Power v. Hollman

The opinion of the court was delivered by Rogers, J. —The trustees of an insolvent debtor cannoUsustain an action in right of the insolvent without having first given bond. Stoever v. Stoever, 1 Penns. Rep. 262; Lessee of Willis v. Rowe, 3 Yeates 520. These authorities show that the plaintiff cannot sustain this suit, as a trustee, nor do I understand that he seeks a recovery in that right; he claims title as the grantee of Kinsloe, under the deed of the 6th of April 1811. Kinsloe took the benefit of the insolvent law in 1810; and, in his schedule, returned a list of his creditors; and on the 4th of July 1810 assigned his property for their use to William Power and S. Rhine. There is no evidence [220] that either of the trustees accepted the trust, that they ever did any act under the assignment, or that they ever intermeddled in any way with the property, in the character of trustees. On the 6th of April 1811, Kinsloe conveyed the property in dispute, by deed, for the consideration of 110 dollars, to William Power, the present plaintiff. It was agreed that Power should pay the debts of Kinsloe. That would appear, at least, to have been one object of the arrangement. The couit of common pleas charged the jury, that although they were not prepared to say the deed was absolutely void, yet they instruct the jury that Power could not purchase the estate of Kinsloe, which was the subject of the assignment, before the debts were paid, or the trust executed, so as to put the creditors in a worse situation than they otherwise were. Without examining the abstract proposition, or inquiring how far sound policy will admit of a purchase by a trustee who has entered upon his trust from the insolvent, as creating a relation hostile to the rights of creditors ; we are of the opinion that Power does not stand in sucli a situation in regard to Kinsloe and'the other creditors, as to prevent him from purchasing Kinsloe’s resulting interest. It must be-noted that there are no other-grounds for saying that Power was the trustee, except Chat his name is mentioned in the deéd of assignment. It is of ordinary occurrence that the names of creditors are inserted as trustees, without their consent, and that nothing further is done in respect to the property mentioned in the assignment; particularly when the-value is trifling in comparison with the amount of debts. It also happens, in the greater number of instances, that the trustees do not give bond. Few persons will devote their time to the service of others, and give security for that purpose, when the prospect of attaining payment of the debts is very small and remote. In some cases they aré not even aware that their names have been used for that purpose. We can see then nothing in the circumstances which can prevent Power from purchasing the interest of Kinsloe : he stands in no other relation to him than that of creditor. Nor have the other creditors a right to complain. They may, if they are so disposed, apply to the court, who, on a proper application, will appoint other trustees in the place of those‘who have refused to act, or who have neglected to qualify themselves to act by giving bonds for the faithful performance of the trust. It would be a harsh rule, without the consent of Power, for the court to put him in a different situation from other-creditors. I would not wish to -be understood as interfering with the principle of the cases of Gray et al. v. Hill, 10 Serg. & Rawle 436, or Nicholson v. Wickersham, 14 Serg. & Rawle 118. By an assignment, under the insolvent laws, the debtor’s estate in land passes to the trustees, though their assent does not appear. This principle ps necessary for the security of creditors; for unless the estate passes, by the act of executing the conveyance, it would necessarily remain in the debtor himself, who might, the next moment, and before the assent of the trustees could be procured, put the property beyond [221] their reach. The trustees are the mere instruments of the court in passing the estate to tlie creditors. Although this be so (and the soundness of the decision on this point cannot be doubted), yet we cannot perceive the justice or the policy of extending the principle so far as to interfere with the acknowledged right of Power, as a creditor, to purchase the interest which remains in the debtor, after the assignment, subject to the rights of other creditors. In every aspect in which this case can be considered, Power cannot be viewed in a worse situation than a nominal -trustee, who is not prevented from purchasing trust property. Sug. 422; Wilkes v. Fenn, 5 Johns. Rep. 344; Jackson v. West, 14 Johns. Rep. 407. An insolvent debtor, who has made a general assignment of his property, cannot maintain suit when the cause of action accrued previously to the assignment. Young v. Willing et al., 2 Dall. 276. A person discharged as an insolvent debtor, upon assigning all his property to trustees, cannot support an ejectment for land, though his trustees have not given bond pursuant to the act of the 4lh of April 1798. Willis v. Rowe, 3 Yeates 520; Stoever v. Stoever, 9 Serg. & Rawle 455. As Kinsloe could not sustain suit, neither can his vendee; for by the deed of the 6th of April, he becomes clothed with all the rights of the grantor, but nothing more. Power stands in the place of Kinsloe, as the owner of the residuary interest, after-payment of debts. To entitle him to recover, he must show in addition, that the debts have been paid. And when this has been done, the insolvent or his vendee may maintain ejectment without a formal re-assignment; for in Pennsylvania, a plaintiff may maintain ejectment, on an equitable title, and no plaintiff can be non-suited for a title outstanding in his own trustee. As this case goes back for another trial, it will be an important question of fact for the jury to decide, whether the debts have been paid. For the purpose of proving this fact, the plaintiff calls to his aid the doctrine of presumption. The court of’common pleas ruled, that the presumption of payment will not operate in favour of the trustees, or Mr Power claiming adveise to it. By the assignment, the estate passed to the trustees, and no delay or omission to settle, or account, or pay the debts, would operate as a bar to the claims of the creditors. The estate and claims, says the judge, are in the custody of the law, and such trusts are not within the operation of the statute of limitations. That these claims would not be barred by the act of limitations maybe admitted, but we cannot agree that lapse of time will not raise a presumption of payment. If the trust had been accepted, and bonds given, it would certainly be a fair presumption that those who had debts against the estate had presented them for payment, and that their claims had been liquidated. But here no proceedings were had, no steps were taken by the creditors in relation to the fund; hence, the presumption arises that the debts have been paid, or that some satisfactory arrangement has been made either by Kinsloe or his vendee, who have an interest in [222] extinguishing the liens against the estate. Indeed, it was in proof that Power paid part of the debts, and that Kinsloe paid some after the assignment. The court said, that this would have been the law, if Kinsloe had been the plaintiff. After the assignment he retained an interest, and if he waited for a considerable length of time, and the creditors- did not proceed, he should be. restored to his estate ; in such a case, after such a lapse of time, as occurred in this case, the debts would be presumed to have been paid.' In this view of the case we concur, but we are further of opinion,- that the plaintiff comes within the operation of the same principle. By the conveyance, he succeeds to all the rights of the vendor ; and is entitled to the benefit of all the presumptions arising from length of time-.- The doctrine of presumption is very extensive in its application ; the computation runs from the period when the money is demandable. Sechrist v. Sechrist, 1 Penns. Rep. 420. The presumption would not be destroyed by the fact that the trustees were not called on to settle their accounts. This would rather add to the presumption, because it is difficult to account for the acquiescence of the creditors, except by the natural presumption that they had been paid, or that some satisfactory arrangement has been made with them by the owner of the resulting interest. Judgment reversed, and a venire denovo awarded.