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Perkins and Brown agt. Warren,
This action was brought to recover an alleged balance of an account, amounting to between four and five thousand dollars. The claim thus made by the plaintiffs was denied by the defendant, who insisted that there was a balance due to him from the plaintiffs of between two and three thousand dollars. The cause had been referred to a referee and was pending before him at the time the order appealed from was made.
The order was made on proof by affidavit, that on the first day of October 1851, and since the commencement of this suit, the defendant sold and conveyed to his cousin, Perry Warren, real and personal property, to the amount of 13,000 dollars, for which he took the notes of the said Perry Warren. The motion was heard on affidavits after an order to show cause. It was claimed that the transfer of property complained of was made to defraud creditors. The plaintiff Brown made affidavit that he had entire confidence that the plaintiffs would recover judgment against the defendant for the amount claimed. It was shown that in the progress of the cause the defendant had obtained several orders for commissions not executed, and otherwise, which it was alleged were for the purpose of delay, and of giving defendant an opportunity to dispose of said property. In answer to the motion the defendant made affidavit that he believed he had a good defence on the merits; that the claim made in this cause by the plaintiffs was wholly unfounded and unjust, and that he had entire confidence that he should be able to recover against the plaintiffs between three and four thousand dollars; and the defendant also denied that he had obtained any orders for the purpose of delay; that the transfer complained of had no possible reference to the claim made by plaintiffs, or to the possibility of their recovering a judgment against him; that in consequence of ill health, by reason of which he had been unable to work the farm, he had intended to sell it ever since 1846; and that he still owned 250 acres of good farming lands worth between seven and eight thousand dollars, and was worth over and above said lands, and free and clear from all incumbrances and above all debts and liabilities, more than enough to pay and satisfy any judgment the plaintiffs might by possibility recover against him. The defendant further showed by the affidavit of a third person, that defendant had fre
Perkins and Brown agt. Warren.
quently offered his property for sale during the last two years, and that the property was sold to Perry Warren for a fair and adequate consideration, and that Perry Warren was believed and reputed to be wealthy and entirely responsible for the money agreed to be paid for the property bought by him, independent of the property so purchased.
The power to make the order appealed from is claimed to have been conferred by the last clause of section 219 of the Code, in the following words: “And where, during the pendency of an action, it shall appear by affidavit that the defendant threatens, or is about to remove or dispose of his property with intent to defraud his creditors, a temporary injunction may be granted to restrain such removal or disposition."
The order appealed from is as broad in its operation, if not as full and particular in its language, as an injunction granted on a creditor's bill under the practice of the late Court of Chancery, or an order made in proceedings supplementary to execution under the last clause of section 298 of the Code. Such an order could not be made under the late chancery practice, and can not be made now, under the section last cited, until the plaintiff shall not only have established his demand by obtaining judgment, but shall also have attempted, unsuccessfully, to collect it on execution.
It is a most important question of practice to inquire, whether under the last clause of section 219 of the Code above cited, an injunction may now be obtained during the pendency of the action, that shall stop every business transaction of the defendant, and paralyze his power over his property, whenever a plaintiff shall succeed in satisfying a justice of this court or a judge of the county court, that some transfer of property made by the defendant was so made with the intent to defraud creditors. If this can now be done, it is not only a new practice, but one most destructive to the business of a defendant. Such an interference, if it could be permitted on a mere claim of indebtedness, would be greatly prejudicial to the commercial interests of the community. It has long been regarded as a cardinal principle, that the legal right of the plaintiff must be established before he can call to his aid the extraordinary power of a court of equity; and
Perkins and Brown agt. Warren.
a writ of injunction could never be granted, where there was doubt about the legal right. The law was still more careful in protecting a defendant from interference by an injunction that would suspend all his business operations; for in addition to establishing the legal right by the recovery of a judgment, it required the plaintiff first to make the attempt to collect his demand by execution.
If the law is now changed so as to permit an injunction like this to issue pendente lite, then our practice presents this extraordinary feature, that the same remedy may now be had on application before judgment, as on application after judgment and execution returned unsatisfied. The facts to be set forth would be somewhat different; as, in the former case, it would be necessary to show an intent to defraud, but the remedy would in both cases be the same.
In giving effect to the section under which this extraordinary power is claimed, we ought to be limited by the language employed. We should exercise no power not expressly conferred. The language of Bronson, J., in speaking of a less summary statute, the non imprisonment act, in The People vs. The Recorder of Albany (6 Hill, 432), is fully applicable here. He said “ the more I see of these summary proceedings, the more fully I am convinced they should be carefully watched. They will otherwise be turned into the means of oppression.”
