CREDITOR. (See ASSIGNMENT FOR BENEFIT OF CREDITORS; BANKRUPTCY; DEBTOR AND CREDITOR; INSOLVENCY.) - One to whom a debt or obligation is due.1

CREDITORS' BILLS, OR CREDITORS' SUITS.

1. Definition and Kinds, 573.

2. Jurisdiction, 573.

3. Exhausting Remedy at Law, 574.
4. Effect of the Bill, 576.
5. Nature of Remedy, 576.

6. What Property may be reached, 577. 7. Parties to the Bill, 578.

8. Against Corporations and Stockholders, 578.

9. Against Decedents' Estates, 580.

1. Definition and Kinds. - Creditors' bills are bills in equity filed by creditors for the purpose of collecting their debts out of the real or personal property of the debtor, under circumstances in which the process of execution at common law could not afford relief. They may be classified according to the character or condition of the debtor, as, first, against a debtor in his lifetime; second, against corporations or their stockholders; and third, against decedents' estates. In this article the subject will be treated generally, as relating to the first class the others will be considered specially, under paragraphs 8 and 9, post.

2. Jurisdiction. The jurisdiction of a court of equity to reach the property of a debtor justly applicable to the payment of his debts, even where there is no specific lien on the property, is undoubted. It is a very ancient jurisdiction; but for its exercise, the debt must be clear and undisputed, and there must exist some special circumstances requiring the interposition of the court to obtain possession of and apply the property. Unless the suit relate to the estate of a deceased person, the debt must be established by some judicial proceeding; and it must generally be shown that legal means for its collection have been exhausted.3

of exchange is restrictive, and puts an end to its negotiability. It is an appropriation of the proceeds of the bill which renders any other illegal. Lee v. Bank, 1 Biss. (C. C.)

other for money, or other property, which has got into the hands of another without his consent by mistake or accident, which he is entitled to have, or to a compensation in damages for, upon the ground of an im

C1325The term creditor does not mean plied promise.

singly a person to whom a debt is due, that is but its usual meaning; but it further denotes a person to whom any obligation is due, and this is its unusual meaning. A creditor, according to the definition of Bouvier, 'is he who has a right to require the fulfilment of an obligation or contract.' In this large sense it means more than the person to whom money is owing. Webster's definition of the word is, 'A person to whom a sum of money, or other thing, is due by obligation, promise, or in law." Beasley, C. 7., in N. J. Ins. Co. v. Meeker, 37 N. J. L. 300.

"In a strict legal sense a creditor is he who voluntarily trusts and gives credit to another for a sum of money, or other property, upon bond, bill, note, book, or simple contract. In a more liberal sense he is a creditor who has a legal demand upon an

"In the more general or extensive sense of the term, he is a creditor who has a right by law to demand and recover of another a sum of money on any account whatever." Stanley v. Ogden, 2 Root (Conn.), 261.

2. Bisp. Eq. sec. 525.

Bills of this description had their origin in the limited scope of the ordinary writs of execution. These writs, being commonlaw writs, were confined in their operation to legal interests. Equitable interests could be reached, if reached at all, in equity alone. The narrowness of the common-law remedy naturally led to a jurisdiction in equity to afford the necessary relief. Ibid. sec. 526; Pomeroy, Eq. Jur. sec. 1415.

3. Field, J., in Public Works v. Columbia College, 17 Wall. 521, 530. "It is within the general jurisdiction of a

In this country, there have been enacted in several States various statutory provisions, intended to accomplish more speedily or effectively the object of the creditor's bill in the court of chancery. In other States the creditor's bill, as a branch of the equitable jurisdiction, is still the appropriate remedy. The employment of special statutory writs and processes, especially those for the attachment of debts due to the defendant, has greatly restricted the use of the creditor's bill in this country.

