West v. M'Carty and Others, 4 Blackf. 244

Dewey, J. This was a suit in chancery commenced by the appellees, Nicholas M’Carty and David Williams, partners in merchandise, and Jacob Landis and Philip Landis, partners in merchandise, against J. L. Potter and Thomas West.

The bill alleges that Potter was indebted to the respective firms in certain sums; that being so indebted, he and West combined together for the purpose of cheating them out of their debts, and that in order to effect that purpose, they made a fraudulent arrangement by which Potter, without any consideration, transferred a large amount of notes, accounts, obligations, mortgages, and indentures to West; that Potter, immediately after this fraudulent transaction, secretly absconded, and had ever since remained out of the jurisdiction of the state; that after the departure of Potter, West concealed and converted to his own use a large amount of other property which had been left by Potter, with intent to defraud the complainants and other creditors of Potter; that West also claimed as his own, horses, wagons, and other property which had been left in his possession by Potter; but that fearing he would be detected in his fraud, he caused an execution for about 30-dollars to be levied upon the property so left; and by fraudulent practices, became himself the purchaser of it at constable’s sale, at a price much below its value.

The bill further charges that Potter, at the time he absconded, was the owner of several certificates, bonds, deeds, and other writings obligatory, for several lots in the town of Indianapolis, which he fraudulently transferred to West; and that West had been for several years before the fraudulent transfers aforesaid, the journeyman of the said Potter; that he had fraudulently converted to his own use, several hundred dollars’ worth of property belonging to Potter; that he had secretly large sums to Potter, and still retained a considerable amount in his own hands.

The answer of West denies fraud, and negatives the assignment to him, either fraudulently or otherwise, of any property or choses in action,—denies all knowledge of any certificates or other evidences o.f ownership in Potter of any real estate legal or equitable,—admits that Potter left the state and that he has not returned, but alleges that West had no knowledge or suspicion that he did not intend to return until long after his departure,—and states that when Potter went away, he declared that his intention was to go to Cincinnati on business, which West believed.

It further states, that while West was the journeyman of Potter he had frequently left home before, leaving West as his foreman and agent to transact his business in his absence; that when he last went away, he left with West several notes and other demands, to be collected and applied to the payment of his, Potter's debts, as West was accustomed to do in Potter's absence; that some property was left in West's hands, a part of which he had caused to be taken on an execution against Potter; which issued upon a judgment against him, which West and another had replevied; that he had himself bid in the property fairly; that finding Potter did not return, and having assumed liabilities for him, he disposed of' part of the property to discharge them, and claimed that Potter remained considerably in his debt after crediting him with all the property, choses in action, &c., which West had received of him.

To the answer of West, the complainants filed a general replication, averring that their bill was true. The state of the accounts between the complainants and Potter, and also of those between Potter and West, including the whole amount of property received by the latter belonging to the former, and the disbursements made by West on account of Potter, were referred to a master in chancery.

It appeared by his report, that Potter was indebted to the complainants in the amount claimed by them; and that West had received of Potter much more property than sufficient to pay them, and that he had, after Potter's departure, paid his debts to a considerable amount. The Circuit Court, founding their decree upon the report of the master, and. taking no notice of the charge of fraud, decreed against Potter and West, to the amount of the complainants’ debts against Potter. West appealed. By agreement of parties, all objection to the appeal on the ground of Potter’s not joining in it is waived.

The real issue formed by the pleadings, was as to the existence of fraud on the part of West. There was no evidence in the cause, in our opinion, to establish the charge of fraud against him. The decree of the Circuit Court is therefore erroneous, as it neither conforms to the allegations of the bill, nor is supported by the testimony adduced. 7 Wheat. Rep. 522, Crocket v. Lee.—10 Ib. 181, Carneal v. Banks.

The whole case made out by the answer of West, the proof, and the master’s report is simply this,—that Potter was indebted to the complainants, that he left in West’s hands property to an amount considerably more than sufficient to pay them, that he absconded and has not yet returned.; that West, after his departure, bought in a large portion of the property on execution; that with part of the means which Potter left in his hands, he paid debts of the latter, and retains the balance on account of the indebtedness of Potter to himself.

It is not for us to determine in this case, whether West is actually responsible to the complainants, at law, under the circumstances which exist. It is very evident, however, that if they have any remedy against him, it is legal and not equitable. As creditors seeking to liquidate and recover their debts against Potter, they have not brought themselves within the rule which entitles creditors to resort to a Court of equity. That rule is, that they must first have obtained judgment at law if they proceed against real property, and judgment and execution if they seek to reach personal property.

There are some exceptions to this principle, but these complainants have not brought themselves within any of them. By the process of attachment, they might have seized all the property of Potter in West’s hands, and by summoning the latter as garnishee, they might have secured any debt which he owed Potter. 4 Johns. Rep. 671.—2 Blackf. 356.—Ib. 421. Per Curiam. The decree is reversed with costs. Cause remanded, with instructions to the Circuit Court to dismiss the bill, &c. J. Morrison, for the appellant. C. Fletcher and O. Butler, for the appellees.