Howell v. Moores

Mr. Justice Magruder

delivered the opinion of the Court:

The assignment mentioned in this record was executed in January 1877. The present “Act concerning voluntary assignments, and" conferring jurisdiction therein upon county courts,” did not go into effect until July 1, 1877. Therefore, the provisions of that act have no application to the questions involved in the present discussion.

It is insisted by the appellant, that a court of chancery has no jurisdiction to entertain a bill of this character. By the terms of the assignment now under consideration, the property was conveyed to the assignee in trust to convert the same into money and pay the creditors. The enforcement of trusts is peculiarly within the province of a court of equity. Such a court will entertain jurisdiction to enforce the trust, created by an assignment for the benefit of creditors, at the suit of one or more of such creditors.

There can be no doubt that the appellee could have filed this bill for an accounting against Isaac M. Howell, as assignee, in his lifetime. The death of the assignee does not deprive the creditor of his right to go into a court of equity to enforce the trust and obtain an accounting. Such money belonging to the assigned estate, as Howell had in his possession when he died, went into the hands of his administrator. The administrator took the assets charged with the same trust, to which they were subject, while under the control of Howell in his lifetime.

It is contended, however, that appellee could have filed his claims in the Probate court against the estate of Isaac M. Howell under section 70 of the “act in regard to the administration of estates.” (Starr & C. Stat. page 219). That section provides that all demands against the estates of deceased persons shall be divided into seven classes, the sixth of which is as follows: “where the decedent has received money in trust for any purpose, his éxeeutor or administrator shall pay out of his estate the amount thus received and not accounted for.”

The sixth clause of section 70 can not be regarded as conferring exclusive jurisdiction upon the Probate court. The twelfth section of article ti of the constitution of 1870 provides, that “the circuit courts shall have original jurisdiction of all cases in law and equity.” A case, which has for its object the enforcement of a trust, is a case in equity. The legislature has no power, under the constitution, to deprive the circuit courts of their equitable jurisdiction. Therefore, the jurisdiction, conferred upon the county or probate court by the clause above quoted, must be held to be concurrent only with the previously existing jurisdiction of the circuit courts in matters of trust. In cases of concurrent jurisdiction the court, which first obtains jurisdiction, will have precedence. Appellee never filed his claims in the probate court, and, therefore, that court can not be said to have first acquired jurisdiction of the subject matter of this suit, if it should be conceded that it had the power to grant the relief sought by the present bill.

“The jurisdiction of a court of equity for enforcing trusts is not taken away by the fact that the party has a remedy at law, especially where the party seeking relief is entitled to a discovery, or where the trustee is bound to state an account of the trust fund and its proceeds.”

The views thus far expressed are sustained by the following authorities: Clapp et al. Admrs. v. Emery, 98 Ill. 523; Gibson et al. v. Rees et al. 50 id. 383; Darling et al. v. McDonald, 101 id. 370; Harris v. Douglas et al. 64 id. 466; Burrill on Assignments, (4th ed.) pages 737, 689, 708; Pomeroy’s Eq. Jur. secs. 276, 279, 280, 187, 994, 351, 1154 (n. 2); First Congregational Society in Raynham v. Trustees, 23 Pick. 148; Clark v. Henry’s Admr. 9 Mo. 336; Oliveira v. University, 1 Phillip’s Eq. Rep. (N. C.) 69.

We are of the opinion, that the objection to the jurisdiction of the Circuit Court is not well taken.

The assignee’s account shows that his receipts exceeded his disbursements by the sum • of $297.94. The report of the Master deducts $243.04 from the compensation of the assignee, as fixed by the latter in his account. The compensation as thus reduced is the same as that allowed by law for similar services to administrators and executors. We think this deduction was proper. The estate of the assignee is justly chargeable with the two sums of $297.94 and $243.04, aggregating $540.98, together with interest thereon at six per cent per annum from March 11,1879, the latest date at which any of the proceeds of the sales of the assigned property are shown to have come into his hands.

We see no reason why the disbursements, with which the assignee credits himself, after deducting therefrom the overcharge for services as above explained, should not have been allowed by the master.

The assignee’s account shows that he paid out $115.00 to the creditors of H. B. Town upon the Carr and Dickson notes, and $389.16 to the creditors of Sylvanus Town upon the Brogden and Wheat notes. These payments were properly made out of the respective funds realized from the individual assets of the two partners. In the schedules attached to the assignment, the Carr and Dickson notes are mentioned as debts of H. B. Town, and the Brogden note is mentioned as a debt of Sylvanus Town. We do not find the Wheat note named in the schedules. But the assignment contains this provision: “If any debt is by mistake omitted, it is nevertheless to share in the proceeds of the assigned estate.” There is nothing to„ show, that Wheat was not a creditor of Sylvanus Town, or that the payment of the Wheat note was not a legitimate disbursement.

