Bragg v. Gaynor

21 L.R.A. 161, 55 N.W. 919, 85 Wis. 468, 1893 Wisc. LEXIS 305

• Court: Wisconsin Supreme Court
• Decided: June 21, 1893
• Status: Published

Opinion

PiNNey, J.

1. The contention that the affidavits used to obtain the orders for service of summons and complaint on the defendants James Gaynor and Witherwax, under S. & B. Ann. Stats, secs. 2639, 2640, are void because the respective affidavits used to obtain them do not describe any property of the defendant within the state or in which he had any interest tobe affected by the action, cannot be sustained. The case of ' Winner v. Fitzgerald, 19 Wis. 393, arose under sec. 10, ch. 124, R. S. 1858, when the grounds for making the order were required to appear wholly by affidavit. The present statute (S. & B. Ann. Stats, sec. 2640) provides that the application for the order' “ shall be based upon the complaint, duly verified and filed, and an affidavit, together showing the facts required to exist.” In Cummings v. Tabor, 61 Wis. 188, the change in the statute was considered, and it was held thatthe statute now requires the order to be based in part upon a verified complaint filed, and it does not expressly require that the affidavit which is to accompany the verified complaint shall show that a cause of action exists against the defendant. . . . It does not say, as the old statute did, that such fact must be made to appear by affidavit.” It is enough, within the statute and the rule established by this decision, that the applications were made upon a complaint duly verified, and on affidavits, together showing the facts required to exist. Voelz v. Voelz, 80 Wis. 507, 508. The rule thus laid down has not been departed from or modified' in any subsequent case. The failure to describe the property in question in the affidavits does not render the orders invalid. The property in question is sufficiently described in the complaint for all purposes of jurisdiction, if it is of such character and so circumstanced that on a creditors’ suit it can be regarded as property in this state which can be reached in the action and applied to the payment of the judgment against James Gaynor, and as against said Witherwax, if his claim to it, as found by the circuit court,' is colorable and fraudulent as against the plaintiff.

2. It has been the law in this state from a very early period that debts due to a nonresident debtor from citizens of this state are subject to garnishee process at the suit of his creditor in the courts of this state, and that such debtor can be brought into such courts by publication of summons; and where the debt is claimed by another he need not be summoned at all, but, in order to conclude him, it would be necessary to give him timely notice of the proceeding and to tender him the defense of it. Adams v. Filer, 7 Wis. 306; Wilson v. Groelle, 83 Wis. 530. More recent provisions have been made for bringing in the adverse claimant as a party defendant, so that as to the different claimants the proceedings may assume the character of an action of inter-pleader, and for service of an order without the state, or by publication, if either is a nonresident. The proceedings are regarded as an action, and the court may adjudge the recovery of any indebtedness, the. conveyance, transfer, or delivery to the sheriff, or any officer appointed by the judgment, of any real estate or personal property disclosed or found liable to be applied to the plaintiff’s demand, or to pass title thereto, and. may by its order, when proper, direct the manner of making sale and of disposing of the proceeds or any money or other thing paid over or delivered to the clerk or officer (Baker v. Lancashire Ins. Co. 52 Wis. 193 ; Prentiss v. Danaher, 20 Wis. 311); and the garnishee may be enjoined from disposing of the debtor’s property (Almy v. Platt, 16 Wis. 169; Malley v. Altman, 14 Wis. 22); “and any property, money, credits, and effects held by a conveyance or title void as to the creditors of the defendant shall be embraced in the liability of the garnishee; ” but no garnishee can be charged “ by reason of his having drawn, accepted, made, indorsed, or guarantied any negotiable bill, draft, note, or other securitjr ” (S. & E. Ann. Stats, secs. 2766-2768).

