, 78 Wis. 454; Ullman v. Duncan, 78 Wis. 213; Manson v. Phœnix Ins. Co. 64 Wis. 26. Such an attack could only be successfully made by them or such other creditors in aid of some lien or right acquired at law, or after their legal remedies had been exhausted. Nassauer v. Techner, 65 Wis. 388; Meissner v. Meissner, 68 Wis. 336; Ahlhauser v. Doud, 74 Wis. 400; Gilbert v. Stockman, 81 Wis. 602; North Hudson B. & L. Asso. v. Childs, 86 Wis. 295. In other words, a court of equity will not interfere in aid of creditors who have not reduced their claims to judgment nor acquired any lien upon the debtor’s property. 20 Am. & Eng. Ency. of Law, 311.
But counsel seek a departure from these well-established rules of law, on the ground that the trial court, by the order of September 5, 1894, appointing a receiver and sequestrating the property of the firm, expressly restrained “ all persons having claims or demands against the said partnership . . . from commencing any action against said copart-nership.” That portion of that order was certainly improvidently granted, and must be regarded as a nullity. It tends to support the argument of counsel that the judgments, executions, and levies mentioned were procured by collusion with the debtors and for unlawful purposes. But, however strong may be our suspicions in that direction, we must, nevertheless, declare the law as it is, leaving creditors at large to such remedies as they may be advised. Certainly, the trial court could not, by such order, bar Stearns & Spingarn, or any other creditors at large, from commencing and maintaining a personal action against .Weber Bros., nor *476from obtaining a personal judgment against them and issuing execution thereon. Had they done so, and then, in an appropriate manner, filed a bill in equity in aid of such execution or some equitable levy, a different question would, have been presented. Counsel invokes the doctrine that, where a party has a clear equitable right, a court of equity may invent an appropriate remedy. The insurmountable difficulty of doing so in the case at bar is the failure of Stearns & Spingarn to put themselves in a position to maintain such right in a court of equity.
The orders mentioned are appealable. E. S. sec. 3069. They affect the sheriff individually and as the representative of the parties named; and the attorneys represent their clients as well as themselves.
By the Court.— The several portions of the orders of the superior court of Milwaukee county of September 25,1891, and October 11,1894, which are appealed from, are reversed, and the cause is remanded for further proceedings according to law.