Opinion
05-20-1904
MEYERS v. WEDEL et al.
Rulif V. Lawrence, for complainant. Frank Durand, for defendants.
Creditors' bill by Octavius C. Meyers against George A. Wedel and others to set aside an alleged fraudulent assignment. On order to show cause why an injunction should not be granted. Order dismissed.
The complainant is a judgment creditor of Ella D. Wedel. The defendants are George A. Wedel and Ella D. Wedel, his wife, Louise Wedel, his mother, Henry A. Savage, Caroline Savage, relatives, who it is claimed participated in fraudulent acts narrated in the bill, and James Carton, as assignee for the benefit of creditors of Ella D. Wedel. The bill of complaint alleges that the defendant George A. Wedel conducted business in a notion and fancy goods store in Asbury Park, with a branch store at Ocean Grove; that the business at the Asbury Park store was managed in the name of Ella D. Wedel for the purpose of concealing the real ownership, which was in George A. Wedel, in order to avoid the payment of his debts. The complainant dealt with Ella D. Wedel in making sales of goods to her (to the amount of over $1,000), which he alleges he was induced to sell to Ella by representations made by George regarding her financial capacity and credit. The complainant alleges that, in pursuance of a fraudulent scheme, Ella Wedel made an assignment for the benefit of her creditors to one Carton, and, Carton having put up the property at public sale, George A. Wedel, in furtherance of the fraudulent scheme, acting through the defendant Savage, bought in the stock of goods, and then filed a preferred claim with the assignee for wages alleged to be due him from Ella D. Wedel, his wife, for services in the conduct of the business, which preferred claim was allowed, and the amount thereof was accepted as part payment in settlement of the price of the stock of goods sold by the assignee as above stated; that thereupon George A. Wedel immediately opened the Asbury Park store, and proceeded to conduct the business in his own name. The complainant prosecuted his claim to judgment against Ella D. Wedel, and recovered a judgment in the Supreme Court to the amount of $1,086.95, and issued execution, which was returned "Nothing found." Afterwards, in March, 1903, supplemental proceedings were had on the judgment, and under the order of the court an examination of witnesses was had before a Supreme Court commissioner, including George A. Wedel and Ella D. Wedel, which examination is submitted with the bill of complaint as additional proof for the relief here sought. The bill further alleges that in August, 1901, Mrs. Ella D. Wedel made a fraudulent transfer of the goods and stock in the Ocean Grove Branch store to her mother-in-law, Mrs. Louise Wedel, who turned over the same to the said George A. Wedel; and that all of said transfers were part of the fraudulent scheme to cheat the complainant and other creditors of said Ella D. Wedel. The complainant expressly charges that, although the two stores were conducted in the name of Ella D. Wedel, the profits were received by George A. Wedel, and that it was part of the scheme of the defendant that Ella should pretend to be proprietor of the business, and that the transfers, assignment, and purchase, and the installment of George in the business, were all parts of a fraudulent scheme for the purpose of cheating the creditors and other persons who had been induced to sell goods to the two several stores so conducted. The bill further shows that a fire has occurred in the Asbury Park store, and that insurances which George A. Wedel had effected thereon have come to be due from various insurance companies, and have been adjusted for a sum larger than $5,000, which George A. Wedel is about to collect. The complainant prays a discovery touching the transactions recited in the bill, and that it may be decreed that the defendant George A. Wedel is the actual owner and proprietor of the business conducted by him in the name of Ella D. Wedel, and that he is personally liable for the payment of the complainant's judgment against Ella D. Wedel, and that that judgment may be declared to be a lien on the goods and effects of George A. Wedel contained in the above-named store, occupied by him; and that the insurance moneys aforesaid may be declared subject to the payment of the complainant's judgment, and applied thereto; and that all the fraudulent conveyances mentioned in the bill may be set aside, and declared null and void; and that an injunction may issue restraining George A. Wedel from disposing of or incumbering the goods and property now in his possession at his Asbury Park place of business, and from collecting or disposing of the insurance moneys aforesaid; and also restraining the insurance companies from paying said insurance moneys to said George A. Wedel; and for further relief, etc. On the filing of the bill an order to show cause was allowed, directing that George A. Wedel show cause whyan injunction should not issue restraining him according to the prayer of the bill of complaint, and the insurance company from paying over the insurance moneys to said George A. Wedel, with an ad interim restraint until the further order of the court in the premises. When the order to show cause came on for hearing, the defendants George A. Wedel, Ella D. Wedel, and Louise Wedel filed their answer, circumstantially denying all the acts of fraudulent concealment for the purpose of hindering and preventing creditors which are alleged in the bill of complaint.
Rulif V. Lawrence, for complainant.
Frank Durand, for defendants.
GREY, V. C. (after stating the facts). The only matter presently under consideration is whether a preliminary injunction which the complainant asks in the terms defined in the order to show cause should be allowed. So far as an injunction is asked against the insurance companies who have adjusted the insurance losses and hold the various adjusted sums, amounting to about $5,000, ready for payment to George A. Wedel, the insured, the injunction must be refused. The insurance companies are not made defendants in the bill of complaint. They are neither invited to answer the bill nor is any subpoena prayed against them. It is asked by the bill that they may be enjoined, but an injunction cannot be allowed against any one not a party defendant in the cause.
Regarding the preliminary injunction sought against the defendant George A. Wedel something more should be said. The court of appeals has declared the general rule in this state to be entirely settled that, in order to enable a creditor to challenge, on the ground of fraud, a transfer of property made by his debtor, such creditor must first have obtained a judgment at law or other lien upon his debtor's property. Haston v. Castner, 31 N. J. Eq. 698. In the present case the complainant alleges that the goods and chattels sought to be affected by this suit have always been the property of George a. Wedel; that he, with the assistance of other defendants, concealed his ownership for the purpose of hindering his creditors from collecting their debts, and in the particular case of the complainant used his wife's name as the party carrying on the business, and fraudulently induced the complainants to give her credit in her own name, etc. This course of conduct, if exhibited by satisfactory proof, might justify the complainant's recovery of a judgment at law against George A. Wedel as an undisclosed principal. But no judgment has in fact ever been recovered by the complainant against George A. Wedel, and consequently no charge or lien in favor of the complainant has ever been established against the property alleged to be his, and which it is sought to charge. The complainant, having a judgment only against Ella D. Wedel, asks in the present suit that George A. Wedel may be compelled to pay it, and that an injunction issue to prevent George A. Wedel from disposing of property alleged to be his, although that property is in no way affected by that judgment. This radical defect in the complainant's procedure being manifest on the face of the pleadings, it is not necessary to examine the proofs submitted in support of or resistance to the allowance of a preliminary injunction.
The order to show cause and the ad interim restraint must be dismissed.