Selby v. Magruder , 6 H. & J. 454 ( 1825 )

Buchanan, Ch. J.

delivered the opinion of the court,’ This cause comes up on a case stated, the facts of which are, that at the November term of the Montgomery county court, in the year ISIf, The President and Directors of the Union Bank of George Town obtained several judgments against George Magruder for large sums of money; that at the November term of the Montgomery county court, in the year 1819, The President, Directors and Company, of the Bank of Columbia, obtained a judgment against the said George Magruder for a large sum of money, on which judgment a writ of fieri facias, returnable to the November term 182P, was sued out on the 8.th of March 1820, and on the same day put into the hands of the sheriff; which writ of fieri facias was returned by the sheriff, endorsed “laid as per schedule annexed for S§9o8 o7( — residue of defendant's property secreted.’* That at the June term 1820 of the circuit court for Washington county, in the District of Columbia, The President, Directors and Company, of the Bank of Washington, obtained a judgment against the sajue George Ma~ grúder, on. which a capias ad satisfaciendum was sued out) and served upon him by the marshal of the district. That on the 5th of August in the year 1820; he was regularly discharged under the act of congress passed for the relief of insolvent debtors within tlié District of Columbia, and on the same day executed a deed to George B. Magruder; (the defendant below and now appellee;) who was appointed his trustee, for all his property, real; personal ánd inix'ed, which deed was regular/y acknowledged and recorded, both in Montgomery county and in the District of Columbia. That on the 2d of April 1819, writs of scire facias wore sued but by The President and Directors of the Union Bank of George To'wn, to revive the judgments they had obtained against George Magruder at the November term 1817, on each of which a fiat was entered at the November term 1820, on the 14th of that month; arid bh the same day' writs of fieri facias were issued arid placed iri th,e hands of the sheriff; in virtue of which, on ..the 1st of January 1821, he seized the property which hé had before returned “secreted;” on the fieri facias that was issued on the judgment obtained by The President■, Directors and Company, of the Bank of Columbia: That bn the 2d of December 1820, another writ of fieri facias was issued on the judgment of the Bank of Columbia, whigh was also levied on the 1st of January 1821; on the sanie propértp That • the 'first execution issued on the judgthent obtained by the Bank of Columbia, Would have been levied ripdn the property so taken in execution on the 1st of January 1821, iti pursuance of instructions given for that purpose, if it could have been 'found, and that it was secreted after the. transfer fay George Magruder of all his property to George B. Magruder as liis trustee; that the. property thus in the possession of the sheriff, the. appellant, was replevied out of liis hands by the appellee, who sold it by consent of the counsel on the part of the appellant, and the Bank of Columbia, and holds the proceeds, amounting to the sum of §3100, as trustee of George •Magruder, subject to be distributed according to law. There was a bill of exceptions taken at the trial, which was abandoned; and,the case was made to try the question, whether The President, Directors and Company, of the Bank o f Columbia, by delivery to the sheriff, pi-e* vious to the application of George Magruder for the benefit of the Insolvent laws in the District of Columbia, of the ■fieri facias on the judgment they had obtained against him¿ acquired a lien on that property, which entitled them to foe paid the amount of their judgment by the trustee, out of the proceeds of sales thereof, before any distribution among the general creditors; with an agreement, if the court should be of that opinion, that then a judgment should be entered up against the appellee for that sum. ,

The appellee derived all his authority, as trustee of George Magruder, from the insolvent laws of the District of Columbia, and must be governed by them in the execution of his trust. The fifth section of the act of congress of the 3d of March 1803, ch. 84, provides for the salé of the property of petitioning debtors, and directs that “the product thereof, after satisfying all incumbrances and liens, shall be divided ainohg the creditors in proportion to their respective claims. ”

The President and Directors of the Union Bank of George-Town, most certainly acquired no lien on the property in question, by reason of the execution issued on their judgments being placed in the hands of the sheriff on the 14th of November 1820, all the property of George Magruder having been antecedently transferred to the appellee by the deed of trust of the 5th of August. But the personal property of a defendant being by the laws of this state bound from the timé of the delivery of the writ of fieri facias into the hands of thé sheriff, The President, Directors anil Company, of the Bank of Columbia, acquired a lien, by the first execution on their judgment being put into the sheriff’s hands on the 8th of March 1820, ■ which was anterior to the application of George Magruder for the benefit of the insolvent laws. And the property in question was not discharged from the operation of that lien by the circumstance that the execution was in part levied on Other property, because the sheriff was instructed to levy it on that particular property, and endeavoured to do so, but being secreted, he was unable to find it, and was constrained to make return on the writ that it was secreted, which sufficiently explains why it was not also levied on that property. And it would be attended with serious consequences to judgment creditors, if after the whole of a debtor’s personal property became bound by delivery of an execution to the sheriff the debtor, or any body else-, could relieve any portion of it he pleased from the lien, by secreting if, and driving the sheriff to levy the execution only on wli'á’t might be suffered to remain, no matter how inadequate to the object of the execution.

