Stedman v. Vickery

Appleton, J. The trustee, McAllister, having been charged on his disclosure, at the April, term, 1855, by the. presiding Justice, duly alleged exceptions thereto. . At the October term following, the trustee moved for leave to disclose further. As his exceptions to the ruling by which he had been charged were then pending, the motion was denied. Thereupon, by leave of the Court, he withdrew his exceptions, and he-'was then allowed to disclose further, to all which the plaintiffs excepted. In cases brought from the Common Pleas to the Supreme Judicial Court by appeal, it was the constant practice to receive further disclosures, the appeal being regarded as a continuation of the proceedings in the Court of Common Pleas. “And,” remarks Shaw, C. J., in Hovey v. Crane, 12 Pick. 167, “until a final judgment rendered, there seems nothing to restrain the general power of the Court from receiving further disclosures, if necessary to the rights of the parties.” In Carrigan v. Sidebottom, 3 Met. 297, where, in an answer, a — 135 — fact had been stated incorrectly, or in terms which would admit of an inference or implication not intended, the trustee was allowed, without further interrogatory, to make an additional answer, correcting or qualifying the supposed erroneous answer. In Boynton v. Foster, 7 Met. 415, it was held, that a trustee, who had been discharged in the court below, must, upon the removal of the cause, follow the same in the Supreme Court, and there answer further interrogatories, if required by the plaintiff. Whether persons summoned as trustees, having once answered interrogatories, shall further answer, is a matter entirely within the discretion of the Court. Warren v. Perkins, 8 Cush. 518. By R. S., c. 119, § 79, the trustee, though he may have disclosed in the original suit, may be permitted, or required, to disclose anew on scire facias. Now, no reason is perceived why that which may be done in a subsequent suit, may not much more properly be done in the original process, and thus the subsequent litigation be avoided. It is for the interest of the public that there be an early termination to suits; and it is better for all that the facts be ascertained and the legal rights of the parties be determined now, than to await a second suit, in which to receive what might have been heard in the first with a great saving of delay and expense. The trustee McAllister, states, that having become liable for the principal debtor for a large sum, in January, 1852, he took a mortgage of his house and an absolute deed of his store, giving back a memorandum to reconvey upon being indemnified. He cannot be charged for this real estate. If those conveyances are void for any cause, that question cannot be here considered or determined. The trustee discloses a mortgage of the goods in Vickery’s store, valued at §3000 at the date of the mortgage, and at $2000 at the time of the service of this trustee process. The trustee had previously become liable for a large amount for the mortgager, and there are ample reasons disclosed in the relations between the parties, why the trustee should ask, and — 136 — why the mortgager should give a mortgage, without imputing any fraudulent design to either party. If the trustee had merely a constructive, and not an actual possession of the mortgaged goods, he cannot be charged as trustee. Pierce v. Henries, 35 Maine, 57. If he was in actual possession, his disclosure shows outstanding liabilities, for an amount exceeding by thousands of dollars the value of the goods mortgaged in the store. If the plaintiff wished to avail himself of these goods, he should have moved the Court to “ order and decree” the sum of money, upon payment of which, “within such time as the Court shall order, and while the right of redemption exists,” the alleged trustee “ shall deliver over the property to the officer serving the process, to be held and disposed of in like manner as if it had been attached on mesne process,” &c. R. S., c. 119, § 58. This the plaintiff has neglected to do. He has, therefore, no right to claim that the mortgaged property shall be exposed to the officer having the execution which may finally issue in this case. Some of the property of the principal defendant, in the hands of the trustee, has been sold by him. In such case, the provisions of § 58 are not applicable. The arguments of the counsel mainly relate to the brig Black Hawk, which, on Dec. 1, 1854, was mortgaged to the trustee, and of which subsequently and on the same day he received an absolute bill of sale. The trustee discloses that being desirous to sell the brig, and with the avails relieve himself from the onerous liabilities he had incurred for the debtor Vickery, he took the bill of sale, he agreeing to pay the creditors where he was surety, the whole which he might realize from her, including earnings, as well as the money received on her sale, and allowing to said Vickery what he received from her. Without this arrangement it is obvious that he would have been unable to effect a sale, however desirable it might be, with the consent of the mortgager. With it, he was enabled to dispose of the brig whenever it might in his judgment become expedient. — 137 — It is insisted that this bill of sale is void as being without consideration: and further, that though thus void, it nevertheless is so far valid as to destroy or defeat the mortgage previously given. The bill of sale, whether valid or not, does not appear to have been given with any fraudulent intent. It was held in Little v. Little, 13 Pick. 427, that an outstanding liability as surety for another, together with a promise, express or implied, by such surety to the principal, that he will pay the debt, and so indemnify the principal, is a valid consideration for a promissory note from the principal to such surety, payable on demand. In Garden v. Webber, 17 Pick. 407, it was decided that where a promissory note, secured by mortgage, was given in order to indemnify the promisee against any loss he might suffer by reason of his subsequently indorsing for the accommodation of the promisor, and the promisee did accordingly indorse for the promisor, that such note was valid as against creditors of the promisor, whose claims accrued after such indorsements were made. The same doctrines were re-asserted in Swift v. Crocker, 21 Pick. 241. According to these decisions, the promise of the trustee to appropriate the proceeds of the brig to the discharge of debts for which he was liable with Yickery as surety, must be regarded as a sufficient consideration for the conveyance