Opinion
12-22-1902
GNICHTEL v. FIRST NAT. BANK OF HIGHTSTOWN.
W. Holt Apgar, for complainant. Holt & Van Dyke, for demurrant.
Bill by Frederick W. Gnichtel, trustee in bankruptcy, against the First National Bank of Hightstown, N. J. On demurrer to bill. Decree for complainant.
W. Holt Apgar, for complainant.
Holt & Van Dyke, for demurrant.
REED, V. C. The bill is filed by a trustee in bankruptcy to compel the First National Bank of Hightstown to pay over to the complainant certain moneys received by the defendant from the bankrupt. The demurrer seems to be rested upon the authority of a case decided by one of the appellate courts of Illinois,—the case of McCormick v. Page, Nat. Bankr. News, 1009, 96 Ill. App. 447. In that case the demurrer was sustained upon the ground that the trustee had an adequate remedy at law, and therefore it followed that the remedy by equitable proceeding was excluded. But in this state the jurisdiction of equity is not excluded in all cases where there is an adequate remedy at law. There is a class of cases where the jurisdiction of the courts is concurrent, and this class includes suits in which the gravamen is fraud, actual or constructive. The remedy at law may be perfectly adequate, and yet the jurisdiction of a court of equity to afford relief exists, although it is not always exercised. Ramshire v. Bolton, L. R. 8 Eq. 294; Anderson v. Eggers (N. J. Err. & App.) 49 Atl. 578, 55 L. R. A. 570. In matters involving a recovery of the property of insolvent debtors, equity has always asserted its authority. Nor does it matter whether the property of a debtor has gone into the hands of a party in a transaction between the debtor and the party in which there existed actual fraud, or whether the transaction was constructively fraudulent. A voluntary deed made by an insolvent to a person entirely innocent of any knowledge of the grantee's condition will be set aside in equity at the suit of an antecedent creditor. The transaction set out in the bill is constructively fraudulent or unlawful, by force of the provisions of the federal bankruptcy act. Because the property was received by the bank in the shape of money, and therefore the decree asked for is that the bank pay money to the trustee, the cause presents an aspect which at once suggested the adequacy of an action at law, and therefore suggested the exclusion of any equitable remedy. But the money held by the bank stands in exactly the same posture as any other property which the bank might have received, and the decree asked for only requires the bank to turn over to the trustee the property which it has received. Besides the property sought to be recovered is, in its nature, trust property held by the bank for the benefit of the creditors of the bankrupt. The trustee has the right to follow it into a court of equity.
I think there should be a decree for the complainant.