Bank of Middlebury v. Edgerton

The opinion of the court was delivered by Bennett, J. Upon the facts which the testimony in this case clearly establish, there is no good ground to claim that Seneca Smith has a lien upon the funds in the hands of Sheriff Edgerton for the satisfaction of his judgment against the railroad company; and indeed he has not appeared before this court to vindicate his claim. It is apparent from the testimony, that Smith, in connection with other attaching creditors of the railroad company, entered into an arrangement with the directors and the other officers of the company by which their suits against the company were to be discontinued, and this was expressly required on the part of Mr. Barker as a sine qua non, before he would consent to make any negotiation in behalf of the railroad company to aid them in giving them relief from their financial embarrassment, and this was in fact done by all the attaching creditors, save Mr. Smith. None of the other creditors attempted further to prosecute their suits against the company. It is not improbable that Smith may have entered into the arrangement in good faith and have intended to carry out [188] the arrangement on his part, but, for some cause, subsequently changed his views. The service of Smith’s writ had never been completed by a delivery of a copy to the railroad company as required by the statute; and this was not through the neglect of the officer, but through the direct agency of Smith himself. The writ was not in fact returned to the court at that term to which it was made returnable, and when the suit purported to have been entered in court. The officer’s return upon the writ was not, in fact, made until the November following the return day in the writ. The appearance of Mr. Canfield, at the term to which the writ was made returnable, for the railroad company, was through the procurement of the attorney for Mr. Smith, who acted without authority from the company, and was repudiated by Mr. Canfield as soon as he became acquainted with the facts in the case. Although he appeared before the auditor in taking the accounts, yet it was with a protest as to the right of Smith to proceed in the matter. To hold that Smith is, under all the circumstances, entitled to enforce a Men upon the property attached, would be to enable him to commit a gross fraud, not only upon the officer but upon all who were interested in the arrangement by which the suits were to be discontinued. The proceedings of Smith are so irregular and so far tainted with fraud, that a court of equity cannot allow him to set up a Men to the funds in the hands of the sheriff that can override the equities of the orators. The more important question in the case arises between the orators and Harmon and Love, and the question is which has the superior equity to the funds in the hands of the sheriff. Harmon and Love on their joint account, and Love on his individual account also on the 10th of February, 1854, issued their writs against the railroad company, which were served on the next day by attaching the property of the company, subject to certain other prior attachments. The trustee suits in favor of George T. Hodges and the Bank of Middlebury were served upon Clark, the trustee, as early as November, 1853. No conflict arises as to the rights of the sheriff under prior attachments, and the rights of Clark under his lease, but it is claimed by Harmon and Love that the trustee suits in favor of George T. Hodges and the orators can have no [189] effect against their attachments, although prior in time. Judge Clark was in the possession of the railroad property under his lease, and as a receipt-man, at the time the trustee writs were served upon him. The statute enacts, “ that every person having any goods, effects or credits of the principal defendant intrusted or deposited in his hands or possession, may be summoned as a trustee, and such goods, effects and credits shall thereby be attached and held to respond the final judgment in the suit.” No question can be raised but what the statute is broad enough to include the property of the company in the possession of Clark, and we see no good reason why it may not be attached in his hands by moans of the trustee process, subject to all such liens as were upon the property at that time. In the case of Brown v. Davis and Trustee, 18 Vt. 211, it was held that articles of personal property in the possession of the trustee might be charged by the trustee process, although the property was in all respects open to the ordinary process of attachment, and in a case too, where the person sued as trustee had no claim to, or a lien upon the property. To hold this is not locking up the property from the reach of other creditors. If there was likely to be a surplus it might be reached by a subsequent trustee process, and in Burlingame v. Bell, 16 Mass. 322, it was held that goods charged by a trustee process might be specifically attached in the hands of the trustee on other debts, and the officer would hold them subject to the claim of the trustee arising from the service of the trustee process upon him, and in Rockwood v. Varnum, 17 Pick. 293, the right of the trustee to retain the custody of the goods against any one who shall attempt specifically to attach them, was fully recognized. Though the property at the time of the execution of the lease to Clark was heavily encumbered by attachments, yet the general property remained in the railroad company, and they might make a valid sale or assignment of it, subject to all liens then upon it which had been created by prior attachments. See Whipple v. Thayer, 16 Pick. 25, and Marshall v. Town, 28 Vt. 14. In the case before us, Clark, having become responsible for the property to the officer as a receipt-man, on the previous attachments, had the actual possession of the property after the execution of the lease by the railroad company, as against the company [190] under the lease, and also had his rights at the same time as a receipt-man. It has been said in argument that the lease to Clark was void ; but if such was the fact, we do not see how that could better the condition of Harmon and Love. He would still be in the possession of the property of the company, and though it might be specifically attached, yet that would not preclude the right to attach it by the trustee process. But we see no valid objection to the validity of the lease to Clark. It is not necessary in this case that we should hold that the franchise to this company, to be a corporation, is a subject of sale or transfer. The right to build, own, manage and run a railroad, and take the tolls thereon is not of necessity of a corporate character or dependent upon corporate rights. It may belong to, and be enjoyed by natural persons, and there is nothing in its nature inconsistent with its being assignable. See Peter v. Kendall, 6 B. & C. 703, Comyn’s Dig., title, Grant. C. The vote of the directors of the 2d of November, 1853, was in every way ample to confer the power upon Mr. Barker, the president of the company, to execute the lease to Clark, and it gave him the right by implication to affix to the lease the corporate seal. Though the sheriff might have had the right to retake the property from the possession of Clark, his receiptor, by reason of his prior attachments, yet this is no reason why (the general property remaining in the railroad company,) a further lien might not be acquired on it against the company, subject to all prior liens, and we have no doubt the trustee process was an appropriate proceeding to reach the surplus in the hands of Clark, subject to his rights as a lessee, and also as a receiptor of the property on the prior attachments, and indeed it may well be questioned whether this was not the only method by which the surplus in the hands of Clark could be reached. The trustee, Clark, holds the surplus for the attaching creditors in the trustee suits, and when the prior specific attachments have been satisfied by the sheriff out of the property, it is his duty to restore any surplus which shall remain to Clark, that he may hold it subject to his rights as lessee and his liabilities as trustee, by means of the trustee suits against him. The result then, must be, that the decree of the chancellor, which appears to have been pro forma, is reversed, and the cause [191] remanded to the chancellor, with directions that he pass a decree that the defendant, Jacob Edgerton, be allowed to retain in his hands, out of the avails of the sale of the property, a sum sufficient to satisfy the liens of J. H. Yail and Silas W. Hodges on the property, by means of their attachments and judgments, etc., against the railroad company; and that after retaining for any just claim which he may have on the trust funds in his hands for taking charge of the same, he pay what shall remain, including such interest as he should be charged with, into the hands of Myron Clark, that he may hold the same to pay and satisfy the claims which George T. Hodges and the orators may respectively have upon the funds by means of their suits against the railroad company and said Clark, as their trustee, in their due order, as the proper court shall award and direct, so that the said Clark may be fully indemnified for his liability as such trustee; and if need be, a reference may be had to a master to ascertain the sum to be paid by said Edgerton to said Clark, and that the orators pay to said Edgerton and to Clark the costs of their several answers, including counsel fees for drawing the same, to be taxed by a master; and that said Seneca Smith be dismissed without costs, and under an order that he pay to the orators their costs on the original bill, including also the costs taxed against the-orators in favor of Clark and Edgerton ; and that Harmon and Love be dismissed without costs, and that they pay to the orators their additional costs, occasioned by the means of their supplemental bill, all which are to be taxed by a master.