Page v. Olcott

The opinion of the court was delivered, at the circuit session in October, by Bennett, J. We think the decree of the chancellor, dismissing the bill, should be reversed, and the cause be remanded to the chancellor with instructions to send it to a master, in order that he may make a full and complete statement of the accounts of the trustee Oleott, under the assignment, detailing, with all convenient certainty, his proceedings under the trust, and the report to be made to the chancellor for his action thereon, as to him shall seem meet and proper; the death of Davis, his co-assignee, having now been suggested on the record. This court, however, will indicate to the chancellor certain principles which should be adopted by the master in taking the accounts, leaving other principles to be settled by the chancellor, if found necessary. So far as the trustee sold the property of James Bennett upon credit, he should be charged with the cash value of the property at the time of the sale, and interest on the same from the time of the sale; and cases no doubt might arise, upon a proper bill, in which the trustee should be made chargeable for a depreciation in the value of the property before the sale, if he has been guilty of culpable negligence in not effecting an earlier sale. In New York, it is fully settled that an express power given to the assignee to sell on credit, renders the assignment void, as against creditors, upon the ground that it may delay them. See Barney v. Griffin, 2 Comstock 365; Nicholson v. Leavitt, 2 Selden 510; Burdick v. Post, 12 Barb. 168, and affirmed in the court of appeals; see 2 Selden 522; and the same principle was again fully recognized by the court of appeals, in Kellogg v. Slauson, 1 Kernan 304. [469] We are well satisfied with the views of the New York courts upon this point, and, for the reasons upon which those cases are based, the cases themselves may be referred to. Though this question has been somewhat discussed of late, in our courts, yet I am not aware that we have had any express adjudication upon it. The case of Mussey et al. v. Noyes et al., 26 Vt. 462, was decided upon a construction of the assignment, the court holding that no express power of sale on credit was given in the instrument, and none should be intended in order to vitiate the'assignment. It cannot be claimed that the present^ assignment gave a power to sell on credit, and the sale on credit was a violation of the trust It will not be claimed that the trustee should be allowed to sell on credit, and yet hold the assignment void if it provided for such a sale in express terms. Trustees, acting in good faith, and with due diligence, should be entitled to an indulgent consideration of the court, yet if they betray their trust, or have been guilty of culpable negligence, they should be dealt with according to the rules of strict, if not rigorous justice. It is necessary, in such cases, that rules of somewhat of a stringent character should be established to prevent speculation in trust funds, and to induce fidelity of conduct. It would seem to follow that the trustee should not be allowed to deal with the trust property by way of barter or exchange. It is his duty to convert the property of the insolvent into money with all reasonable despatch, and pay over the avails. to the creditors, according to the provisions of the assignment. Cases may be supposed, where it might be for the interest of all concerned to allow the trustee to barter away the trust property in exchange for other property; yet this is aside of the trust, and would open a door for speculation and gross fraud, and we think the rule in such cases should be to charge the trustee, at least, with the value of the property, at the time of the exchange, and the interest, unless those in interest shall elect to affirm the exchange. It may, however, be questionable whether there is enough alleged in the bill to allow such a charge. It might perhaps be claimed that the assignment of the property to Simonds, under the contract set up in Olcott’s answer, was a breach of the trust; yet this is not complained of in the bill, and a trustee is not to be held to account for any neglect or breach of [470] duty not charged in the bill. It would seem as if the only negligence or breach of duty complained of in the bill was the selling on credit a part of the property, and negligence in not collecting such debts, and in not accounting for such moneys as he had received ; but it is not necessary now to settle the construction to be given the bill. It was the duty of the trustee to keep a full and fair account of the sales of the trust property, and, if he neglects to do this, and the amount of sales cannot be ascertained by him, he should be charged with the value of the property sold by him, and the interest on it. The objection urged, in the argument, that Leach & Elliott were not made parties to this bill, is without weight. The bill goes upon the ground that all the preferred creditors are first to be paid, and, of course, their interest is not antagonistic with that of the orator. If the debt of Leach & Elliott has not been paid, the trustee would have a right to detain funds in his hands for that debt, and no questions are raised as to its amount. Besides, the want of parties was not insisted upon in the answer, and the general rule is, if it is not insisted upon in the answer, it cannot be at the hearing. Decree of chancellor reversed and case remanded, &c.