3. Exhausting Remedy at Law. The jurisdiction in equity attaches only when the creditor's legal remedies have proved inadequate. For this reason the creditor must usually allege that he has obtained a judgment, and issued execution, and that there has been a return thereto of nulla bona.3 There are,

court of chancery to assist a judgment creditor to reach and apply to the payment of his debt any property of the judgment debtor, which, by reason of its nature only, and not by reason of any positive rule exempt ing it from liability for debt, cannot be taken on execution at law, as in the case of most property, in which the debtor has the entire beneficial interest, of shares in a corporation, or of choses in action. Gray, J., in Ager v. Murray, 105 U. S. 126; Bayard v. Hoffman, 4 John. Ch. (N. Y.) 450; Hadden v. Spader, 20 John. (N. Y.) 554

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1. The statutes and decisions on this subject will generally be found under the name Supplementary Proceedings;" i.e., proceedings by the creditor supplementary to the usual means of execution, in compelling discovery by the defendant himself of his assets, or by joining others in whose hands the defendant's assets are supposed to be. Statutes of this kind are in force in Arkansas, California, Colorado, Indiana, Iowa, Kentucky, Maine, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New York, Ohio, Oregon, South Carolina, and Wisconsin.

The procedure in supplementary proceedings is usually by order made upon proof of return of an execution unsatisfied, requiring the debtor to appear in person in court, to be examined concerning his property: a receiver is then appointed to collect the assets, and, upon qualifying, he becomes vested with the assets without conveyance or assignment by the debtor. The receiver also represents the creditors in bringing any suits which may be neces‐ sary to establish title to the property. Wait, Fraud. Conveyances, sec. 62; High on Receivers (2d ed.), § 401, et seq.

2. This is the case in those States in which there is either the general chancery jurisdiction, or a special jurisdiction conferred by statute for assisting creditors in enforcing their rights against the debtor's property. It follows, that, where there is

no such equitable jurisdiction, the creditor's bill, as known in chancery, cannot be used. For the jurisdiction in equity in the several States, see EQUITY; also Bisp. Eq. (4th ed.) sec. 15; Pomeroy, Eq. Jur. sec. 41.

In Pennsylvania a judgment creditor desiring to avoid a fraudulent alienation of land by his debtor, must levy on the land, buy it in, and bring ejectment: he is not entitled to relief in equity. Girard National Bank's Appeal, 13 Weekly Notes Cas. (Pa.) 10I.

3. "Courts of equity are not tribunals for the collection of debts, and yet they afford their aid to enable creditors to obtain payment, when their legal remedies have proved to be inadequate. It is only by the exhibition of such facts as show that these have been exhausted, that their juris diction attaches. Hence it is, that, when an attempt is made by a process in equity to reach equitable interests, choses in action, or the avails of property fraudulently conveyed, the bill should state that judg ment has been obtained, and that execution has been issued, and that it has been returned by an officer without satisfaction." Webster v. Clark, 25 Me. 313. Quoted and approved as the established rule of equity in Taylor v. Bowker, 111 U. S. 110; s. c., 6 Am. & Eng. Corp. Cas. 609; Baxter v. Moses, 10 Am. & Eng. Corp. Cas. 307.

A creditor's bill should be dismissed when it is apparent that no bona fide attempt has been made by the officer to find property to satisfy the judgment. As the basis for a creditor's bill, an execution upon the judgment should be in good faith issued, and should be returned unsatisfied by the officer upon a reasonable and actual, but ineffectual, effort to find property. If the return shows on its face a failure in this respect, there is no foundation for equity jurisdiction. Bassett v. Orr, 7 Biss. (C. C.) 296.

"The court, when its aid is invoked, looks only to the execution, and the return

however, a few exceptions to this rule, which are stated in the note.1

4. Effect of the Bill. The filing of the creditor's bill, and the service of process, creates a lien upon the effects of the judgment debtor. It has been aptly termed an "equitable levy."