But for the last-named provision, the indebtedness of the defendants Ilelmer and the Chapmans to the defendant James Gaynor could have been reached by process of garnishment, and applied to the satisfaction of the judgment against him, although a nonresident of the state, and although he had made a colorable or fraudulent transfer of the indebtedness to the defendant Witherwax, also a nonresident. For all such purposes, these debts would have been regarded as property in this, state and subject to the jurisdiction of its courts, although both Gay not’ and With-erwax were nonresidents. Such result would.not have been considered in conflict with the general rule that the situs .of personal property is for many purposes, such as taxation, succession, and distribution, regarded as having its locality at the domicile of the owner. By force of statute law, as' well as public policy declared thereby and in the decisions of the courts, the situs or place where these debts are considered to be with reference to jurisdiction of our courts over them for the purpose of subjecting them to the satisfaction of debts due to a resident of this state from a nonresident in order to protect, do justice to, and satisfy creditors resident here, is that of such resident debtor owing the same. The right to so reach and appropriate such debts for such purposes has been affirmed by numerous adjudications from the earliest period, and it is too late now to attempt to maintain the proposition that for all purposes the situs of debts so sought to be reached and applied is at the domicile of such nonresident. They are to be regarded, for the purposes of such proceedings, as property abiding or being in the domicile of the party owing them, and are as much subject to the jurisdiction and control of our courts as tangible property of a nonresident found within our jurisdiction. It cannot be disputed that tangible property so situated could be seized and applied to the satisfaction of the debts of a nonresident; and it is equally clear, as it seems to us, that debts, things in action as distinguished from things in possession, may be subjected to the equitable jurisdiction of our courts for the same purpose. The process of garnishment operates as an attachment, and fastens on such debts a lien by which they are brought under the dominion and jurisdiction of the court. Embree v. Hanna, 5 Johns. 102, 103; Milne v. Moreton, 6 Bin. 353; Bissell v. Briggs, 9 Mass. 467, 468. In Tingley v. Bateman, 10 Mass. 346, it is said: “The summoning of a trustee- is like a process in rem. A chose in action is thereby arrested and made to answer the debt of the principal. The person entitled by the contract or duty of the supposed trustee is thus summoned by the arrest of this species of effects. They are to be considered for this purpose as local, and as remaining at the residence of the debtor or person intrusted for the principal.” And in Blake v. Williams, 6 Pick. 303, it is said that “the relation of debtor and creditor,and the rights of the latter over the effects of the former, are distinct objects of jurisprudence, within the control of the legislative power of the country where the property is. This power is absolute and uncontrollable. It may be unreasonably exercised, but still it is legal if so willed by a sovereign independent power, for the dominion is here.” Story, Confl. Laws, §§ 390, 592, 592a; Milne v. Moreton, 6 Bin. 361.

The courts of this state can exercise jurisdiction only over persons and property within its territory, but it is familiar law that “through its tribunals it may subject property within its limits, owned by nonresidents, to the payment of demands of its own citizens against them; and the exercise of this jurisdiction in no respect infringes upon the sovereignty of the state where such owners are domiciled. Every state, it is held, owes protection to its own citizens, and when nonresidents deal with them it is a just and legitimate exercise of authority to hold and appropriate any property owned by such nonresidents to satisfy the claims of its citizens.” Pennoyer v. Neff, 95 U. S. 726. “ This jurisdiction is called into exercise and attaches where property is once brought under the control of the court by seizure or acts of equivalent import, and which stand for and represent the dominion of the court over the thing, and, in effect, subject it to the control of the court. This may be by the levy of a writ or by the mere bringing of a suit. ‘ It is immaterial,’ said the court, by Mr. Justice McLeaN, in Boswell’s Lessee v. Otis, 9 How. 336, 'whether the proceeding against the property be by an attachment or bill in chancery.’ ” The property may be bound without actual service, within the jurisdiction, of process upon the owner, where the only object of the proceeding is to enforce a claim against the property specifically of a nature to bind the title. Notice of the proceeding may be given by publication, etc., as prescribed in the statute (Cooper v. Reynolds, 10 Wall. 308, 317; Heidritter v. Elizabeth O. C. Co. 112 U. S. 300-302); and the property will be effectually bound by the judgment that may follow. That local laws may thus fix the situs of debts at the domicile of the debtor for such purposes that under such laws they may be attached, and compulsory payment will protect the debtor everywhere against a suit for the recovery, of the same debt by the creditor, is well established by many adjudicated cases, among which are Allen v. Watt, 79 Ill. 284; Bethel v. Chipman, 57 Mich. 379; Newland v. Reilly, 85 Mich. 151; Hannibal & St. J. R. Co. v. Crane, 102 Ill. 249; Morgan v. Neville, 74 Pa. St. 52; Cochran v. Fitch, 1 Sandf. Ch. 142; Williams v. Ingersoll, 89 N. Y. 523, 524. And the correctness of this doctrine is distinctly recognized in Guillander v. Howell, 35 N. Y. 658, 659, as an exception to the general rule as to the situs of personalty at the domicile of the owner. Garnishee process under our statute is only the equivalent of an equitable attachment, and creates a lien in like manner as by filing a bill, and is in every essential element, so far as it extends, a creditors’ bill (La Crosse Nat. Bank v. Wilson, 74 Wis. 391); and a creditors’ bill is an equitable levy (In re Milburn, 59 Wis. 34).

