Schack v. McKey

Opinion per Curiam. In Hancock v. The American Bonding & Trust Company, 86 Ill. App. 630 (633), it is said:

/ “ The general rule no doubt is, subject to a few exceptions, that a receiver should never be appointed unless it is apparent to the chancellor from the showing made that there is danger that the property which is the subject of the litigation is liable to be dissipated or placed beyond the jurisdiction of the court, or in some way involved by transfers or conveyances, or by its being subjected to other claims, so as to render it more difficult for the court to give and enforce the final relief to which the complainant may be found to be entitled.”

An application for the appointment of a receiver is addressed to the sound judicial discretion of the court, taking into account all the circumstances of the case, and, if exercised, is for the purpose of promoting the ends of justice and of protecting the rights of all the parties interested in' the controversy and the subject-matter, and is based upon the fact made to appear to the court that there is no other adequate remedy or means of accomplishing the desired object of the judicial proceeding. Pomeroy Encv. Jurisprudence, Secs. 30, 31.

The appointment of a receiver and authorizing him to take possession of property is the exercise of a higher and more far-reaching, power than the granting of an injunction, and should not be resorted to where an injunction will as well serve the purpose of the judicial proceeding, and to the same extent protect the rights of the complainant.

The law of this State gives to a party against whom an injunction has been issued,' or over whose property a receiver has been appointed, a right of appeal, but from subsequent interlocutory orders as to the sale and distribution of the property, over which a receiver has been appointed, no appeal is given. Had a mere preservative injunction been issued in this case, appellant would have been assured that his rights in and to this property would be preserved by a full hearing upon the merits. "Whereas, a receiver appointed upon an interlocutory order might at any time, under the direction of the court, sell all this property, and it thus be forever passed away from his control, notwithstanding the final result of the litigation might establish that his purchase of the same was entirely valid and his title unimpeachable. In so far as one of the affidavits submitted by the complainant stated what appeared upon the taking of certain testimony, it should not have been considered. Certainly, evidence that would not be admissible when a witness is called to testify orally, is not permissible because presented in the form of an affidavit. Had the affiant been called in open court, he might have testified as to what he had heard the defendant say under oath or otherwise, but not as to what appeared from'the defendant’s statement.

Counsel, in respect to the criticism that the complainant’s verification of the bill was a statement .of things he could not have known of his own knowledge, say:

“ The fact remains that the affidavit was so made, and the court has before it the verified bill stating positive facts, and the propriety of the order.appointing a receiver will have to be tested upon the pleading as it stands.”

All testimony, whether by way of affidavit, verification or otherwise, is addressed to the general knoxvledge and understanding of the tribunal before which it is presented. The fact that a witness has sworn that of his own knowledge he knows a particular thing, is an assertion to be carefully considered by the court, but not necessarily to be believed and acted upon. If other evidence presented to such tribunal the surrounding circumstances, or the general knowledge which all men have is such that a particular statement made by a witness is manifestly untrue, such statement, so far from strengthening the cause of him in whose behalf it is made, tends to weaken the force of other things which said witness may declare. 1 Ency. Pl. and Pr. 942; Hartley’s Appeal, 103 Penn. St. 23.

Appellee urges that the answer of appellant is not as full and explicit as it ought to have been. The answer might have gone much less into details than it did. Appellee waived an answer under oath, and thereby placed appellant in a position where he might make his answer a mere pleading, stating technically and formally enough to constitute an issue upon the material allegations of the bill.

■The material allegations of the bill, and the affidavits in support thereof, so far as they are entitled to be considered, make out no more than the case of a sale and delivery by Meyer to Schack of the stocks of merchandise for an inadequate consideration, or for nothing but a pretended consideration, for the purpose of hindering, delaying and defrauding the creditors of Meyer, and placing the property beyond their reach.

This is the statement of a case for which the law affords a full and adequate remedy, either in replevin to recover the goods in specie, or in trover for their value.

Whatever may be the doctrine of other courts, the rule in this State is unmistakable that a party who has a plain and adequate remedy at law must proceed there, and so long as his remedies at law are not exhausted he may not resort to a court of equity. Gore v. Kramer, 117 Ill. 176 ; County of Cook v. Davis, 143 Ill. 151 ; Kimball v. Walker, 30 Ill. 482 ; Comstock v. Henneberry, 66 Ill. 212 .

The reservation by appellee in his answer of all advantage he might have had by demurring to the bill, enabled him, on the hearing of the application for the appointment of the receiver and the turning over to him of possession of the property, which was the substantial relief sought by the bill, to raise the question that appellant had a complete and adequate remedy at law. Black v. Miller, 173 Ill. 489 ; 1 Daniell’s Ch. Pl. and Pr. 715.

Taking the bill and affidavits to be true, a case for an action of replevin to recover the specific property is probably made out. The objection to such a form of remedy, that a replevin bond would have to be given by appellee , that might subject the estate in bankruptcy to a possible liability which the bankruptcy court might hesitate to authorize, does not seem to possess much force. The little weight to which the objection is entitled does not seem to have prevented the appellee from giving a receiver’s bond of $6,000 in this proceeding. The objection urged to the other forms- of action, in trover or assumpsit, that are open to appellant for a recovery of the value of the property, can not be sustained on the ground that it might be difficult to collect a judgment that might be recovered. There is no allegation in the bill that in anywise tends to show that appellant is not able to respond to any judgment that might be recovered against him in such a suit, and in the absence of an allegation or showing of that kind, the presumption is that he is able. '

But it is urged that the equity court acquired jurisdiction because the transaction was a fraudulent one. The fraud relied upon is in the sale and purchase of the merchandise for an inadequate consideration, or for only a pretended consideration, that was not real at all. It is not every fraudulent act that will authorize a court of equity to take jurisdiction. It is only in cases where complete justice can not be done at law that equity will interfere. In many instances of fraud, the law courts can give as full remedy as can be had in equity. In this case it would be only because - of fraud that suits at law could be successfully maintained, in replevin or trover, and we have shown that if because of the fraud replevin would give to appellee the goods in kind, or their value in trover, the remedy of appellee is just as complete at law as it could possibly be in equity.

As is said in Gore v. Kramer, sufora, “ it is clear that if the contract of sale was fraudulent, an action at law would lie for the value of the goods, and the fraudulent contract could not be interposed to bar a recovery.”

We think there was plain error in appointing a receiver of the goods mentioned, and in ordering the appellant to turn over possession of the goods in question to the receiver, and to that extent the order appealed from is reversed.