Weller v. Weller , 18 Vt. 55 ( 1844 )

The opinion of the court was delivered by

Royce, J.

The trustees now before the court, in payment for the estate of Nathan Weller the elder, which they purchased of Jonathan Weller, executed their promissory notes, which were lodged in the hands of Vail by order of the judge of probate, and made payable to the heirs respectively, for the value of their several shares in that estate. Among those heirs were John H. Weller, (the principal defendant) Harry Weller, and Nathan Weller the younger. The shares of the two latter had been purchased and paid for by John H. Weller, before the estate was set to Jonathan Weller by the court of probate. Consequently, John H. had the legal property and right of action in the note made payable to himself, and became substantially the owner of those made payable to his brothers, Harry and Nathan. But as the shares of those three persons were bound by the decree in chancery in favour of McDaniels, and the trustees had paid more than their value to redeem them, it was rightly decided that these notes no longer constituted any indebtedness against the trustees. And it is not material, for the present purpose, whether the decision went upon the ground of an indirect payment of the notes in redeeming the shares, or on the ground of a total failure of consideration.

Among the notes, so executed by the trustees, was also one made payable to Hiram and Catharine Warden for the sum of one hundred and thirty three dollars and thirty three cents, that being the value of said Catharine’s share in the estate. John H. Weller had also contracted to purchase that share, and had paid to Warden and wife one hundred and sixteen dollars towards it. That share, not being bound by McDaniels’ decree, was held by the trustees in an unincumbered state, by force of the conveyance from Jonathan Weller to them, and continued to form a valid consideration for this last note. By this note they are still indebted, and the question is, whether the debt, or a portion of it, is due in such a sense to John-H. Weller, that they can be adjudged his trustees.

It has long been the settled doctrine in this state, that, to render a person liable as trustee under this kind of process, on account of rights or credits in his hands, it is necessary that he should be legally indebted to the principal defendant, or indebted by some legal demand belonging to him. Sargeant v. Leland, 2 Vt. 277; Hutchins v. Hawley & Tr., 9 Vt. 295. It has been considered, that the attaching creditor was merely enabled to avail himself of the defendant’s legal rights in relation to the trustee, and hold him liable for such demands, only, as the defendant could have enforced by an action at luw. 9 Vt. 295 above cited; Baxter & et al. v. Currier & Tr., 13 Vt. 615. It is even said incidentally, in Hoyt v. Ball & Tr., 13 Vt. 129, that the demand must be one which the defendant could have prosecuted in his own name. But this, I apprehend, cannot be received as a rule of universal application. For it was decided in Newell v. Adams, 1 D. Chip. 346, (and the doctrine has never been changed,) that after a bona fide assignment of a demand not negotiable, and due notice thereof given, the debtor could not be charged as the trustee of the assignor. He must, then, be capable of becoming the trustee of the assignee, or else the assignment of such a demand places it beyond the reach of the trustee process. Hence it has been sufficient, under all our trustee statutes, that the claim upon the trustee was a legal debt by contract, — that it belonged to the principal defendant, — and that he had a right to have it enforced by an action at law if necessary. And if an action by him might be defeated by reason of fraud between himself and the trustee, that difficulty is removed, in favor of the attaching creditor, by chap. 29, sec. 34, of the Revised Statutes. Now the note last mentioned is a legal demand against the trustees, and is chiefly owned by John H. Weller, the defendant. Had the money been paid upon it into the hands of Vail, he would not have been justified, if fully apprised of the facts, in paying the defendant’s share over to Warden and wife. And in respect of his interest in the note, the defendant might doubtless have required it to be prosecuted for his benefit. Upon these views, in which we are substantially supported by the case of Camp v. Scott & Tr., 14 Vt. 387, we consider that the makers of the note are liable to this process, as trustees of the present defendant.