The provision in the fifth section of the law of congress, that “no process against the real Or personal property of the debtor shall have any éfféct or operation, except process of execution, and attachment in the nature of executions; which shall have been put iiito the hands of the marshal antecedent to the application,”'é'annot be so construed as. to nullify the effect of the lien; that The President, Directors and Company; of the Bank of Columbia, had acquired, to ihe extent of their judgment Oh the personal property of George Magruder, before the timé of his application, and to divest their debt of the priority which that lien would otherwise have given to it; but the delivery bf an execution to the sheriff in this státe, having the samte effect to create a lien on the personal property of a debtor here; that the delivery of similar process to the marshal has, in relation to personal property within the District of Columbia-, the sheriff, as the proper officer to execute such process here; toust be considered as within the spirit and meaning of the act Of congress, and the samé preference given to liens, so created on personal property in -this state; as to liens created on the same description of property in the District of Columbia, by the delivery of the execution to the marshal there; Or if that clause of the act of cohgress is to be understood as restricted to process issued within the district; and as denying effect and operation to such process only; if not put into the hands of the marshal before the application of the debtor; then the effect of the delivery of process of eXeCiitiori to the sheriff, on property in a state, is left to the Operation of the law bf such state; If either Of'these .positions be true, thte lien of The President, Directors and Company,- Of the Bank of Columbia, on the property of George Magritder, was embraced and protected by the general terms, “all incumbrances and liens,” and the appellee took it under the deed of trust; subject to that lien, and the priority given t© it by that act. And the question here is, whether that-priority ceased with the return of the execution?

. Whatever might, on general principles, have been the effect of the return of that execution; if George Magruder bad not applied for the benefit of the insolvent law, and Ike contest had been.between The President, Directors and. Company, of the Bank of Columbia, scad some other credi-. tor, who had put his execution into the hands of the sheriff before they had sued out. another, writ of fieri facias, this, case must be governed by the particular, circumstances attending it.

If the appellee had sold' the.property,before the return of the execution, The President$ Directors and Company, of the Bank of Columbia, would have beep entitled to have their judgment first satisfied out, of the, proceeds of sale, they being the only creditors who had,acqu.ired a lien. That however was not done, but after the execution of the deed of trust, the particular property in question wag secreted and kept out of the way of the. sheriff, so that they could not reap the benefit of their Ijep, by,way,of. execution, and were compelled to look to the trust, fund. And if the preference given them by law was defeated by. the return of the execution, as is contended, it could notafterwards be revived by issuing and putting into the hands, of the sheriff another execution, which could pot have the effect to create a lien against the deed of trust; and thus power would be given to trustees, either by negligence, or a gross violation of their trust, always to destroy the legal priority of a creditor who had obtained a lien, without any negligence or fault on the part of such creditor, which cannot be. A trustee under the insolvent law takes the property subject to all liens, and the preference given by that law to such Mens; which preference follows the property as a trust fund, as long as it remains in his bands; lie receives it, and holds it as a fund, in trust, by. operation of-law, first for the payment of the liens existing at the time of the execution of the deed of trust, which right of priority is no more liable to be affected or defeated by the negligence, delay, or acts of, the trustee, than if they were claims particularly set out, and a preference expressly given to, them in terms by the deed, but the trust being once raised for their payment, it must continue until they are satisfied, or the fund appropriated for that purpose is exhausted. This is just that case, and. not like a mere contest between two judgment creditors for a preference under their respective executions; but the case of creditors seeking to. pbigjn payment ef their debt from a trustee folding pro-. jjerty in his hands, which was conveyed to him in trust for that purpose; anil having had, at the time the trust was created, a. lien on the property that gave them in law a priority over, other creditors, the trust is Virtually, as if it had been, expressed to be for the payment, first of that debt getting it out in terms. ' ‘

We'can discover; nothing in the record by which that, priority has been lost, or clestroyed, and think that The President, Directors and Company, of the Bank of Columbia, are entitled to have the amoufit. of their judgment paid before any distribution is made among thq general creditors; the trustee not having it in his power to defeat the object of the trust, by'delaying to sell the property, which was kept out of the way of the sheriff, until after the return of. the execution', and the trust continuing the same as it was originally created, whether the property was sold or not.

JUDGMENT REYBESEDÓ