Groome v. Lewis

Cochran, J.,

delivered the opinion of this Court:

The question to he considered in this case, arises on the following facts: A sale of certain real estate was made hy George Earle, as trustee, under a decree passed hy the Court helow, on a hill filed hy Sarah C. Earle against the appel-lee and one Edward J. Cannon. The proceeds of sale, to which in part the appellee was entitled, were duly reported for distribution, hut before his share was ascertained hy the statement and ratification of the final account, the appellants, being his creditors, sued out attachments for the amount of their respective claims, and caused them to he laid in the hands of Mr. Earle, the trustee. Counsel, professing to act for the appellee, and for the protection of his interest in the fund derived from the sale, entered their appearance for the garnishee, and after continuing the cases for several terms, consented to judgments of condemnation. The amount allowed the appellee hy the* account was $1,622.06 * and in his proceedings taken to compel the trustee to apply the proceeds of sale as directed hy the final order of ratification, he assumes that this sum should he paid to him regardless of the claims of the appellants on their judgments of condemnation. At the hearing helow, the Court, holding that he was entitled to the fund, passed a decree directing its payment, and¡ in reviewing that decree, we áre required to determine whether the fund is within the operation and effect of those judgments. This question is an important one, and not altogether free from difficulty.

The appellee, to establish an exclusive right in himself to the sum allowed hy the account, notwithstanding the judgments, relies on the general rule, that funds in the hands of a trustee in equity are not liable to attachment and condemnation before the statement and ratification of a final account. The appellants, on the contrary, contend that this rule does not apply in this case, and' that it cannot he invoked in this proceeding for the purpose of relieving the fund in question from the operation and effect of their judgments. The reasons assigned for the rule, in the reported cases, unquestionably indicate, if they do not expressly prescribe, tbe time and circumstances wben, and under which, it should be asserted, and a brief notice of them in that connection would seem to be appropriate here. The question was considered in the case of Cockey vs. Leister, 12 Md. Rep., 124, where, on the authority of the cases of the Farmers Bank of Del. vs. Beaston, 7 G. & J., 421, and Bentley vs. Shrieve, 4 Md. Ch. Dec., 412, the Court said, that an attachment would not lie to affect funds in the hands of a trustee in equity before an order of distribution on a final account; 1st, because the power of the Court over the fund is such as to suspend the privilege under the attachment' laws, to which the trustee, as garnishee, would otherwise be entitled, of confessing judgment for the amount in hand, with an allowance of his costs therefrom, and also prevent him from responding to a judgment of condemnation except out of his own estate; and 2nd, because the interference by the process of one Court with funds in the custody of another, would result in confusion and conflict of jurisdiction.

The rule insisted on thus appears to rest altogether on jurisdictional considerations, sufficient for the defence of a trustee as garnishee, as well as for the protection of funds in his hands from condemnation; but it is manifest from the nature of the case, whether we look to the jurisdiction to which the fund is subject, or the resulting privilege of the trustee holding it, that these are purely matters of de-fence, of which the trustee should avail himself, by motion, pleadings or proof, at some stage of the attachment proceeding before the final judgment. He is not, however, required to plead these facts specially, either for his own protection or that of the fund in his hands, but they should be so disclosed that the Court having jurisdiction of the attachment may take notice of them before the cause is concluded by a judgment. But does this record show any such state of case? On the contrary, there is nothing in these proceedings to show that the garnishee made any defence whatever, or that the counsel who appeared for him in the interest of the appellee, and assented to the judgments of condemnation, made any; nor do the extracts from the records of the attachment cases, produced hy the appellants as the foundation of their claims to this fund, disclose any fact in regard to its character or condition, nor of the garnishee’s relation to it, upon which error in the judgments can he predicated. Even if it were otherwise, the period, within which errors could have been assigned or irregularities corrected, has passed long since, and these judgments, like others pronounced hy Courts of competent jurisdiction, must he respected as final and conclusive on the rights ascertained and established by- them. The' fact that the garnishee had a good defence, or that he was clothed with a privilege sufficient to protect him from liability to the attaching creditors, cannot be inquired into here, for the purpose of setting aside the judgments, or releasing him from their proper legal effect. Raborg vs. Hammond, 2 H. & G., 42. Powles vs. Dilley, 9 Gill, 222. Prather vs. Prather, 11 G. & J., 110. Peters vs. League, 13 Md. Rep., 58. Boyd vs. Ches. & Ohio Canal Co., 11 Md. Rep., 195. But it is said that these judgments, even if binding on the garnishee, do-not affect the fund in dispute, and, to that extent, that they should be treated as nullities, under the rule relied on by the appellee. This proposition, if true in this case, unquestionably gives a more comprehensive operation to the-rule than the reasons on which it is founded would seem to justify.

