In Ager v. Murray (1881), 105 U.S. 126, 128, 26 L. Ed. 942, 1882 Dec. Comm'r Pat. 188, the United States Supreme Court endorsed the use of a creditor's bill in a creditor's attempt to satisfy a monetary judgment against an individual who owned no real or personal property subject to execution at law, but who owned an interest in certain patents.
The judgment-creditor filed a creditor's bill, and the lower court, exercising its equity powers, ordered that the debtor's patents be sold, that the debtor execute an assignment of the patents to the purchaser, and that, if the debtor failed to execute an assignment, a trustee be appointed to execute the assignment.
The Supreme Court affirmed.
Having concluded that patents are subject to payment of a creditor's judgment, the Supreme Court noted the difficulties "of seizing and selling a patent upon an execution at law, which is ordinarily levied only upon property that has itself a visible and tangible existence within the jurisdiction of the court and the precinct of the executing officer." Ager at 130-131.
The Supreme Court reaffirmed its holding from Stephens v. Cady (1852), 55 U.S. (14 How.) 528, 531, 14 L. Ed. 528, that" 'the incorporeal right, secured by the statute to a copyright or patent holder, being intangible, and resting altogether in grant, is not the subject of seizure or sale on execution, -certainly not at common law.'" Ager at 129-130.
Thus, the Supreme Court held that a debtor's interest in patents, although property, assignable by him, cannot be taken on execution at law. Id. at 131.
The court went on, however, to note that the difficulties of subjecting incorporeal property to a seizure and sale on execution at law do not attend decrees of a court of equity. Id., citing Massie v. Watts (1810), 10 U.S. (6 Cranch) 148, 3 L. Ed. 181.
Indeed, the court stated, "it is within the general jurisdiction of a 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 cannot be taken on execution at law." Ager at 129.
The court quoted from Stephens, "'no doubt the property may be reached by a creditor's bill, the court compelling a transfer and sale for the benefit of creditors.'" Id. at 130.
While reaffirming the unavailability of a writ of execution at law to reach a judgment-debtor's patent rights, the Supreme Court ultimately concluded that the lower court's decree was within the court's equity powers, upon a suit for a creditor's bill.