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5. Nature of Remedy. The objects sought by the creditor in chancery are generally, (1) to remove some obstruction, fraudulently or inequitably imposed to prevent a sale of the debtor's property on execution at law; or (2) to obtain satisfaction of his debt out of property of the defendant, which cannot be reached by execution at law. In the first class of cases, the court acts in the methods usually adopted for the enforcement of decrees in equity the remedy by injunction against any transfers of the debtor's property, made with intent to defraud and delay his judgment creditors, is the immediate relief afforded, which is followed by the various forms of relief in rem or in personam given by equity in cases of fraud. In the second class of cases, the relief sought is best obtained by the appointment of a receiver, who shall take possession of the property, and hold and dispose of it under the order of the court. The necessity of obtaining both.

Perkins, 49 Mo. 565. See also Scott v. McMillan, Litt. (Ky.) 302; Peay v. Morrison's Executors, 10 Gratt. (Va.) 149; Farrar v. Haselden, 9 Rich. Eq. (S. C.) 331; Pope v. Solomon, 36 Ga. 541.

The return of an execution unsatisfied before its return-day, and in the lifetime of the writ, does not lay the foundation for a receiver upon a bill in behalf of the judgment creditor. High on Rec. (2d ed.) $ 404; Thayer v. Swift, Harring. (Mich.) 430.

1. Swayne, J., in Miller v. Sherry, 2 Wall. (U. S.) 237, 249.

Where the property is not liable to an execution at law, the plaintiff obtains no lien upon the property or fund by the issuing or return of the execution. But it is the filing of the bill in equity, after the return of the execution at law, which gives to the plaintiff a specific lien. Lord Hardwicke in Edgell 7. Haywood, 3 Atk. Rep. 357; Beck . Burdett, i Paige (N. Y.), 309. The judgment creditor who first files his bill in chancery obtains a priority in relation to the property and effects of the defendant which cannot be reached by execution at law. Coming v. White, 2 Paige (N. Y.), 567.

2. The lis pendens is an equitable levy, and secures a priority of lien to the complainant. Tilford . Burnham, 7 Dana (Ky.), 109.

3. Walworth, Chancellor, in Beck v. Burdett, 1 Paige (N. Y.), 308.

"It is a familiar and unquestioned doctrine of equity that the court has power to aid a judgment creditor to reach the property of his debtor, either by removing fraudulent judgments or conveyances which obstruct or defeat the plaintiff's remedy under

the judgment, or by appropriating, in satisfaction of the judgment, rights or equitable interests of the defendant which are not the subject of legal execution." Green, Chancellor, in Robert v. Hodges, 16 N. J. Eq. 302.

4. Where the main purpose of the bill is to set aside a fraudulent transfer of a debtor's goods and effects, made to delay and hinder his creditors, an injunction is considered as a necessary adjunct, and is granted as auxiliary to the general relief sought. Hyde . Ellery, 18 Md. 496; Witmer's Appeal, 45 Pa. St. 455; High on Inj. (2d ed.) § 1402.

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5. Paxson, J., speaking of the applica bility of the equitable jurisdiction to this class of cases, says, Its process is plastic, and may be readily moulded to suit the exigencies of the particular case. A court of equity proceeds with but little regard to mere form. It moves with celerity, and seizes the fruits of a fraud in the hands of the wrong-doer." Fowler's Appeal, 87 Pa. St. 454.

The creditor's bill or a suit to clear the fraudulent transfer is preferable to seizure under execution. If the creditor attempts to sell the disputed property arbitrarily under execution, the market value is injured, and the debtor's transfer of title must be proved to be fraudulent. But by filing the creditor's bill, the only risk incurred is as to the costs and expense of the suit, and generally no seizure is effected unless the suit is successful, in which event the covinous transfer and cloud on the title is cleared away. Wait, Fraud. Con. § 60.

6. No branch of the law of receivers is more frequently invoked than this. Under

remedies is frequently met in the same case. important incident to either remedy.

6. What Property may be reached. From the nature of the jurisdiction, it is obvious that all property of the debtor which ought in equity to be applied to the payment of his debts, may be reached by this process. It is not essential that the property sought should have been fraudulently withdrawn from the creditor's reach at law.1 Property held in trust for the debtor may in general be reached in equity. A patent or copyright is property which may be subjected by this means to the payment of the owner's debts.3 A right of action for injury to debtor's property

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