A. Person, Harriman & Co. v. Oberteuffer

Larremore, J. — After a careful examination of the testimony and the elaborate briefs submitted by the respective counsel, my conviction still remains that the plaintiffs are not entitled to recover in this action. They seek to establish an equitable lien upon property and trust funds held by the defendant as assignee of A. Soleliac & Sons, under a general assignment for the benefit of creditors made September 8, 1877. The claim thus sought to be enforced rests upon an agreement made in the year 1875 between the plaintiffs and the firm of A. Soleliac & Sons, whereby the former agreed to fur [341] nisli said firm with raw materials for the manufacture of silk goods, and to advance funds for the purchase thereof; which goods, when manufactured, were to be delivered to, and sold by, the plaintiffs, the balance of the proceeds of each sale, after deduction for commission, insurance and advances made, to be paid to said firm. Issues were framed and submitted to a jury, which found that between Hay 3, 1875, and September 1877, plaintiffs, in pursuance of such agreement, furnished to said firm raw materials and money to purchase the same to the amount of $150,000. That after July 24,1877, various advances were thus made, amounting, in the aggregate, to $10,470, and that said firm agreed to hold the property manufactured, or in process of manufacture, and the moneys advanced for the benefit of the plaintiffs and as a security and pledge for the performance of said agreement. Assuming that a valid trust was created by the agreement between the parties thereto, it remains to be seen whether, upon the testimony of this case, such trust can be impressed upon the funds in the hands of a general assignee for the benefit of creditors. It will be observed that there was a running agreement between the parties théreto, involving several demands, supplies, sales and settlements of advances and materials. This is apparent on the face of the agreement, and from the poli-, cies of insurance for which it provides. The doctrine of equitable lien has been so fully discussed that a mere reference to leading authorities on the subject will suffice in the decision of this case. Assuming, as above stated, that a valid trust was created, and a lien thereby acquired, what is its scope and limit ? Obviously it confers a right of the recovery of the subject-matter of the trust or its proceeds (Grinnel agt. Suydam, 3 Sand., 135; Gilsin agt. Stone, 43 Barb., 291; Story’s Equity, sec. 964). All the cases point to one conclusion—that the identical [342] property or its proceeds must be traced in order to uphold the lien (Story’s Equity, sec. 1218; Perry on Trusts, sec. 82; Flaggerty v. Palmer, 6 Johns. Ch., 437; Arnold agt. Morris, 7 Daly, 498). In this particular the evidence offered on the part of the plaintiffs fails to substantiate their claim to the equitable relief which they seek. JSTor is their case strengthened by the recitals in the policy of insurance. The latter appear to have been (as termed in agreement) “ floating polices,” covering any goods that were delivered to Soleliac & Sons, and unless a loss occurred which their ■ provisions covered, created no specific lien which the plaintiffs could enforce. • Whatever rights the plaintiffs have against the firm of Soleliac & Sons for conversion or misappropriation of property, breach of contract or otherwise, are not here at issue, and cannot be determined on this trial. The defendants are entitled to judgment in their favor for a dismissal of the complaint, with costs.