Johnson v. Powers/Opinion of the Court

I am constrained to dissent from the opinion of the court in this case. This is a bill by a creditor to reach the assets of his insolvent and deceased debtor, alleged to have been fraudulently conveyed by him before his death. Did the plaintiff sue in his capacity as administrator, it is freely conceded that under the case of Noonan v. Bradley, 9 Well. 394, his bill could not be maintained. But while the bill recites his appointment as administrator it is rather by way of introduction to the proceedings which were subsequently had in the probate court than as an independent title to relief. After the recital of such proceedings, the bill proceeds to state, in substance, that during the year 1874 commissioners were duly appointed by the probate court having jurisdiction of the estate of the decedent, to hear, determine, and adjudicate upon claims of creditors against said estate, before whom plaintiff appeared and presented his claim as creditor of said Stewart, which said claim was proved before said commission, and judgment rendered in favor of plaintiff for $84,915.04; and the report of said proceedings and judgment was duly filed in said probate court on February 3, 1875.

It is further averred that said Stewart at his decease left no property, real or personal, in the state of Michigan, except certain real estate alleged to have been fraudulently conveyed, and that his estate was utterly and hopelessly insolvent; but that upon suit by plaintiff as administrator against the fraudulent transferees of such real estate, about 7 per cent. of the aggregate indebtedness proved in the probate court was recovered.

The bill further states that no administration has ever been applied for or had in the state of New York, and that decedent left no personal or other assets in that state, except the real estate sought to be reached by this bill.

By Howell's Statutes of Michigan, § 5888, when 'letters testamentary or of administration shall be granted by the judge of any court of probate such judge may, in his discretion, * *  * appoint two or more suitable persons to be commissioners to receive, examine, and adjust all claims and demands of all persns against the deceased,' etc. These commissioners give public notice of their meeting, proceed to hear testimony, and adjudge as to the validity of each claim presented. By section 5898 they are required to make report of claims allowed, and by section 5902, 'when commissioners shall be appointed, * *  * no action shall be commenced against the executor or administrator *  *  * until the expiration of the time limited by the court for the payment of the debts.' By the construction given to these sections by the supreme court of Michigan the commissioners are an independent special tribunal, (Lothrop v. Conely, 39 Mich. 757,) and, while not a court, in the constitutional sense, they act judicially in the allowance of claims. Fish v. Morse, 8 Mich. 34; Clark v. Davis, 32 Mich. 157; Shurbun v. Hooper, 40 Mich. 503. Their decisions, unless appealed from, are final, and are to all intents and purposes judgments, except that no execution can issue upon them; but the amount allowed in each case becomes a debt which the administrator is bound to pay from the assets of the estate. Indeed, it is not perceived why these are not 'judicial proceedings' within the meaning of article 4 of the constitution, to which 'full faith and credit' must be given by the courts of other states.

It is true that these proceedings are not binding upon others than parties and privies, and, if this were an action against the administrator of the same estate in the state of New York, it is conceded at once that under the case of Stacy v. Thrasher, 6 How. 44, the action would not lie. But it is difficult to see how the defendants in this case could be made parties to a suit at law to recover this debt, for which they are certainly not primarily liable; nor is there any one against whom an action could be brought in the state of New York, since there is no administrator or other representative of Stewart's estate there who could be made defendant in such suit. I had supposed that the only objects of obtaining a judgment as the foundation for a bill of this description were either to fix the status of the plaintiff as a creditor, or to show by an execution returned unsatisfied that he had exhausted his remedy at law. In this case, as before stated, no execution could issue under the practice in Michigan; and the averments of the bill show that, even if it could have issued, it would have been unavailing, since the estate was hopelessly insolvent, and there was no property subject to execution. Of course no execution could issue in New York, and there was no person there against whom an action could be brought or a judgment obtained. I see no reason why this case is not controlled in this particular by that of Case v. Beauregard, 101 U.S. 688, in which it was held that, while it was true that a creditor's bill to subject a debtor's interest in property to the payment of the debt must show that all remedy at law had been exhausted, and generally it must be averred that judgment had been recovered for the debt, and execution issued and returned unsatisfied, after all, these were only evidences that the legal remedies had been exhausted, and not the only possible means of proof; and that, where it appeared by the bill that the debtor was insolvent, and the issuing of an execution would be of no practical utility, the issue of such execution is not a necessary prerequisite to equitable interference. Such was also the ruling of this court in Sage v. Railroad Co., 125 U.S. 361, 376, 8 Sup. Ct. Rep. 887. Indeed, it appears from the case of Kennedy v. Creswell, 101 U.S. 641, that a creditor of a deceased person has a right to go into a court of equity for a discovery of assets and the payment of his debts, though he may never have obtained judgment at all. 'When there,' says Mr. Justice BRADLEY, 'he will not be turned back to a court of law to establish the validity of his claim. The court, being in rightful possession of the cause for a discovery and account, will proceed to a final decree upon all the merits' I n that case the plaintiffs appeared only as the holders of a note against the deceased. In the case under consideration the debt is evidenced by the allowance of plaintiffs' claim by the probate court in Michigan. I fail to understand how the defendants in this case could have been made parties to such proceedings, or to appreciate the necessity of such action, although they would be at liberty to insist that the probate court had no jurisdiction to allow the claim, and perhaps also that the claim itself was not valid against the estate.

As no other questions are discussed by the court, I do not deem it necessary to express an opinion upon them.