The next inquiry is, whether the trustees are entitled to retain for all or any of the claims set up in their disclosure. The claim to be subrogated to the original rights of McDaniels, as against this defendant, is clearly of equity jurisdiction, and could not be enforced by any known action at law. And the same is manifestly true of the demand against Harry Weller, when treated as in any sense the debt of this defendant. Nor is it perceived that the payment of McDaniel’s bill of cost, under the circumstances attending it, could legally be treated as a payment of the defendant’s debt upon his express or implied request. But the reasons assigned by Collamer, J., in Hoyt v. Ball & Tr., to show that the creditor cannot, by this process, pursue a mere equity claim against the trustee, are equally applicable, when such a claim is asserted by the trustee against the defendant. The powers of a court of law, under the statute, are alike inadequate to the purposes of complete justice in both cases. The consequence is, that these several claims, being of equity cognizance, if sustainable at all, were properly disallowed by the county court.^*

The remaining claim is a debt in favor of the trustees directly against the defendant. And the ground of its disallowance in the court below must have been, either that it could only be applied in part payment of their note to the defendant, — or because it did not appear to have been contracted before the service of this process. It is true, that the note contained a provision, that whatever sum the defendant might be owing the trustees, when the note came to maturity, should be treated as part payment and deducted. But since the entire note has been otherwise paid, or its obligation extinguished, that provision is no longer in force, and the debt in question remains to be satisfied without regard to the note.

In considering the other ground, it becomes necessary to advert to the 5th and 35th sections of the statute. The former relates to payments, and transactions in the nature of payment, made by the trustee on account of the liability for which he is sought to be charged ; the latter to independent claims in his favor against the defendant. And as the former section denies to the trustee the benefit of any such payment, made after service of the process upon him, (unless made in ignorance of that fact,) it evidently requires that payments claimed should appear to have been made before service of the process, or without knowledge of it. Otherwise the disclosure, or proof, will not make a case within the express requirement of that section. But in regard to distinct and independent claims of the trustee the language of the statute is very different. The 35th section enacts, that “ every trustee shall be allowed to re- ‘ tain or deduct out of the goods, effects and credits in his hands, all ‘ his demands founded on contract, express or implied, against the ‘ principal defendant, and shall be liable for the balance only, after ' all such demands between him and the principal defendant are ad- ‘ justed.” Here is no mention of the time when the process is served, and doubtless for the reason,that it might frequently work injustice to the trustee, to disallow every claim, which should accrue toffiim pending the process. Hence it is seen, that this demand of the trustees comes literally within the protection of the statute. And unless it arose out of voluntary advances made to the defendant after service of the process, or from other transactions intended to render the creditor’s attachment less beneficial to him, they must be entitled to retain for it. But as any thing of that kind would be a virtual fraud, both upon the statute and the creditor, it should be proved upon the trustees, and ought not to be presumed. If the creditor deemed it important to ascertain when or how the demand accrued, he could have questioned the trustees upon that point. Inquiry with the same view might also have been directed by the court. It is now too late, however, for any such amendment of the case. The demand is now to be allowed by reversing the judgment below, or wholly disallowed by affirming it. And since it is not shown to be fraudulent as against the rights of the plaintiffs, we think it safer to abide by the words of the statute, than to presume that either its letter or spirit has been wilfully violated.

Judgment of county court reversed, and judgment that the trustees are liable for the balance of the $116,00 after deducting their demand of $66,49, against the defendant.

* The legislature have enlarged the range of the trustee process by the Statute of November 5,1845, by which it was enacted, that “ Section four of ‘ chapter twenty-nine of the Revised Statutes shall be so construed, as to ex- ‘ tend to and embrace whatever any trustee may have in his hands, or possession, which he holds against law and equity.” The section refered to is in these words, — “ Every person, having any goods, effects, or credits, of the ‘principal defendant, intrusted or deposited in his hands or possession, or ‘ which shall come into his hands or possession after the service of the writ ‘ ‘and before disclosure is made, may be summoned as a trustee, and such ‘goods, effects and credits shall thereby be attached and held to respond ‘ the final judgment in the suit.” It has been held by the court, that this section applies only to cases, where there is an express or implied contract between the trustee and principal defendant, arrising in the usual course of business ; that the object of the statute of 1845 was, to extend the trustee process to claims merely equitable, and such as can only be enforced in a court of chancery; and that a person summoned as trustee cannot be held as such for money, which he has received of the principal defendant as usury; Barker v. Graves, Addison Co., Jan. T.1847; nor for money received as a compensation for raising money for the defendant, at a time of pressing emergency ; Fish v. Nichols, Tr., Ibid.