Bixler v. Fry

122 N.W. 119, 157 Mich. 314, 1909 Mich. LEXIS 1001

• Court: Michigan Supreme Court
• Decided: July 6, 1909
• Docket: Docket No. 161
• Status: Published

Opinions

Ostrander, J.

Complainant charges in his bill of complaint that he is a creditor of R. S. Drew, and that there are other creditors of said Drew whose names and the amount of whose demands he is unable to state; that said Drew sold his stock of merchandise to the defendant, who claims to have paid the purchase price, without complying with the provisions of Act No. 223 of the Public Acts of 1905; that the sale was void as to creditors of Drew, who has no other property or effects or means out of which creditors can secure their demands. In behalf of himself and of all other creditors of said Drew, he prays that a receiver of said goods may be appointed, an accounting had, the property disposed of, and the proceeds distributed to creditors. It is not charged that the complainant is a judgment creditor of Drew. It is not charged that defendant, Fry, is pecuniarily irresponsible.

To this bill defendant, Fry, interposed a demurrer, the third ground of which is the nonjoinder of Drew as a party defendant, the fourth ground, that complainant has not recovered a judgment at law against Drew, and the fifth ground, that the complainant has an adequate remedy at law. It was held in Musselman Grocer Co. v. Kidd, Dater & Price Co., 151 Mich. 478 (115 N. W. 409), that a purchaser may be garnished by the creditor; expressly overruling the contention that a receiver must be appointed to hold the property sold for the benefit of all creditors of the seller. This ruling necessarily disposed of the contentions that the statute itself provided for or indicated a proceeding in rein or for the exclusive jurisdiction of a court of equity. This construction of the statute also excludes the idea that in the statute itself is found provision for the co-ordinate jurisdiction of courts of equity and of law. The most that can be said is that the statute does not necessarily exclude equitable interference, if such interference is warranted under general rules.

It is one of the elementary rules of equity pleading that necessary parties shall be brought upon the record. The debtor, the person against whom the demand of the complainant is asserted, the party to the contract which is the foundation of complainant’s right to proceed at all, the person charged with making a void sale of his property, is a necessary party defendant.

But, further than this, we are referred to no rule which permits the maintenance of the bill, even with proper parties, by one who is not a judgment creditor. The right to attack a void sale or transfer of property is no other or different than the right to attack a sale or transfer voidable merely. A court of equity is open to a judgment creditor to attack and set aside transfers of property made by his debtor. If it appears that complainant has an adequate remedy at law, jurisdiction will ordinarily be denied. That complainant here has a remedy at law must be admitted. It is not made to appear that the remedy is inadequate. The learned trial court was of opinion that to delay the appointment of a receiver until creditors had recovered judgments might render the statute of no benefit to creditors,- and, without passing upon the contention that Drew is a necessary party defendant, acted upon what was deemed the necessity of the case in overruling the demurrer.

We are of the opinion that the bill makes no case for the appointment of a receiver and that the demurrer thereto should be, for the reasons given, sustained. Order overruling the demurrer is reversed, with costs of both courts. The record will be remanded for further proceedings as complainant may be advised.

Blair, C. J., and Grant and Hooker, JJ., concurred with Ostrander, J. Montgomery, J. I concur on the ground of want of parties. McAlvay, J., concurred with Montgomery, J.