Iauch v. de Socarras

39 A. 381, 56 N.J. Eq. 524, 1898 N.J. Ch. LEXIS 77
CourtNew Jersey Court of Chancery
DecidedOctober 16, 1898
StatusPublished
Cited by4 cases

This text of 39 A. 381 (Iauch v. de Socarras) is published on Counsel Stack Legal Research, covering New Jersey Court of Chancery primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Iauch v. de Socarras, 39 A. 381, 56 N.J. Eq. 524, 1898 N.J. Ch. LEXIS 77 (N.J. Ct. App. 1898).

Opinion

Pitney, V. C.

The original bill in this cause was filed on the 8th of February, 1896. It is based upon a judgment recovered by the complainant, Iauch, against Mrs. Pauline de Socarras on the 6th of February (two days before the filing of the bill), in the supreme court of this state, and an execution issued forthwith thereon, levied by the sheriff of Monmouth county upon certain lands described in the bill. It sets forth that Mrs. de Socarras was seized of the premises in her own right prior to the recovery of the judgmant, and after incurring the indebtedness which was its foundation, and that on the 8th of November, 1895, she conveyed the lands to a third person, and on the same day that third person reconveyed them to her in trust for the benefit of her son, Rudolfo. The charge of the bill is that this familjr settlement was void as against the complainant, and prays that! the deeds of settlement from the third party to hers.elf, as trustee for her son, .may be declared to be void as against the complainant, and that the title of the premises may be decreed to be reinvested in her, so that they may be sold under the execution for the satisfaction of the judgment and a good and clear title given therefor to the purchaser thereof. There is no prayer that they may be sold for the benefit of creditors generally.

This bill, as originally framed, did not make .the son, Rudolfo de Socarras, Jr., a party defendant, and was met with a demurrer for want of parties, and that demurrer was sustained. The bill was then amended by adding Rudolfo as a party. Another gen[526]*526eral demurrer was then interposed, which was overruled. An appeal was taken from the order overruling the demurrer, which was dismissed and the cause remitted.

In September, 1897, the defendants filed a-joint and several answer and cross-bill. By the first they alleged a consideration for the settlement, and by the last set up what was claimed to be an equitable defence to the complainant’s judgment, and prayed that it be declared not binding in equity upon Mrs. de Socarras. A replication was filed to this cross-bill, and the cause was at issue and came on for hearing and trial before me as vice-chancellor.

On the second day of the. hearing, counsel appeared for the petitioners . above named — Milligan & Brazo — and asked permission to cross-examine the witnesses. It then appeared that on the.26th of June, 1897, more than a year after the filing of the bill, the petitioners had made an ex parte application to the court, by a petition which set forth that they had recovered judgment on the 30th of June, 1896, against Mrs. de Socarras in the circuit court of the county of Monmouth, but not stating the date of the accrual of the debt upon which it was founded, and that the bill in this cause was a creditor’s bill filed by lauch, “ for the benefit of himself and all other creditors of said Pauline de Socarras who shall in due time come in and,contribute to the expenses of the suit.” On the strength of that allegation in the petition, and without any notice to either of the parties, an advisory master advised the order now. brought in question, which directed that the said petitioners be and they are hereby admitted as a party complainant to this suit.” That order was made on the 6th of July, 1897.

Neither of the parties to the original suit had any notice of it, and the appearance, at the hearing, of counsel for petitioners was a surprise to them. After some discussion, the counsel for complainant agreed in open court that the petitioners might be admitted as parties complainant, provided they did not thereby gain any priority over the complainant’s judgment, but should come in, if at all, subject to his judgment. These terms were consented to by the counsel of the petitioners, but not by the [527]*527counsel of the defendants, and the latter gave, notice of amotion to vacate the order of July 6th, 1897, admitting the petitioners as complainants in the cause, upon the grounds, first, that said order was improperly, unadvisedly and inadvertently made, and second, that the order is illegal and contrary to the practice of the court in such cases.

The facts as above set forth raise a nice and important question of practice, which was elaborately argued, and has received careful consideration.

The complainant’s bill contained no statement or admission that it was filed for the benefit not only of himself, but of all those creditors who might choose to come in and contribute to the expense of the suit. The allegation of the petition in that regard was untrue, and misled the advisory master into making an order, without notice to any of the parties, which cannot stand for a moment, unless the character of the suit is such as that the petitioners had an absolute right to be admitted as parties complainant, without regard' to the allegations of the bill.

The consent given at the hearing by the counsel for the complainant removes a part of the difficulty. But the question still remains, whether the order can stand against .the protest of the defendants.

I had occasion to consider the question in some of its aspects in the recent case of Mallory v. Kirkpatrick, 9 Dick. Ch. Rep. 50 (at p. 56), and have since taken the trouble to look at most of the authorities, with the following result:

That class of creditors’ bills in which the suit can properly be said to be necessarily brought for the benefit of other creditors besides the complainant, comprise those which seek to reach, establish and administer assets in the hands of a trustee.who holds them either voluntarily or, by force of circumstances, involuntarily, for the benefit of all the creditors. They may be classed as follows:

First. Suits to administer the estate of a decedent held by an executor or administrator, and apply the same to the payment of his debts.

Second. Where' a living creditor voluntarily assigns property [528]*528to a trustee for the benefit of his creditors, and a creditor seeks to have that trust administered.

Third. Where there is an assignment by operation of law for the equal benefit of the creditors, such as occurred in all instances of attachmeuts against foreign or absconding debtors under our statute until the recent change in that respect.

Fourth. Cases where a creditor of a corporation seeks to reach unpaid subscriptions of stock, as in Wetherbee v. Baker, 8 Stew. Eq. 501; and see Mallory v. Kirkpatrick, 9 Dick. Ch. Rep. 50.

Fifth. A creditors’ bill, under our Chancery act (§§ 88, 94), in which equitable assets are reached by a receiver, and are all subject to the debts of the defendant, but are not distributed pari passu, and the complainant is first paid. As to this class of cases, see Whitney v. Robbins, 2 C. E. Gr. 360.

In all these cases the property reached becomes assets in the hands of the court, to be distributed among the creditors either equally or with certain priorities.

A sixth class is that now before the court, where a single judgment creditor of a living debtor obtains a lien upon real estate, or, by execution, on leviable chattels, and asks the aid of the court either to perfect an equitable title already in the defendant in execution or to set aside a fraudulent conveyance made by him to a third party.

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Bluebook (online)
39 A. 381, 56 N.J. Eq. 524, 1898 N.J. Ch. LEXIS 77, Counsel Stack Legal Research, https://law.counselstack.com/opinion/iauch-v-de-socarras-njch-1898.