Hicks v. Gleason

The opinion of the court was delivered by Davis, J. The circumstances detailed in the bill of exceptions furnish a good ground of action, confessedly, unless the fact of the pendency of the trustee suits against the defendant’s deputy, at the time this suit was commenced, interposes a legal obstacle to a recovery. The defence assumes, that at that time, when the result of the trustee suits could not have been foreseen, the officer was justified in withholding payment to the creditor; — which is true; — but it goes farther, and assumes, that, after the termination of those suits, adjudging him a trustee of the plaintiff to the amount of the several claims of the plaintiffs in those suits, but still leaving a balance in his hands, this balance cannot be recovered now', when the obstacle is ■removed, because the right to a recovery was not complete when the suit was instituted. If this be so, the pendency of a trustee suit is a bar to a suit in favor of the principal debtor; — which was directly denied in Morton v. Webb, 7 Vt. 123; — and a temporary bar is tantamount to a perpetual bar, so far as this particular suit is concerned. It is a necessary corollary to this doctrine, that, whatever exigencies may exist, arising from possible loss of the debt by insolvency, by the apprehension of farther trustee suits drawing upon the same fund, or however well convinced that such suit is collusive and fraudulent, or unfounded, the hands of the principal defendant are tied up,, and [143] he can make no movement, until the factorizing suits are ended. There is no ground for such a doctrine in principle, or precedent. A trustee suit is an anomalous proceeding, which, at the same time that it seeks to obtain, like an ordinary suit, a judgment in behalf of a creditor against his debtor, aims also to substitute the creditor in the place of such debtor, in respect to any sums due to the latter from the persons named in the suit as trustees. If successful, it not only establishes a right to such substitution, but reduces the demand to judgment; so that execution may follow against the trustee for the amount due from him, or for so much of it as may be necessary to satisfy the judgment against the principal defendant. The rights of the latter are of course excluded and extinguished to the same extent, but no farther. Until this is done, the two proceedings, not being parallel, may well exist at the same time. For every purpose of making demand, securing his claim by attachment, or otherwise, the rights of the principal debtor remain unimpaired by the pendency of trustee proceedings. They subsist, however, in subordination to any lien created by such proceedings. It is true, when money is collected by an officer, he is not subject to a suit in behalf of the creditor, until he shall have failed, upon proper demand, to pay it over. Such demand was made in this case, — although, when it was made, the three trustee suits were pending, and the officer was not obliged to comply with it until their termination. Nor do we hold, that he was bound to anticipate the exact extent, to which the creditors in those suits might succeed in establishing a right to the funds in his hands. This; would be impossible. If the right to sue is not suspended by a factorizing suit, so neither is the right to make a demand in another form. See the opinion of Phelps, J., in Morton v. Webb, above cited. A previous demand was probably not made before bringing the trustee suits; and none was necessary, as costs are not ordinarily recoverable of trustees; and the bringing of the action may therefore be regarded as a demand. In respect to costs, I think the rule laid down in 8 Mass. 456 is just and reasonable. Whether it was acted upon by the county court, or not, in the present case, does not appear. Nothing upon the record shows any error on this subject. The judgment of the county court is therefore affirmed.