National Exchange Bank v. Sutton

Deyens, J. The bill of the plaintiffs proceeds upon the ground that the conveyance made by William Sutton was a conveyance to the defendant, Eben Sutton, of his real estate, or a certain portion thereof, which, having proper regard to the rights of his creditors, he might properly make, and that the agreement made contemporaneously by the defendant with William Sutton is one which it is his duty to perform. They do not seek to invalidate the conveyance as voidable, by creditors, or as for any reason fraudulent, nor to place themselves in such a position as they would occupy if, for the purpose of impeaching its validity, they had at law attached the property. As creditors, they seek the benefit of the trust, which, they contend, the defendant assumed in favor of all the creditors, and having assented to it by bringing this bill, they claim to have it enforced in their favor by directions under the bill to Eben Sutton, or through his removal as trustee. Nor is their bill framed upon any alternative by which, in case the court should be of the opinion that no trust was created in favor of the general creditors, such facts are averred that the conveyance to Eben Sutton can be declared fraudulent and illegal as against them, and the defendant held responsible to them for the property he has received, or which he still holds, belonging originally to William Sutton. The position of the plaintiffs submits, as the only inquiry, whether the conveyance was a general assignment for the benefit of all the creditors of William Sutton who might desire to avail themselves of it, or whether the conveyance was simply upon the trust that the defendant should apply the net proceeds of the estate conveyed to him to the payment or settlement of such of the debts of William Sutton as he should see fit, and upon such terms and at such times as he should see fit to pay or settle the [135] same, returning to William Sutton any surplus which might exist after such payments or settlements, the whole administration of the .property for these objects thus being left to the defendant, acting according to his own discretion. The language of the defendant’s agreement, after the statement that William Sutton, having become financially embarrassed, has conveyed to him all his real estate in the county of Essex, not otherwise disposed of, is as follows: “ For the purpose of having the same applied in liquidation of his indebtedness, irrevocably, in such manner as I shall deem best, and with full and complete authority in me to settle with the creditors for such sum or sums, and at such time or times, as I shall deem best, and leaving the time and manner of the sale of said real estate fully at my discretion, and the same is to be managed and sold without any interference on the part of said William Sutton, his heirs or assigns.” In a subsequent clause the defendant agrees to return to William Sutton any surplus from the proceeds of said real estate, after the amounts paid to the creditors of William Sutton and the expenses have been deducted therefrom. We have no occasion to consider whether, if the words “for the purpose of having the same applied in liquidation of his indebtedness ” stood alone, they might be construed, as imposing a trust which would render it the duty of the defendant to proceed to convert the real estate conveyed, with reasonable promptitude, into money, and to distribute the proceeds, thereof ratably among all the creditors of William Sutton. They are qualified by the words which follow them. Those words indicate that the property was put by the debtor into the hands of the defendant to enable him to negotiate and to effect settlements with William Sutton’s creditors as he best could, and it might be on terms more favorable to William Sutton than he himself could expect to obtain; perhaps also to prefer those whom the debtor.desired especially to benefit. The discretion given to the defendant is absolute, and of a character such that an honest exercise of it cannot be controlled by the direction of the court. The amount to be repaid to William Sutton is not that which remains after paying all his debts, but that which remains after 'what the defendant may have paid to creditors. The agreement leaves the defendant to [136] proceed with the payment or settlement with creditors, so long .as he may feel disposed, but imposes no duty upon him to dispose of the whole property or any specific portion in effecting this object. How large a portion of the property of William Sutton the real estate undisposed of in Essex County constituted, does not appear distinctly, although it is averred that what remained in his hands after the conveyance was inconsiderable. This fact is unimportant in the aspect in which the case is now presented. That William Sutton had full confidence that the defendant would use this property to the best advantage in extricating him from his embarrassments, is no doubt true; but there is nothing to show that he expected him to do it by a ratable distribution among his creditors, when the whole language of the agreement is taken into consideration, but rather the reverse. The authority given to the defendant “ to settle with the creditors for such sum or sums, and at such time or times,” as the trustee shall deem best, indicates that the division of the property was not to be ratable, but upon a different basis, having regard to all those exigencies which control in matters of negotiation. We are therefore of opinion that no trust was created for the benefit of all the creditors by the conveyance to the defendant, so as to entitle them to a ratable division which could be enforced in equity. Bill dismissed.