The statute (Code, $ 219) only authorises a temporary injunction where it shall appear by affidavit that the defendant threatens, or is about to remove or dispose of his property with intent to defraud his creditors: and then the injunction can only restrain “such removal or disposition,” that is to say, the removal or disposition threatened, or about to be made. If it be a threat to remove property generally, the injunction may perhaps, there being no other objection, be as general as the threat. But, I am inclined to think, the statute was only intended to prevent the consummation of some particular act, which the defendant threatens or is about to do, rather than to restrain generally the sale or disposition of property, and thus tie up all the business concerns of the defendant, pending a litigation.
But it is only when the act is threatened, or about to be done,
Perkins and Brown agt. Warren.
Here the pro
and not when it has been done, that this court is authorized to interfere during the pendency of an action. The remedy given is preventive merely. The facts disclosed by the affidavits did not bring this case within the terms of the act. perty had been sold and conveyed, and there was no proof whatever that the defendant threatened, or was about to remove or dispose of the notes he had received for the property.
I think it is a mistake to suppose that this provision authorizing a temporary injunction was intended as a substitute for proceedings under the act “to abolish imprisonment for debt.” The provisions of that act are still unrepealed and in full force (Code, § 471). The transaction complained of, if made with the intent to defraud creditors, might fall within the provisions of that act, (section 4, subdivision 3, 2 R. S. 3d ed. 107), which authorizes a warrant to be issued where it is shown that the defendant has assigned, removed or disposed of, or is about to dispose of any of his property with intent to defraud his creditors. The provisions are entirely unlike and with good reason. Under the non imprisonment law the defendant may be arrested to answer for a past transaction. If the allegation made against him is controverted, a trial takes place on legal evidence; and if convicted of the fraudulent act charged, the defendant is to be punished by imprisonment. Under the section of the Code in question, the court has no power to punish for an act already committed: it can only prevent the commission of threatened or apprehended fraudulent acts. I think the provision of the statute authorizing an injunction, inapplicable to the facts shown by the affidavits.
A reasonable construction must be given to the clause in question. The language is general. “ Where during the pendency of an action, it shall appear,” &c. It certainly can not be supposed that this remedy by injunction may be granted in every action that may be brought. There may be cases in which the plaintiff will have no interest in thus enjoining the defendant. Suppose, for instance, an action to compel a specific performance, or an action to redeem; a fraudulent transfer of property not involved in the litigation, would give no reason for interference by injunction. I think all that was intended by the legislature in using such general language, was to make the statute broad
Perkins and Brown agt. Warren,
enough to cover every case where there may be an equitable ground for interference.
If this is the correct view of the statute, there is no reason for supposing that the legislature intended to give such a remedy by injunction, when the legal right of the plaintiff was controverted and denied upon oath. In this case the plaintiff swears to a balance due him from the defendant of between four and five thousand dollars. This was enough, prima facie, to establish his right. But on showing cause, the defendant denied this demand on oath, and claimed a balance due him from the plaintiffs of between two and three thousand dollars. The legal right of the plaintiff was thus denied as broadly as it was asserted; and there was no more reason to suppose a balance due from the defendant than from the plaintiffs. The defendant, in my opinion, had just as good a right to watch over the transactions of the plaintiffs as they had to question those of the defendant. Under such circumstances, I think, an injunction should have been refused, even if the affidavits had made out a case of apprehended fraudulent transfer. The plaintiff's demand being denied on oath, and not being supported by any evidence, there was no proof that he had any interest in restraining the defendant. It was like the well settled equity practice, by which an injunction is dissolved, if the whole equity of the complaint is denied by the answer.
I think the defendant put at issue the whole equity of the application by denying on oath the existence of any demand in favor of the plaintiffs against him. He denied also the fraudulent intent. I admit that a mere denial of a fraudulent intent can not avail a defendant where the facts established authorize a legal inference that the intent was fraudulent. But in this case facts were set forth by the defendant, going to show the improbability of such intent. The entire solvency of the defendant, and the fact that the defendant was still the owner of real estate worth between seven and eight thousand dollars, were also shown in answer to the application.
But without deciding whether there was sufficient evidence of a fraudulent intent, I think, for the reasons above set forth, that the learned justice erred in granting the order appealed from and that it should be reversed, with $10 costs.