The account book of the assignee was introduced by the complainant. In the accounting, the assignee’s estate is charged with all the monies shown on the debit side of his account to have been received by him. Items aggregating $1340.50 are picked out from the credit side of the account and allowed. So far as we can find, there is no more proof sustaining the credit items which are allowed, than there is in favor of the credit items which are disallowed. There is no testimony discrediting any of the items in the assignee’s book. The only witness, who refers to any of them, is Henry B. Town, and his evidence, as far as it goes, tends to sustain their correctness. The entries in the book are the only proof in regard to the receipts and disbursements by the assignee. Sylvanus Town had died before the accounting was had before the master.

It is not allowable for the complainant to introduce one entire account and use the debit side and a part of the credit side as evidence, and ignore all the balance of the credit side, there being no testimony outside of the account to discredit any of its items. The account in the book is an entirety and must be- accepted as a whole or not at all. Viewed as an admission by the assignee, it must be taken with the qualifications, which accompany the admission. In Frink v. Cole, 5 Gilm. 339, we said: “The complainant called for and introduced the books in evidence, and he was bound to admit those items, which made against, as well as those which operated in his favor, unless he could show, that the items to his prejudice had been improperly inserted.” (Moore v. Wright, 90 Ill. 470; Morris v. Hurst, 1 Wash. C. C. Rep. 433; Jacobs v. Farrall, 2 Hawks, 570; Veiths v. Hagge, 8 Iowa, 191.)

The remainder of the disallowed credits is shown by the account in the book of the assignee to have been paid out by him in the form of dividends to the creditors of the firm of S. Town & Son. We now reach the main theory, upon which -the accounting in the court below was based. It is not denied, that the assignee paid these monies upon the firm debts, but it is'charged that ’such application of them was improper, upon the alleged ground that, being derived chiefly from sales of property belonging to the individual partners, they should have been used in paying the individual debts and not the firm debts. It is claimed that the assignee should have applied the funds, realized from the individual assets, to the payment of complainant’s two claims, it being contended that such claims are individual and not firm indebtedness.

The notes of $500.00 each, which contain the words, “we or either of us promise to pay” etc., are claimed to be the individual indebtedness of each of the partners. The obligation is certainly joint as well as several. It is not universally true, when a contract appears on its face to be the separate contract of one partner, that it will not be binding on the firm if it is understood to be, and is, in fact, for the.benefit of the firm. “When a partnership consists of two persons, and they both sign a note with their individual names and not by the name of the firm, if it be in fact for a joint or partnership object, there would seem to be strong reasons for putting it, in the marshaling of securities, to the partnership account. ” (In re Warren, 2 Ware, 322; Bump on Bankruptcy, (9th ed.) page 245; Maynard v. Fellows, 43 N. H. 255; Carson v. Byers, 67 Iowa, 606; 1 Parsons on Notes and Bills, 131.)

In the present case, the deed of assignment contains the foil owing language: “The co-partnership debts of said-firm and the private debts of Sylvanns and Henry B. Town are set forth and described in a schedule hereto attached, marked schedule B and made a part of this deed.” When we turn to Schedule B, we find the three notes of $500.00 each described under the following heading: “Copartnership debts due from said firm of S. Town & Son, towit” etc. The assignors thus designated these notes as firm debts. The assignee, acting under the instrument, which defined his powers and duties, treated the notes as partnership obligations and paid dividends upon them as upon the other partnership obligations. The Bank, which was then the holder of the notes, accepted the dividends, and made no claim to larger payments, as being the owner of an indebtedness against the individual partners. In his account book the assignee arranges the payments upon these notes among the dividends paid upon the firm indebtedness of Town & Son.

The question is not, whether the notes may not be construed upon their face to be the several obligations of the individual partners, but whether the estate of the assignee shall be required to account for monies, which the assignee in his life time distributed in good faith among the creditors of the firm, treating the holder of these notes as a firm creditor in compliance with the directions of the assignors themselves. It is to be observed that, after the assignment was made, four years and two months passed before the death of the assignee, and six years and six months elapsed before the filing of this bill. However rigidly the rule contended for may be applied where the law marshals and distributes the individual and copartnership assets of the different members of a firm, yet when the copartners undertake to administer their own funds, as they do when they make an assignment for the benefit of their creditors in the absence of statutory regulations, the assignee is justified in making such distribution as the assignment provides for, there being no proof of any fraud or improper conduct either in the making of the deed or in the carrying out of its provisions. (Burrill on Assignments, (4th ed.) pages 193 and 295.) We are, therefore, of the opinion that the appellant as administrator should not be required to repay the monies distributed among the firm creditors, simply because such funds were not applied as individual assets upon the notes in question. (Lill v. Egan, 89 Ill. 609.)

