Coe v. Beckwith

Leonard, J.—(After stating the facts.) The defendant, as one of his grounds of demurrer, insists that the complaint does not state facts sufficient to constitute a cause of action. It is necessary then to ascertain whether the plaintiff has any title to these funds as a trustee. If he has such title, he is entitled to apply to this court for instructions as to his conduct in relation to the trust, when questions of difficulty arise, and in that event also, the defendant will have acquired no lien upon the funds in question, by virtue of his attachment. In my opinion, the complaint fails to make title in the plaintiff to the funds in question by virtue of the trust-deed. In order to derive title under this deed, it is necessary that the plaintiff take possession of the railroad and run it, whereby he would be entitled to the tolls and income, and, after paying expenses, could divide them among the bondholders. The complaint does not, however, allege that the plaintiff has taken [302] possession of the road, or run it. The funds have been deposited to his credit in the Trust Company as trustee, but he' did not acquire them in any manner by virtue of any power or authority under the trust-deed. The complaint does not show that any one was under any legal liability to deposit those funds to the credit of the plaintiff, any more than to the credit of another person. The position which he held, rendered him a very proper person to be chosen for the purpose of receiving and paying out the funds; but there is nothing to show his right to compel any person to account to him for the earnings of the road. The plaintiff could acquire that right under the deed, only by taking possession of the railroad. True, the complaint alleges that he has taken possession of the tolls and income—but how did he do it ? That has not been disclosed. The money in question may have been taken possession of by being deposited to the plaintiff’s credit, and that is all that this allegation (from the other facts stated) can mean in this case. The allegation that the plaintiff took possession of this money by virtue of the deed, is merely a mental deduction or conclusion, without any facts stated upon which any one else can arrive at the same result. It is stated in the complaint, that an officer of the Bailroad Company visited the East, after the company were in default for the non-payment of coupons, for the purpose of making an arrangement with the bondholders; but it is not alleged that any arrangement was in fact effected, or that any change was made in the trust, or in the manner of securing the payment of the bonds or coupons, or any thing from which the plaintiff derives title to the funds in question. The plaintiff must stand, as far as this complaint is concerned, upon the appropriation made by the letter of February 19, 1858, and the actual deposit made in pursuance thereof. The complaint does not state, expressly, that the Bailroad Company deposited the funds in question, but from the whole tenor, it is fairly to be inferred. If not deposited by the Bail-road Company, then none of the defendants have any interest therein. The allegation is, that there has been deposited various sums [303] in the Trust Company to the credit of George S. Coe, trustee; but who made the deposits, or from what source derived, is not , definitely stated. It is there alleged that the plaintiff took possession of them under the trust-deed. That he took possession is probable ; but that he did so under the deed is impossible from the evidence of any fact alleged. The complaint then alleges that the funds so deposited were intended to meet the coupons which fell due in 1856. This latter averment is pregnant with meaning, and is probably the saving fact in the complaint. I am of opinion that the allegations of the purpose for which the deposits were made, of the taking possession thereof by the plaintiff; of the letter of February 19, 1858, apprising the Trust Company of the account and purpose for which the future deposits of the Railroad Company were to be made,—constitute an appropriation of the funds; and that the plaintiff was invested thereby with the title thereto, as trustee for the holders of the coupons, who had an immediate right therein, and would enforce a pro-rata division thereof on demand, and was not invested therewith as agent only for the Railroad Company. The Railroad Company cannot control or reclaim the deposit. As to them, the deposits are appropriated. The Trust Company would be liable to the plaintiff in a suit on behalf of the holders of the coupons, if they should suffer these deposits to be withdrawn on the authority of the Railroad Company alone. The objection of the want of authority in the officers of the Railroad Company to make these deposits in the manner they did, is not tenable, inasmuch as if deposited without authority, the act would constitute a breach of trust. It does not appear that the officers had not the authority. Courts never assume a breach of trust to have been committed. Authority to make the deposit must be presumed. The objection for the want of proper parties is not, I think, well taken: 1. The Railroad Company have fully parted with all title to the money, and have dedicated it to the holders of the coupons. 2. The plaintiff’s check will afford a good discharge to the Trust Company, and the coupons which he retires he will then • hold as the trustee or agent of the Railroad Company. There [304] fore, neither the Trust nor Bailroad Companies are necessary. parties. 3. The sheriff has no interest at present. The fund is not in his possession or control. 4. The plaintiff’s excuse for not joining all the holders of coupons, is well recognized and sufficient, viz., that they are numerous and unknown. The demurrer is irregular, in naming others who are holders of such coupons, who have not been joined as defendants. It assumes the functions of a plea in abatement. No conclusion is to be drawn therefrom adverse to the plaintiff, as such statements are not. within the office of a demurrer. The defendant Beckwith is one of the same class of coupon- . holders as the other defendants, and entitled to participate with themyw rata only, and it would be wholly unjust and inequitable for him to obtain the whole fund, or more than his share, by a common-law action upon his coupons. At least it so appears from the allegations of the complaint. Judgment must be for the plaintiff on the demurrer, with leave to the defendant to answer the complaint in twenty days. The costs of the demurrer are to abide the event of the action. •