FOGG V. ST. LOUIS, H. & K. B. CO.
H. & K. R. Co. and another.'
September 24, 1883,)
(Uil'cuit (Jourt, E. D. Missouri, 1.
Although courts of equity, as a general rule, follow the statute of limitations, they do not clo so wlien manifest wrong and injustice would result.
Where a corporation conveyed all its assets, except its corporate franchise, to another corporation, and the latter assumed all the grantor's debts and took possession of its assets, and suhsequentlya creditor of the grantor, whose demand had accrncr! before said conveyance was executed, and was not yet barred by the statute of limitations, brought suit at law against said grantor, l'ecovered judgment, and had an execution issued, which was returned nullrt. bona, and promptly after said return was made, but more than 10 years after the original demand accrued, instituted proceedings in equity against his judgment creditor and its said grantee to force the latter to pay his demand, held, that the claim was neither barred by lacbes nor the statute of limitations.
In Equity. Exceptions to so much of the answer as set up against plaintiif's demand a bar by force of the statute of limitations and of complainant's laches. The defendants are the St. Louis, Hannibal & Eeokuk Railroad Company and the St. Louis & Keokuk Hailroad Company. George D. Reynolds and James CarT, for plaintiff. Smith cf; H([1'1'ison, for defendants. TREAT, J. The only facts disclosed which are essential to the present inquiry are that prior to May 4, 1870, the plaintiff's demand against the second corporation named was in existence, and could have been pursued and enforced; that no suit was brought. on said demand until September 21, 1881; that judgment was recovered in said snit on said demand at law on October 3, 1882; that execution thereon was duly issued and return of nulla bona made, lIarch 19,1883; that on March 4, 1873, the last-named corporation, to-wit, the St. LOllis & Keokuk Railroad Company, conveyed to the other defendant corporation all its property and franchises, the latter assuming all the debts, liabilities, and obligations theretofore made or incurred by or legally imposed upon the said St. Louis & Keokuk Railroad Company, for right of "ay, station grounds, ties, or bridging, and other good and valuahle considerations in said conveyance mentioned; that under said conveyance the first-named corporation entered into possession without knowledge of plaintiff's claim, which is alleged to be on a construction account. This suit was commenced ilIa}' 3, 1883. There are many other averments and denials looking to possible aspects of the controversy "hich need not be now noticed. It clearly appears that the last-named corporation conveyed to the former all of its assets and franchises (ex.cept its franchise of corporate existence) on lIarch 4, 1873, on the terms stated, and that the latter took
by Beuj. F. Rex, Esq" of the St. Louis bar.
}>ossession accordingly, and has enjoyed the same ever since. Under the admitted facts it seems that the grantee assumed all the liaIJilities of the grantor; but, if that be not so, by the express terms of the conveyance there was devolved on it, in equity, the payment of plaintiff's demand, when established. When one corporation conveys to another all of its assets and franchises, and the latter becomes thereby substantially, if not formally, the legal or equitable successor of th3 former, it must be held to take cum onere. A full consideration of the questions involved in said conveyance might show that it was ultra vires, (Thomas v. Railroad Co. 101 U. S. 71;) but if so, it has been executed, and, so far as the parties thereto are concerned, their respective obligations thereunder, as uetween themselves, will be permitted to stand. As to third persons, creditors of the grantor, said conveyance may be fraudulent and void. However that may be, it still remains to consider whether, under the facts and circumstances stated, the plaintiff has lost his right to pursue the grantee, through laches or lapse of time. The general rule is not disputed t,hat courts of equity will follow statutes of limitations in other than exceptional cases, and that creditors at large must reduce their claims to judgment, and have executions issued thereon and returned nulla bona, before they have any standing in equity. This follows from the principle recognized by the statutes of the United States, that no case is cognizable in equity when the plaintiff has an adequate and complete remedy at law. Judgment and a fruitless execution furnish the proper evidence that the plaintiff is remediless at law. True, a bill in equity may be upheld for a creditor at large where it shows that the plaintiff's demand rests on a lien or trust, or that an obstruction to his remedy exists which can be removed only by a decree in equity, and that a suit at law would be wholly unavailing. The cases especially referred to and urged upon the attention of the court are those in 99 and 101 U. S., (Case v. Beaur garrl, 119 and 6t:i8.) Under the rulings of those cases it is contended that the plaintiff here could, in March, 1872, have maintained his suit in equity against the first-named defendant, and hence, within the meaning of the statutes of limitations, his cause of action against the first corporation named herein should be held to have then accrued, and to ha ve been barred in law and equity at the commencement of this suit, :May 3, 1883. On the other hand, it is urged that, inasmuch as the general rule in equity required plaintiff's demand to be first reduced to judgment, whereby a judgment lien would be created and a return of uulla bona to follow, the plaintiff's cause of action in equity did not accrue before said judgment had at law, and return of nulla bOlla. Justice STORY, in his Equity Jurisprudence, § 2121, says that the general rnle is that the canse of action accrues when the party might bring suit. If such were the universal l'ule it would be necessary to
HARTLEY V. BOYNTON.
determme wnether the plaintiff could have brought this suit before be had reduced his claim at large to judgment. Each case, however, is presented to the chancellor on its own facts and circumstances; and often a demand is held stale where not pursued within a period of time short of that fixed by statute, or held not barred, although at law the statute of limitations would prevail. Although courts of equity, as a general rule, follow the statute of limitations, they do not so do when manifest wrong and injustice would be wrought. In the case now before the court it is probable that if the plaintiff had entered upon the doubtful ground as to such cases in equity by filing his bill in 1873, being a creditor at large, and the court had held that it had jurisdiction, it would have found an issue for a jury to first determine the validity of the demand, whereby like delay would have ensued. Still, such a proceeding would then have brought home to the defendant notice that such a claim existed. The ordinary and safer course has been pursued by first reducing the demand to judgment and ex.hausting the remedies at law, and then filing a bill in equity promptly thereafter. In so doing no laches to bar this action can be imputed to the plaintiff; nor can it be held that he is within t1le bar of the statute of limitations. Presumably the original claim on which judgment was rendered could not have existed so early as stated, otherwise the action at law would have been barred by the statute. There are many averments and issues as to R.ncillary matters touching this question, which, if a different conclusion had been reached on the general facts herein stated, might have requ'red full consideration; such as, the circumstances under which the conveyance was made and its purpose with reference to creditors, the consideration therefor, the relation of the two corporations to each other or their practical identity, etc. It must suffice that independent of 6uch inquiries the bar set up in the answer canr:ot be upheld, and the exceptions must be sustained.
(Circuit Court, N. D.lou:a, W. D.
OF (lR DECREE.
The entry of a jll(lgment or decree by a COll:t, of nece"ity presuppose, the fnct that the court has found that due servictJ hus been huJ or an uPIJe"I...llle(J hus been enlered.
This pre;umption, however, not prevent a party from showing, In a proper proceeding, that in fact he had not been properly served, und therefore