In support of the decree below, reference has been made to the case of The National Bank v. Bank of Commerce, 94 Ill. 271. We do not regard the views here expressed as being in conflict with that case. There a firm, consisting of five members, made an assignment of their firm property, and three of the members each made a separate assignment of his individual property; a note was made by these three members alone to the order of the firm, and endorsed by the firm to the Bank, but was not mentioned at all in the schedules attached to the assignments.

The authorities already cited hold that, where a note is on its face the individual obligation of one or more of the partners, it may be shown by parol proof to have been given for a firm debt. While there is no proof that the nqtes in this case were given for firm debts, yet their description as firm debts in the assignment was sufficient evidence of that fact to warrant the assignee in distributing the funds accordingly, there being no objection to such action on his part by the owner of the notes, and no notice to him by such owner, that the latter regarded the indebtedness as an individual liability.

The next question relates to the indebtedness upon the bond. The warrantee deed from Sylvanus Town to appellee must be held to be a deed with covenants of seizin, against incumbrances, and for quiet possession, etc., as specified in section 9 of the Conveyance Act. We do not, however, deem it necessary to discuss the points made by counsel in their able and elaborate arguments upon these covenants, and upon the doctrines of actual and constructive eviction.

The bond for $2000.00, in addition to the provision in regard to performing the covenants of the deed, contains the following language: “To him, the said Thomas T. Moores, his executors, administrators and assigns, we bind ourselves, our administrators, executors and assigns, that we will pay or cause to be paid all liens against the above described 26T8780 acres, whether by mortgage or otherwise, at this time standing, within three years from this date, then if such liens, whether by mortgage or otherwise, are fully paid and cancelled, or caused to be paid and cancelled, this obligation to be void,” etc.

The portion of the bond thus quoted amounts, in effect, to an executory contract bearing date eight, days after the date of the warrantee deed. The mortgage to Mary E. Brogden was a lien standing against the land at the date of the contract. The Towns did not pay off the mortgage within three years, but suffered it to be foreclosed, resulting in a conveyance to the purchaser at the foreclosure sale and a judgment for possession against appellee. No question is made as to the validity of this mortgage sale or of the deed made in pursuance thereof. The appellee was not bound to take the risk of paying the incumbrance himself. He had a right to rely upon its payment by the obligors in his bond. He may not have had the money to discharge it.

It is unnecessary to inquire what may be the proper measure of damages in an action on the covenants against incumbrances and for quiet possession. The executory contract, embodied in the terms of the bond, is independent of the covenants in the deed, and, for the breach of this contract, appellee is entitled to recover such damages as are the necessary, natural and proximate result of such breach. He lost his title to the 26^0- acres, and the land itself, by the sale under the mortgage, and the proceedings for possession, which followed. The measure of his damages is the actual consideration which he paid for the land, together with interest at six per cent. The consideration named in the deed is the sum of $2000.00. Prima facie the sum so named is the amount paid for the land. But, as between grantor and grantee, the recital in the deed is not conclusive evidence of the consideration paid. The actual consideration, which passed between the parties, may he shown by parol testimony to be different from the consideration recited in the conveyance. (3 Wash, on Beal Prop. (4th ed.) page 375; Kimball v. Walker, 30 Ill. 482; Illinois Land and Loan Co. v. Bonner et al. 91 id. 120; McCrea v. Purmont, 16 Wend. 460; Morse v. Shattuck, 4 N. H. 229; Parker v. Brown, 15 id. 176.)

The appellee, on July 1, 1874, purchased the tract from Sylvanus Town by deeding to the latter two town lots known as the Bose street property and by executing his note for $1000.00. It appears from the testimony of four witnesses, that, on July 1, 1874, the Bose street property was not worth more than $500.00. Therefore the appellee will be made whole if he gets back his note and receives $500.00 with interest. By the decree of the Circuit Court the note is returned to him. In addition to this he is entitled to recover $500.00 with interest at six per cent from July 1, 1878. Under the circumstances of this ease, interest should not be allowed from July 1, 1874, because appellee was in possession'of the 26^87 acres, drawing the rents and profits, as late as some time in June 1878.

. Our conclusion is that the decree of -the court below is right in finding $2753.60 to be due to the appellee upon the notes, and in ordering the appellant to surrender to appellee, the. latter’s note for $1000.00; but the decree should be so modified as .to find that there is due to appellee upon the bond $500.00 with interest at six per cent from July 1, 1878, instead of $1515.00, and that appellant should be required to pay, instead of $2662.62, the sum of $540.98, with interest thereon at six per cent from March 11, 1879. If there shall be any surplus after paying the indebtedness on the bond, it should be applied upon the indebtedness on the notes.

The judgments of the Appellate and Circuit courts are therefore reversed, except in the respects above indicated, and the cause is remanded to the Circuit Court for further proceedings in accordance with the views here expressed.

Judgment reversed in part and in part affirmed.

Mr. Justice Bailey, having heard this case in the Appellate Court, took no part in its decision here.