Lewis v. Shainwald

48 F. 492, 7 Sawy. 403, 1881 U.S. App. LEXIS 2654
CourtU.S. Circuit Court for the District of California
DecidedNovember 25, 1881
StatusPublished
Cited by8 cases

This text of 48 F. 492 (Lewis v. Shainwald) is published on Counsel Stack Legal Research, covering U.S. Circuit Court for the District of California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lewis v. Shainwald, 48 F. 492, 7 Sawy. 403, 1881 U.S. App. LEXIS 2654 (circtdca 1881).

Opinion

Sawyer, J.

• This is a hill in equity, called by appellant’s counsel a “creditors’ bill,” based upon a prior proceeding, in which a decree had been entered in the district court against the respondent, appellant here, for a large sum of money, and execution issued, upon which a return of nulla bona had been made. It is claimed by the respondent that, prior to the adoption of the Revised Statutes in the state of New York, no such thing as a creditors’ bill, in the sense since used, was known; that a creditors’ bill of the character here set forth was unknown to the court of chancery; and that, therefore, the caséis not properly one of equity jurisdiction. Upon this proposition some decisions of the English courts are cited; and it appears that some of the latter decisions overrule some of the former ones upon certain points. In this connection equity rule 90 is cited as having a bearing upon the case, as prescribing that the English chancery practice shall be adopted in cases where our equity rules do not apply. That rule is as follows:

“In all cases where the rules prescribed by this court or by the circuit court do not apply, the practice of the circuit court shall be regulated by the present practice of the high court of chancery of England, so far as the same may [493]*493reasonably be applied consistently with the local circumstances and local convenience of the district where the court is held, not as positive rules, but as furnishing just analogies to regulate the practice.”

In my judgment, that rule does not in any way affect the question. The jurisdiction of this court is derived from the constitution and laws of the United States, and these rules are simply rules of practice for regulating the mode of proceeding in the courts. They do not, and could not, properly, either limit or enlarge the jurisdiction of the court. The rule quoted simply regulates the practice in exercising the jurisdiction of the court in those respects wherein the rules adopted do not apply; but the practice of the high court of chancery is to be applied, not as controlling, but simply as furnishing just analogies to regulate the practice.

I am satisfied that creditors’ bills of some kinds, whether of the precise character of that now under consideration or not, were .entertained both by the English chancery courts and in the courts of chancery in the several states, particularly in the courts of New York, prior to the adoption of the Revised Statutes of the hitter state. The creditors’hills which were recognized previous to that time were, perhaps, in different form from that then adopted: but there undoubtedly were instances of bills maintained by creditors to subject the assets of debtors to the payment of their debts. The discussions upon tiie subject related mainly to the character of the assets and the circumstances of the particular case. In the case of Hadden v. Spader, 20 Johns, 554, before the court of errors, and in which the decision of Chancellor Ktcxt sustaining a creditors’ bill is affirmed, I think the rule is established that certain assets can bo reached and appropriated by a bill filed by a creditor; and several prior cases recognized the same principle. In the subsequent case o i Donovan v. Finn, Hopk. Ch. 59, there was suggested some limitation. That case, however, did not overrule, or purport to overrule, as it could not, the decision of the court of errors in the case last referred to. Indeed, the two decisions, as to the real point involved and decided, do not conflict. The latter case was one into which the element of fraud, either actual or constructive, did not enter. It was simply a case where a legacy had been left to a debtor, which was in the hands of an executor, and a creditors’ bill was filed to reach that legacy. There was no collusion or fraud, or voluntary conveyance, or other subject-matter of equity jurisdiction in the case. The debt was treated as an hpnest debt, and the chancellor held that it could not properly be reached by a creditors’ bill. He recognizes, however, the propriety of filing such bills in cases of fraud. Frauds and trusts are in themselves subjects of equity jurisdiction. Indeed, matters of fraud and trusts are among the most extensive heads of equity jurisdiction. Wherever there is iiapd in a caso which cannot be fully remedied at law, equity intervenes and uncovers the fraud; and the fact that a creditor is injured by a fraudulent concealment or withholding of property brings him into such relations to the fraudulent transaction that lie may, on that ground, invoke the equitable jurisdiction of a court of equity, have the fraud uncovered, [494]*494and take hold of the funds or the property fraudulently concealed and .withheld from him. He comes within the jurisdiction of the court, not merely because he is a creditor, not because his bill is a creditors’ bill, but because he presents a case in which he sets forth matters of fraud or trust; and equity entertains his bill simply because he stands in such a relation to the fraudulent transaction that he is entitled to hare the fraud uncovered, or a trust declared and enforced.

This principle is recognized in the case last referred to. I read from the decision as reported in 14 Amer. Dec. 533. After stating that “it is apparent that this case does not belong to any general head of equitable jurisdiction, such as fraud, trusts, accidents, mistakes, accounts, or the specific performance of contracts;” that “there is neither fraud nor trust nor accident, nor any other ingredient of equitable jurisdiction,”— the chancellor proceeds to say:

“The English cases cited proceeded, as I conceive, hot upon the ground of subjecting the credits of the judgment debtor to the payment of his debts, but upon some ground of equitable jurisdiction, as fraud or trust, existing in each case. * * * The case of Bayard v. Hoffman, 4 Johns. Ch. 450, was not the case of a judgment creditor; but the object of the suit was to annul an assignment in trust, made by a debtor without consideration. The assignor was insolvent when the assignment was made. That fact not being then known, no actual fraud was intended; but the assignment had all the operation of fraud against the creditors of the insolvent debtor, and for these reasons the cause was of equitable jurisdiction. * * * The case of Hudden v. Spader, 5 Johns. Ch. 280, and 20 Johns. 554, was also a case of an assignment by an insolvent debtor of property upon various trusts, it was clearly a case of trust; the assignment was charged to have been made by fraud, and, though the answers denied that fraud was intended, the facts exhibited a case of fraud. The effect of Die assignment, if it had prevailed, would have been to withdraw and screen from execution the property of the debtor. The assignment was held to be void, and the judgment creditor had relief. These are the principal cases which have been adjudged in this court, and in all of them some acknowledged ground of equitable 'jurisdiction existed. in general, they were suits to set aside conveyances, which prevented the seizure of property by the sheriff, and the conveyances have been considered frauds, either actual or constructive. * * * In giving relief in such cases, this court does not proceed upon the idea of giving execution against a species of property which is exempt from execution at law; but it acts upon some of the most ancient grounds of its jurisdiction, which enable it to give relief in eases of fraud and trust, either to a judgment creditor or to any other person whose just rights may be destroyed or impeded by such a cause.

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Bluebook (online)
48 F. 492, 7 Sawy. 403, 1881 U.S. App. LEXIS 2654, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lewis-v-shainwald-circtdca-1881.