to him. “This form of process,” remarks Parker, C. J., in Boardman v. Cushing, 12 N. H., 105, “is regarded as an equitable action, and it would not consist with equity to deprive the party of a mortgage security by reason of a mere mistake in the mode of taking it.” In that case, as in the one under consideration, the conveyance was taken with -no design to defraud, but on the supposition that in this mode the rights of the trustee could be more effectually secured. If the bill of sale were to be regarded as void, still it is not readily perceived how the giving of a void bill of sale would defeat a previous valid mortgage; or why, if void, it should be upheld merely to destroy an honest claim. The — 138 — mortgage was given in good faith, and for a sufficient consideration. It has never been canceled. The trustee entered into possession of the property mortgaged; and it would be a strange result if he were to lose security otherwise valid, by an act which was either voidable, or if valid, strengthened and enlarged his prior rights. It would seem, according to Ripley v. Otis, 6 Pick. 475, that even if the bill of sale were to be regarded as fraudulent in fact, still the trustee would be entitled to hold the property to secure himself against his original liabilities. It is alleged, and for the purposes of this decision it may be conceded, that the trustee was an alien, and having taken the bill of sale of the brig, conveyed the same in trust for himself to Samuel G. Pike, in whose name she was registered, and by whom, when sold by the trustee, the transfer was made. It is insisted, that these conveyances were in conflict with the revenue laws of the United States, and that the brig is liable to forfeiture. It is immaterial how that may be, for the attaching creditors have no privity with the United States, and can derive no aid therefrom. The plaintiffs cannot interpose any liability to forfeiture, thereby to charge the trustee. If the brig had been forfeited, and an adjudication to that effect been made, the trustee could not be charged, for the title would be in the United States. If there was a liability that such would be the result, the possibility that the trustee might lose the vessel, would furnish no argument for holding him. The sale was valid as between the parties, and whether some of the parties may or may not have incurred penal liabilities for some infractions of the revenue laws, it will be time enough to consider when the question is so presented that it will be our duty to determine it. By R. S., c. 119, § 33, “the plaintiff or trustee may allege and prove any other facts not stated nor denied by the supposed trustee, which may be material,” in deciding how far the trustee is chargeable. Many of the allegations filed, are to the effect, that the conveyance of the Black Hawk was without consideration and — 139 — fraudulent and void. In these allegations no new facts are stated, but rather the inferences the plaintiffs seek to have drawn from the facts disclosed by the trustee. To enable the plaintiffs to charge the trustee, the allegations must be clear and distinct, setting forth the "other facts" to be proved. The trustee has disclosed all the circumstances attending the conveyance and the consideration for which it was made. The mere allegation that it was fraudulent, or without consideration, when the trustee has stated the circumstances and the consideration, and where no facts to be proved are disclosed, is not enough. Pease v. McCusick, 25 Maine, 73, Gouch v. Tolman, 10 Cush. 105. In determining the liability of the trustee the facts disclosed were taken as true. If the statements of the trustee are false, the plaintiffs have their remedy. Laughran v. Kelley, 8 Cush. 199. In the present posture of the case, the disclosure must be regarded as true. The allegation, that McAllister has permitted the debtor to use the earnings of the brig, is not sufficiently definite to be perceived to be material. If this was before the plaintiffs’ writs were served, it is unimportant. The mortgagee may permit the mortgager to use or dispose of the mortgaged property. Till the rights of third persons arise, it is a matter solely between them. It is only when creditors intervene that inquiry becomes important. If, after he was summoned, the trustee permitted property of which he was in possession to be disposed of by his debtor, he may be held to account therefor. But that is not alleged. The allegations assorting a violation of the revenue laws of the United States, are entirely irrelevant to the question under consideration. The trustee is neither to be charged for violating them nor refraining from their violation. The trustee does not disclose specifically when his liabilities for the principal debtor accrued. The fifth allegation is, that a large portion of them accrued subsequent to the conveyance of the brig Black Hawk from the trustee to Pike, the other trustee. The times when the trustee became liable, may be — 140 — come important in determining the state of the accounts between the principal defendant and the trustee, and in ascertaining whether or not there is any balance in his hands. The trustee may have leave to disclose further. If, in his further disclosure, this question is left in doubt, the plaintiffs may offer proof on this point. From the personal property, or the proceeds of the same in his hands, the trustee is entitled to deduct all payments of sums for which, previous to the conveyance of the defendant to him, to which reference has been had, he had incurred liabilities, and to hold the balance as security for all outstanding liabilities thus incurred. He is further to “be allowed to retain or deduct out of the goods, effects and credits in his hands, all his demands against the principal defendant, of which he could avail himself if he had not been summoned as trustee, whether by way of set-off on a trial or by a set-off of judgment on executions between himself and the principal defendant; and he shall be liable for the balance only after their mutual demands are adjusted.” R. S., c. 119, § 70; R. S. of 1857, c. 86, § 64. The trustee McAllister, having the Black Hawk in his possession, and having disposed of the same, is to be held for the amount for which it was sold, subject to the deductions already specified. It is obvious, therefore, that the trustee Pike cannot be charged for the same property. The exceptions in the case of the trustee Pike are overruled. The exceptions in the case of the trustee McAllister are sustained. Tenney, C. J., and Hathaway, May and Goodenow, J. J., concurred.