Heyneman v. Dannenberg

A Court of Equity will take jurisdiction of a, bill for an injunction filed by attaching creditors of au insolvent, to restrain proceedings on execution against the property attached under a judgment against the debtor, in favor of another, alleged to have been obtained by fraud, where all the material allegations of the bill, except fraud, are admitted. It would be requiring the creditors to do a vain act, to compel them to await their judgment at law and a return of execution, when it is admitted that the only effect would be a return of nulla bona, and the property attached would, in the mean time, have passed to innocent purchasers on execution sale under the judgment. In such a case the books of the judgment creditor are not admissible as evidence for the defence, to show an entry of the original transaction on which the judgment is based, where the only predicate laid, is evidence that the judgment creditor was possessed of capital sufficient to have loaned the amount of the judgment to the judgment debtor.

Appeal from the District Court of the Fourth Judicial District. The plaintiffs, attaching creditors of Lewis Morris, filed a bill against him with Joseph Dannenberg and W. Thornburg, the sheriff of Yuba County, praying for a perpetual injunction restraining the defendants from proceeding to sell on execution certain property of Morris, under a judgment for $10,080, and costs, obtained by Dannenberg against Morris, a few days before the filing of the bill. The bill alleges that the property about to be sold on execution under said judgment, has been attached by the plaintiffs subsequent to an attachment in the action of Dannenberg. That the judgment was obtained by Dannenberg with intent to defraud the creditors of Morris, and that there was no actual indebtedness of Morris to Dannenberg, and that the property is about to be sold on execution under the direction of Dannenberg, for the benefit of Morris; that Morris is utterly insolvent and has no other property but that about to be sold under the execution. Morris and Dannenberg filed separate answers, denying the fraud and alleging that Dannenberg’s judgment was obtained on a note given for an actual bona fide debt, but admitting all the other material allegations of the complaint. The plaintiffs called as witnesses J. S. Wynchell and E. Wolfe, who testified, under the exception of defendant Dannenberg, that they had been partners in business, up to a few months before the commencement of this action; that shortly before their dissolution, Morris proposed to them to buy a large quantity of. goods on credit and then confess a judgment to a friend, or give him a note and have him bring suit thereon and attach their goods; naming Dannenberg as a safe person to accomplish this for them, and stating that he, Morris, desired to make ten thousand dollars, and did not care how he did it. They further testified that they refused to act upon the proposition, and also that during their partnership Dannenberg never had any dealings with the firm. The evidence for plaintiff further shows that the debts of Morris to plaintiffs were incurred very shortly before Dannenberg attached; and that six months before, Dannenberg had stated that he had very little means, and has asked the assistance of the firm to which Morris belonged, to start a business requiring only §2,000 or §3,000 capital. There was further evidence given, to identify Dannenberg with the whole transaction. The defendant, Dannenberg, introduced his brother as a witness, who testified that the defendant D., was worth over §12,000. Defendants’ counsel then offered the books of account of D., containing the original entries of his business transaction with Morris; which were objected to by plaintiffs, and excluded by the Court, the defendant D., excepting. The evidence was submitted to a jury, who were directed to find a special verdict. They found that the note given by Morris to Dannenberg was without consideration, and that the judgment of the latter and the proceedings thereon were fraudulent as against the plaintiffs. A decree for a perpetual injunction, as prayed for in the bill, was thereupon entered. Defendant, Dannenberg, moved for a new trial, which was denied, and he appealed.