Goldthwaite v. Ellison

STONE, C. J. It is certainly true that a receiver appointed by the Chancery Court is charged with a trust that is very exacting in its required duties. It is equally true that the court making such appointment is armed with large powers to compel a faithful performance of the duties intrusted to him, and to punish any dereliction of which the receiver may be guilty. And when a receiver thus appointed makes an unauthorized disposition of the trust fund confided ÍQ [500] him, to a person cognizant of the breach of duty, such person receives the fund charged with the trust, and constitutes himself a trustee in invitum for its safe return. — Lee v. Lee, 58 Ala. 406. We need not decide to what extent, if any, the person to whom the receiver improperly confided the trust fund, thereby places himself under the jurisdiction and power of the Chancery Court. He is not the constituted agent, or appointee of the court, and does not, by such act, make himself a party to the suit. It would seem that he is beyond the reach and power of the court in that suit; for, as a rule, courts can make no orders which affect strangers to the litigation before them. Under the averments of the bill before us, and of the plea filed by the receiver, there was a clear breach of trust on the part of the first receiver, in parting with the money without requiring the security the chancellor ordered him to take, and he thereby exposed himself to be dealt with personally.—Ex parte Walker, 25 Ala. 81; Ex parte Hamilton, 51 Ala. 66; Ex parte John Hardy, 68 Ala. 303. In addition, he fastened a personal liability on himself to account for the money; and the borrowers, if chargeable with a knowledge of the violated duty, incurred a similar pecuniary liability. Giving to the averments of the plea their broadest extent, they fail to show that by the acts, conduct and declarations attending the loan of the money, the receiver acquired any title to, interest in, or lien upon the lot in controversy, or in or upon any other real estate Moses Brothers then owned. On the contrary, they show that their title, ownership and disposing power over their realty, and over every part of it, remained entirely unchanged, alike at law and in equity, until the mortgage was executed July 6, 1891. Till then, their debt, as a.debt, was simply a promise to pay; and the fact that in contracting it they participated in a breach of trust, did not so change its nature as to fasten a lien on their property for its payment. Till then, Moses Brothers retained the absolute, unqualified power of disposition over their property, and every part of it, so far as the alleged agreement or understanding could affect it. Lien is never an incident of a contract, or money liability, unless made so by the terms of the contract, or by some rule of law. — 13 Aimer. & Eng. Encyc. of Law, 574-5. We do not think the amended plea makes any material change in the legal bearings^ of the question. An ingenious and exhaustive argument has been submitted for appellant; It certainly shows a case of hardship, but it fails to convince us that there was power in any court [501] to compel a compliance with the agreement or understanding set up in the plea. Had the money been traceable into specific property, a trust would have attached to such property, so long as it could be shown that the title to such property was acquired with knowledge, actual or constructive, of the violated trust. This, not because the trust grew out of the chancellor’s appointment of the receiver. It would rest on the broad, general, equitable doctrine, that one who acquires property with a knowledge that trust funds were misapplied in its acquisition, thereby constitutes himself a trustee in invitum, and makes the fund misapplied a charge on the property. And it acquires no additional force or enlargement of its scope, from the fact that the trust was of judicial creation, so far as the mere right to trace the money is concerned. The only- additional power the court was" armed with in the present case, was that it could deal in personam. Beyond that, it had no greater power to compel the giving of security, than if the loan had been made by an agent or trustee of private appointment, under an agreement or understanding, such as is alleged in this case. It is too indefinite to be characterized as a' contract, and specifically enforced as such. We consider it unnecessary to again collate, or cite the authorites. That was carefully done.on the former hearing. Ellison v. Moses, 95 Ala. 221; 11 So. Rep. 347. The question was very fully considered at that time, was much discussed, and the conclusion reached was the unanimous opinion of the court. We think that to depart from it would seriously impair the benefits of a wise and wholesome statute, and might lead to results we should strive to avoid. We adhere to that opinion.. Affirmed.