Denison v. Petrie

The opinion of the court was delivered by Royce, J. The question to be determined is, whether the trustee should be adjudged liable for the sum of two hundred and twenty nine dollars, received by him upon the notes of Woodward, which had been deposited in his hands by Petrie, the principal debtor. That payment was received after the notes had been sold by Petrie to Blood, but before notice of that sale to the trustee, and pending the trustee process. The notes were not negotiated to Blood in a legal and mercantile sense, but simply sold, whilst lying in the possession of English, a third person. And hence the case is not affected by the statute of 1836, but must be governed by those principles, which have formerly prevailed'in the application of this kind of process. According to the doctrine fully established in this state, Woodward must have been holden as the trustee of Petrie, had the pro [44] cess been served upon him, before he paid the money, and before he had been notified of the sale. And the question arises, whether the same rule should apply to the depositary of Woodward’s notes, as to Woodward himself. To this question no direct authority is cited. The liability of the trustee has, in all former cases, been predicated upon some contract, express or implied, between him and the principal debtor, which was sufficient, of itself, to create and fix his liability. If he had money on hand, or specific chattels in possession, belonging to the principal debtor, that would constitute him a trustee within the statute; — so if he owed him a debt, whether already payable, or to become payable in future. And in every case, where the trustee has been charged, after an assignment had been made of his debt, or of the property in his hands, such pre-existing liability has been merely continued and fastened upon for the benefit of the factorising creditor. But the relation, in which English stood to Petrie, as the depositary, or keeper, of Woodward’s notes, though with authority to collect and receive payment, was not sufficient, of itself, to make him the trustee of Petrie. The notes were but evidence of a debt due from Woodward to Petrie, and could not have been proceeded with as specific property under an execution against Petrie. It was only when English should receive a payment upon the notes, that he could become the debtor, or trustee, of any one for the purposes of the trustee process. Sargeant v. Leland, 2 Vt. 277; Hitchcock v. Edgerton, 8 Vt. 202. But it appears, as before remarked, that, when English received the payment in question, the property in the notes had passed from Petrie to Blood. Consequently, English was never the debtor, or agent, of Petrie, in respect to the money for which the plaintiff seeks to charge him. This conclusion would seem to be fully warranted by the decision in Burke v. Davis & Tr., 13 Vt. 421. In some particulars that was a more favorable case for the attaching creditor than the present. In that case, as in this, the person sought to be charged was not legally a trustee, when served with the process. There was, however, a contingent debt of the trustee to the principal defendant in that case, whilst in this there was no debt of any description. In that case the assignment of the debt, as well as notice thereof to the alleged trustee, took place after the trustee process had been [45] served; but here the sale of the notes to Blood was prior to the institution of the present suit, though the notice to English was subsequent. In both cases the liability of the trustee to some one finally became fixed and absolute. And since, in the case cited, the assignment was holden to have defeated the attaching creditor’s remedy, though made in defiance of his pending suit, the sale of the notes in this instance can be no less effectual. The two cases stand alike upon the decisive fact, that, when the sale, or assignment, intervened, the person sought to be charged was not fixed with any obligation to the principal debtor, on which he could then have been adjudged trustee. Judgment of county court reversed, and judgment that the trustee is not liable.