Had James Gaynor died domiciled in Illinois, the plaintiff, as his creditor, could have taken out administration in Wisconsin, by reason of Gaynor’s ownership of the debts and demands due from the defendants in this action, and enforced collection of his debt by that means, beyond the power of Gaynor’s personal representatives to prevent such result, for locality of personalty of a deceased confers local probate jurisdiction, without consideration as to his last, domicile, and debts due the deceased are deemed lonanota-bilia, i. e., personalty suitable for conferring local probate jurisdiction; and the rule is that simple contract debts constitute such where the debtor (not creditor) resides, and where they can be sued upon. So of any chose in action or money right. Schouler, Ex’rs, § 24; Attorney General v. Bouwens, 4 Mees. & W. 191; Owen v. Miller, 10 Ohio St. 136; Pinney v. McGregory, 102 Mass. 186; Clark v. Blackington, 110 Mass. 373. In Attorney General v. Bouwens, supra, it was held that, “ as bills of exchange and promissory notes do not alter the nature of simple contract debts, but are merely evidences of title, the debts .due on these instruments are assets where the debtors lived, and not where the instrument was found.” In Wilkins v. Ellett, 9 Wall. 740, 742, the court, recognizing the general rule as to the situs of personal property, recognizes also a limitation or qualification in respect to personal property by* the comity of nations, founded on the policy of the foreign country to protect the interests of its home creditors; and the same distinction or exception, as well as the ground for it, is again assigned in the same case. 108 U. S. 258. Under these principles the situs of such debts is made by such local policy the domicile .of the debtors, and not of the nonresident to whom they may owe them.

This action is founded upon the statute (sec. 3029, S. & B. Ann. Stats.) restoring actions in the nature of creditors’ suits, and providing that, “ whenever any execution against the property of any judgment debtor shall have been issued upon a judgment for the payment of money, and shall have been returned unsatisfied in whole or in part, the judgment creditor may commence an action against such judgment debtor and any other person to compel the discovery of any property or thing in action belonging to such judgment debtor, and of any property, money, or thing in action due or held in trust for him, and to prevent the transfer of- any such -property, money, or thing in action, or the payment or delivery thereof to such judgment debtor, except,” etc.; and the court has power by statute to appoint a receiver for such property, money, and things in action. Fraudulent grantees may be- joined as defendants, although they hold by separate conveyances and are. not connected -in interest with each other. Hamlin v. Wright, 23 Wis. 491. This action plainly extends to debts evidenced by bills and notes, and is more comprehensive and far-reaching than a proceeding by garnishment. When commenced by service of process, or notice, it operates as an equitable levy, and creates a lien in equity upon the effects of the judgment debtor, and every species of property belonging to him may be reached and applied to the satisfaction of his debts. Wait, Fraud. Conv. §§ 24, 33; Hadden v. Spader, 20 Johns. 554; Storm v. Waddell, 2 Sandf. Ch. 514, 515; In re Milburn, 59 Wis. 34; Miller v. Sherry, 2 Wall. 249; Tilford v. Burnham, 7 Dana (Ky.), 110, 111; Edmeston v. Lyde, 1 Paige, 637; Beck v. Burdett, 1 Paige, 309.