So far as we can understand, it is not a device for the benefit of debtors, nor can it be said to contemplate in any way, the protection of their interests in trust funds from the appropriate remedies of their creditors, nor can they derive any incidental advantage from the rule, except in cases where the existing facts or circumstances are such as-to justify its application; and the rule cannot be applied, as was said in Cockey vs. Leister, after there has been a final account, and an order to the trustee to pay accordingly.. The theory of the appellee would thus seem to be untenable, for the state of facts upon which the rule might have been availed of, no longer exists. His share of the fund arising from the sale of the real estate, was ascertained by a final account long before he filed his petition against the trustee for its payment to him; and, as he no where denies his indebtedness to the appellants, nor pretends that he has been, deprived of any real defence to their claims, it is neither reasonable nor just that he should have the benefit of an objection to their judgments which could not be made if the cases in which they were entered were still open..

But trying the objection by a more accurate test, we find that it does not go to the issue and service of the writs, but simply to the judgments; and that, indeed, is as far as the objection could go, consistently with the views expressed in the case of McPherson vs. Snowden, 19 Md. Rep., 191. After reviewing the cases of The Farmers Bank of Del. vs. Beaston; Bentley vs. Shrieve; and Cockey vs. Leister, this Court said, that they did not understand from them that an attachment could not be issued and laid in the hands of a trustee before a final account; but that it would not be effective — that is, would not subject the fund to condemnation before that time.-

It surely cannot be doubted that an attachment laid in the hands of a trustee before a final account, would be good, if, at any time before trial or judgment, the share of the fund in hand belonging to the debtor is ascertained by a final account. This process, certainly when pursuing credits, unlike ordinary suits, does not necessarily relate back to the impetration or service of the writ' as the time of taking effect, but may stand on the state of fact appearing at the time; and, in the ease supposed, the account would enable the trustee to confess the amount in hand, as well as respond to a judgment of condemnation, without prejudice to himself or contempt of the jurisdiction to which the fund had been subject; and we can discover no appreciable reason why the issue and laying of the attachment before an account is stated, should afterwards bar a Condemnation of the fund. And if an attachment may be laid in the hands of a trustee before a final account, upon which a fund thereby ascertained fnay afterwards be condemned, we may conclude with equal reason that a judgment entered before the account is stated, would ho final and effective on the fund afterwards ascertained, if before that time no motion nor other proceeding has heen interposed or taken to correct that irregularity in the entry of the judgment. The ascertainment of the specific fund,- upon which the judgment takes effect, cores the irregularity of entering it before tbe final account, and presents a case where the ground of objection has ceased to exist, and would not avail for any purpose, if the attachment were still pending. Even if the previously existing irregularity were properly subject to correction>on a motion to strike out, the attaching creditor could have the case brought up by regular continuances, and demand a condemnation of the fund shown to he in the hands of the trustee by the final account. The result, however, is altogether different when, upon a full disclosure of the condition of the trust fund, the prosecution of an attachment laid in the hands of a trustee results in a judgment adverse to the attaching creditor before a final account; for there the failure to obtain a judgment of condemnation, is an entire failure of the remedy.

The most, therefore, that can he said of these judgments, is, that if the matter of defence suggested here had been relied on at the proper time, their entry would have heen irregular; but it does not follow, as we have seen, that they should now be treated as nullities for any of the purposes of these proceedings. There was no effort to correct them while they were subject to objection on the ground of the alleged irregularity, and, so far as this record shows, no equitable reason has heen assigned, nor is it pretended that any exists, for denying to them the absolute and conclusive effect of final judgments.

(Decided May 26th, 1865.)

We think, upon a full and careful consideration of the whole case, that the fund in dispute is subject to the appellant’s judgments, and that they are entitled to have it appropriated to their satisfaction. We shall, therefore, reverse the decrees of the Court below, with costs to the appellants, and remand the cause, so that it may be concluded in conformity with this opinion. -

By Bartol, J.- — I was prevented, by indisposition, from hearing the whole argument in this case and therefore, could not participate in its decision. But having had an opportunity of examining the questions involved, and of uniting with my brothers in consultation upon the case, concur with them in the foregoing opinion, and the reasoning on which it rests.

Decree reversed and cause remanded.