Summary
In Adee v. Bigler (81 N.Y. 349) it was held that to entitle a creditor to the aid of a court of equity in reaching assets there must be a judgment, an execution issued thereon and a return thereof unsatisfied. It was further held that the fact that the debtor is an insolvent corporation and has conveyed its property in contravention of the statute does not authorize a resort to equity until the remedy at law has been exhausted.
Summary of this case from Kraemer v. WilliamsOpinion
Argued April 27, 1880
Decided June 8, 1880
Peter Van Antwerp for appellant.
Field Deyo for respondent.
The plaintiff in his complaint claims that he has a valid claim against the defendant for money loaned, and asks for judgment for the amount of his claim, and that a conveyance and transfer of the property of the company be set aside, and for the appointment of a receiver.
It is urged that an action can be sustained to set aside the conveyance and transfer, upon the ground that it was made by an insolvent corporation, in contravention of the statute. There is no force in this position, and the remarks cited from the opinion of NELSON, J., in McElwain v. Willis (9 Wend. 548), are not applicable where no judgment has been obtained. That case expressly holds, that to entitle a creditor to the aid of a court of equity, there must be a judgment, an execution on the same, and a return. Nor can the action be upheld upon the ground that the appointment of a receiver is necessary to preserve the property from misappropriation and waste, pending the litigation. The cases cited in support of this position are special, where the claim of a party to share in the distribution of a fund is conceded or established, or the proceeding was expressly sanctioned by statute, and the plaintiff is not brought within the rules laid down.
The provision of the Code of Civil Procedure has not changed the practice in this respect, or established any new rule which authorizes an equitable action before a judgment is obtained. While section 713 may well apply, in some cases, where the right to, or interest in, the property is apparent, it does not confer an equitable remedy under ordinary circumstances, where no judgment has been obtained.
The rule is well settled by a series of adjudications, that, until a creditor has obtained a judgment at law for his demand against the debtor, and the return of an execution unsatisfied, an action in equity will not lie to reach assets and apply them to the payment of a moneyed demand arising upon contract. (2 R.S. 173, § 38; Dunlevy v. Tallmadge, 32 N.Y. 457; Beardsley Scythe Co. v. Foster, 36 id. 565; Ocean Nat. Bank v. Olcott, 46 id. 12; McElwain v. Willis, supra.) Before judgment and execution, a creditor at large is not entitled to the interference of a court of equity on the ground of fraud. ( Wiggins v. Armstrong, 2 Johns. Ch. 144.) Nor do allegations of insolvency change this well-established rule. ( Estes v. Wilcox, 67 N.Y. 264.)
In accordance with the authorities cited, the judgment should be affirmed, with leave to the plaintiff to amend his complaint upon the usual terms.
All concur.
Judgment affirmed.