By fcbe injunction granted in this case against the defendants resident in Wisconsin the court in the most effective manner possible asserted its dominion and control over the indebtedness sought to be reached, and there can be no doubt, we think, that these debts were thus brought, by reason of this equitable levy, within the control'and dominion of the court for the purposes of this action, which was made effective by its final judgment appointing a receiver to collect them and apply the proceeds to the plaintiff’s judgment, with interest and costs. We are not aware of any well-considered case in conflict with this view. The debt or duty evidenced by notes, bonds, or bills is incorporeal and intangible, and exists in idea; or contemplation of law. The note, bond, or bill is the visible, tangible symbol of the debt or duty, which may be' transferred by ■assignment or indorsement thereof. Practically the note, bill, or bond represents money due and to come from the maker or party liable in one state to a party in another, who holds merely the evidence of the existence of the debt for it; and it seems but reasonable and' proper to hold that the situs of the debt for the purposes here in question is at the domicile of the debtor, where collection of it may be •enforced and the property pledged as security may be subjected and applied to its payment. In no other jurisdiction could the security be made available; and it seems clear that the subject matter to which the title or claims in question relate is the property, and not the notes, etc., which are merely evidence of its existence. Owen v. Miller, 10 Ohio St. 143. Loss of the notes' and mortgages, or destruction of them, does not effect or imply a loss or extinction of the, debts which they evidence. They are none the loss property because their amount and maturity are set forth in the notes and mortgages. Kirtland v. Hotchkiss, 100 U. S. 498.

A well-founded distinction would seem to exist between the right of the creditor to collect the debt which may have no locality independent of his own domicile, and the right as to creditors in this state seeking to reach and apply such debts to the payment of their debts against the payee thereof, in which case the situs of the debts for that purpose must be regarded as in Wisconsin, where the right can be made effective as against the persons owing such debts. The case of Owen v. Miller, 10 Ohio St. 136, 143, is directly in point, and fully sustains the plaintiff’s contention, as well as other authorities already referred to. The question upon which this action depends was not involved in the cases of Bryan v. University Pub. Co. 112 N. Y. 382, and Von Hesse v. Mackaye, 55 Hun, 365. Those cases more nearly resemble the proceeding under consideration in the case of Penier v. Hurlbut, 81 Wis. 24.

3. In Winner v. Fitzgerald, 19 Wis. 393, it was held that the officer signing the order of publication, where jurisdiction was based upon property within this state, must be able to see from the affidavit that it was such as is liable to be seized on attachment or execution; but this was said and must be considered in respect to a legal action in form in personam, such as that was, and designed to reach by execution on the judgment therein property which could be seized and sold under such process. Jarvis v. Barrett, 14 Wis. 591. It was not the intention of the court to so narrow the statute as to exclude from its operation and effect property within this state not the subject of such seizure and sale, and thus defeat in a considerable measure the equity jurisdiction plainly intended to be extended as to all property within the state, tangible or intangible, over which the judicial power of the state may be lawfully exercised by an action of an equitable nature, either in rem or one in substance quasi in rem. The language of the statute is general. No such limitation is suggested by it, and we think the statute thus providing for service by publication extends to and includes all equitable interests and all such property as may be reached by an action such as this, as debts having a sitios here and capable of being subjected to the jurisdiction and control of our courts. The statute should be liberally and beneficially construed in favor of citizens of this state or those suing in its courts. We hold, therefore, that the property described in the complaint was not only property in this state, but sufficient to found the jurisdiction of the court, and th&t the objections to the jurisdiction of the court are not well taken.

