Jamison v. Chesnut , 8 Md. 34 ( 1855 )

Mason, J.,

delivered the opinion of this court.

We do not consider that there is any question of jurisdiction involved in this case. That a court of equity has power to pronounce the deed in question to be void upon the ground of fraud, whether under the statute of Elizabeth or under our insolvent system, there can be no doubt; and this was the main, if not the exclusive, ground, upon which the jurisdiction of the court of equity was invoked in the present case. The objections taken by the appellant to the proceeding are, want of proper parties and error in directing the sale of the property in a mode different from that designated by the insolvent laws.

The material facts of the case are simply these: After the application of the appellant for the benefit of the insolvent laws, and before this proceeding was instituted, the trustee of the insolvent died aud no successor has been appointed in his stead, in pursuance of the act of 1805, ch. 110, sec. 4. In this state of the case, the complainants filed their bill to vacate the appellant’s deed, executed prior to his application aforesaid, upon the ground of its being in fraud of creditors. The appellant now contends, that before this proceeding could be regularly instituted, it was the duty of the complainants, or some other interested party, to have applied to the law side of the circuit court for the appointment of a new trustee, who should thereupon have been made a party to this equity proceeding. This position is undoubtedly correct. The theory of our insolvent system regards the trustee as the mutual representative of the rights and interests of both the debtor and his creditors, and any proceeding like the present, which is designed to effect those rights and interests, must embrace the trustee as a party to it. Upon this ground alone we find sufficient to warrant us in reversing this decree and in remanding the cause.

As this case is remanded, we have no difficulty in adding, that a court of equity had no power to decree a sale of this property byr a trustee of its own selection. It had power to declare the deed void, and no more. Immediately thereupon the title vested, under our insolvent system, in the trustee in insolvency, and he was the party to make the sale and administer the assets of the insolvent under the direction of the court of law. This doctrine is established for the purpose of preventing a conflict of jurisdiction which would inevitably result from an opposite theory, and has been recognised by a number of cases heretofore decided in this court. Besides, there is no valid reason why it should be otherwise. Our laws have conferred upon the circuit courts, as courts of law, the amplest powers to administer and settle the estates of insolvents, through the instrumentality of a trustee appointed under the insolvent system, and there ca,n therefore be no reason for invoking the aid of a court of equity. In support of these views we refer to the cases of Alexander vs. Ghiselin, 5 Gill, 179; Waters vs. Dashiell, 1 Md. Rep., 472; Manahan vs. Sammon, 3 Md. Rep., 463.

Unless the aspect of this case should hereafter, upon the coming in of the new trustee as a party, be materially varied, we have no hesitation in saying that the deed was properly vacated, upon the evidence as disclosed in the record, as being in fraud of the rights of creditors.

Decree reversed and cause remanded,