4. The plaintiff having sued as trustee for others interested in the judgment, as well as in his own right, has also joined as a defendant Patrick Gaynor, the coplaintiff of the plaintiff’s assignor in its recovery, and who afterwards, claiming to be the owner of the entire judgment, collusively and without any consideration executed to his brother, James Gaynor, a satisfaction and discharge of the entire judgment, which is relied on to defeat this action. One purpose of this action is to have this discharge canceled and the respective rights and interests of the claimants in the judgment determined. It was competent for the plaintiff, as such assignee, to bring his action, and to' make such joinder of defendants, so that the discharge or release might be canceled if fraudulent and that the rights of the parties might' be ascertained and adjusted with a view to the proper application of the proceeds of the judgment when collected. The object of the action is not to overhaul, modify, or alter the judgment originally given, but to enforce it, and to settle the rights of Patrick Gaynor and the plaintiff, as the assignee of the judgment, as between themselves, and remove an obstacle wrongfully interposed to its colleotion by the collusive conduct oí Patrick and James Gaynor. The case of Stein v. Benedict, 83 Wis. 603, and cases cited, does not tend to show that the complaint as thus framed ought not to be maintained. The court, upon the evidence produced, properly found that the plaintiff was the sole owner off the judgment; that Patrick Gaynor had no beneficial interest in it; that the discharge by him was without authority and fraudulent and void. Patrick GaynoSs counterclaim failed because it appeared that he and Blewett, t.he plaintiff’s assignor, had not been co-partners.

5. We have examined the evidence, and are satisfied that it sustains the findings of the circuit court. It would serve no useful purpose to protract this opinion with a discussion of the evidence. After a bitter and protracted litigation, a large judgment was recovered against the defendant James Gaynor. About that time, or soon after, he took up his residence in Chicago. He had made loans and investments in the county of Fond du Lac, and the debts in question were due him from parties residing there, in all to a large amount, very much in excess of what would be required to satisfy this judgment. He had a strong motive for attempting in the future, as he had in the past, to avoid payment of it, and had resorted to a device for that purpose which we have been compelled to hold fraudulent. We are satisfied from the evidence that the three mortgages affected by the judgment'in this action, and the debts due to James Gaynor from Moore and from Hughes, two of the defendants, were, not in fact assigned until after this action had been commenced and the injunction served upon the mortgagors Helmer and the Chapmans; that the transfers after-wards made were not real, but a mere device to defeat this action and defraud the plaintiff of his debt. The notes and mortgages had been a considerable time past due. It appears that no inquiry was made by Wither wax, the pretended assignee, of the parties who had made these notes and mortgages, or at least of two of them, either as to the validity of the claims or the value of the property on which they appeared to be secured. These assignments bear the same, date, September 1, 1890. Three of them came to the office of the register of deeds of the proper county about February 10,1891,— surely a long delay in mating registry thereof, if Iona fide; and they were in a .condition showing that they had been freshly written and but a few days before. Proof on this subject was given by witnesses who saw them when received, and who had experience in matters of handwriting and examination of manuscripts. These transfers were without recourse, and appear not to have been made or conducted according to the usual course of business,— that is to say, with examinations in the manner '.and with the prudence and caution that would naturally attend bona fide transactions. The several insurance policies on the mortgaged property for the benefit -of the mortgagee do not appear to have been assigned until January 26. Three days after the assignments were sent for registry, a request came to have them “ recorded and returned soon,” in which James Gaynor joined, saying it would accommodate the party who sent them,— ostensibly the attorney of Witherwax. The subsequent statements and conduct of Witherwax in regard to these claims do not seem like those of a bona fide purchaser, but rather to have been in the interest of James Gaynor; and the latter, in one instance at least, by letter, was quite importunate that the party owing one of the mortgages should pay Wither-wax ; and there are also other facts and circumstances in evidence which tend to show that the alleged transfers were not bona fide and real. The defendants James Gay-nor and Witherwax made default and offered' no explanation of the evidence produced against them. We think the evidence, sustains the findings of the circuit court that Witherwax at the time the action was commenced had not, nor had he afterwards, any real interest in the debts and demands in question, but that James Gaynor was the real owner of them.

See note to this case in 31 L. R A. 181. — Rep.

6. The suppression of the deposition of James Gaynor ia assigned as error, but the deposition is not before us, as it was not included in the bill of exceptions. We cannot say that the appellants have been injured by the ruling of the court. Error must be established affirmatively and will not be presumed. The cases in this court to this effect are very numerous. We cannot presume that this deposition contained anything that would have justified a result different from that at which the circuit court arrived.

It follows from these views that the judgment of the circuit, court must be affirmed.

By the Court.— The judgment of the circuit court is affirmed. \