State ex rel. Williams v. Netherton

Philips, P. J. Should this judgment be affirmed, it occurs to me that the situation of the trustee, who stands as an indifferent party to the controversy among the creditors, would be one of singular embarrassment. He was no party to the imputed fraud.. Having sold the property conveyed to him, as a mere trustee, con-formably to the provisions of the deed, and being in doubt as to how and to whom he should pay and apportion the proceeds, he took the customary, and only safe, course, in such conjuncture, by filing his bill in equity, within the proper jurisdiction, bringing before the court all the parties' to the instrument, praying the court to construe the same, and direct the. manner of. distribution. Such matters belong exclusively to the equity side [424] of the court. “ Wherever there is any tona fide doubt as to the true meaning and intent of the provisions of the instrument creating the trust, or as to the peculiar course which he ought to pursue, the trustee is always entitled to maintain a suit in equity, at the expense of the trust estate, and obtain a judicial construction of the trust instrument, and directions as to his own conduct. Such directions he must, of course, faithfully obey, and if he does so he will be relieved from all responsibility therefor.” 2 Pom. Eq.. sect. 1064. In such case the trustee, constructively, brings the fund into court, and submits the same to its control and direction. It then becomes and remains, until final disposition, subject to that jurisdiction. The record in this case shows that the Daviess circuit court found and determined that the instrument was “a valid and subsisting deed of trust,” and directed the manner of distribution. Some of the distributees being dissatisfied with the order of apportionment, appealed to the supreme court. Thereupon the circuit court made a supplemental order directing the trustee, pendente lite, to loan out the money in his hands at the highest rate of interest attainable, and to await the further order of the court. So that, at the time of the service of process of garnishment on the trustee, this fund must be held to have been, constructively and in contemplation of law, in custodia legis. In re Cunningham, 9 Cent. Law Jour. 208, and citations. At this stage of the history of the cause the plaintiffs had the trustee summoned as garnishee on an execution issued on a judgment in the Livingston circuit court, in their favor, against the mortgageor. During the pendency of the cause in the supreme court the trustee died, and the cause was duly revived against his successor in the trust, and his administrator. And during the pendency of the proceeding under garnishment, the cause in the supreme court was decided, affirming the judgment of the circuit court [425] of Daviess county, except as to its finding respecting two ■of tlie distributees ; and the case was remanded, with special directions to the circuit court to enter fip judgment in accordance with, the opinion- of the supreme ■court. In such case the circuit court has no discretion left it, and no power to take other action in the cause, than that ordered by the mandate of the supreme court. Conner v. Pope, 23 Mo. App. 344, and citations. What situation would this leave the trustee in should the judgment of the Livingston circuit court be now affirmed % He would be subject to two judgments for the payment of the same sum of money to different parties, without any fault, negligence, or omission of duty on his part. Having rightfully submitted himself and the trust fund first to the unquestionable jurisdiction of the Daviess circuit court, he could do no more in his answer to the garnishment than he did, which was fio set up the facts, and look to the court for proper pro-fiection. Being, in effect, in custodia legis the fund was not subject to the trustee process. Authorities supra. This doctrine is applicable to a, trustee appointed by the court. Bentley v. Shrieve, 4 Md. Ch. 412. And I am unable to perceive why it should not be to the instance -of a trustee who comes rightfully into a court of equity and submits the fund for its direction and order of distribution. It was held in Curling v. Hyde (10 Mo. 374), that an administrator, or other person holding effects in a fiduciary capacity, subject to the order and control of the court, was not subject to garnishment therefor. In Richard v. Griggs (16 Mo. 416), this rule was so far limited as to subject such trasteó to garnishment for the fund in his hands, after the. final order of distribution by the court. It then became a personal liability of the administrator, not distinguishable, in its legal quality, from one due in his individual capacity. But it must be kept in mind, that there the fiduciary was garnished on .a debt owing by the designated distributee to the judg [426] ment creditor, while in tlie case at bar tbe judgment creditor bad no judgment against tbe distributee under tbe order of tbe Daviess circuit court. But tbe judgment creditor was seeking, by tbe garnishment proceeding, to reach a,nd follow a trust fund in tbe bands of a stranger to his judgment, who bad been adjudged by another court of tbe state, of competent jurisdiction, to be entitled to it against the debtor of tbe garnishing creditor. The proceeding by garnishment is essentially legal. It is not equitable. It can only “reach legal assets in tbe bands of third persons, or intercept legal credits owing to tbe defendant ” (in tbe execution). Atwood v. Hale, 17 Mo. App. 88; Lackland v. Garesché, 56 Mo. 270; Freeman on Executions, 159. As one blunder brings on another, tbe trial court, perceiving tbe irregularity of determining the validity of a deed of trust, upon which depended tbe right of recovery by tbe plaintiffs in tbe garnishment proceeding, in tbe absence of tbe beneficiaries to that instrument, got over on tbe equity side of tbe court, and undertook to bring into this naked statutory proceeding all of tbe parties connected ■with tbe deed of trust, either as parties or privies thereto, and to determine and adjust their respective claims and interests. And, then, in one sweeping instruction, submitted this whole matter, part in equity and part in law, to the determination of tbe jury. And then tbe verdict of tbe jury was permitted to stand, finding tbe deed of trust void as to all tbe beneficiaries thereunder, when there was not one particle of evidence, as to some of tbe beneficiaries, that they took with notice of the alleged fraudulent intent of tbe grantor, and participated therein. Tbe proceedings in tbe Livingston circuit court could not have tbe effect to divest tbe jurisdiction of tbe Daviess circuit court, after tbe latter bad first rightfully attached. West v. Morris, 2 Disney, 415. Certainly it could not arrest tbe operation of tbe judgment of tbe [427] first court. And when that judgment was passed upon by the supreme court, and its peremptory mandate left the circuit court of Daviess county no duty to perform but to carry out its directions, which was to pay over the fund to other parties, no action, or judgment, of the Livingston court could exempt the trustee from his obedience to the first judgment. I know of no precedent or authority for a judgment debtor, in such case, to-off-set the first judgment with the later one. That would be reversing the order of precedence, and the maxim, u qui prior est tempore, potior estjure.” Such a proceeding is calculated to produce irreconcilable conflicts between corresponding jurisdictions, as well as the-grossest injustice to a party sustaining the relation of a trustee, or mere stake-holder. It is quite clear, from the facts developed in this-case, that the plaintiffs had knowledge of the proceeding in the Daviess circuit court. -They could have presented an intervening petition therein, setting up their claim. They should have attacked, in that court, the deed of trust. The court, in the exercise of. its equity powers, could have untangled the web of fraud, and determined the rights and interests of all the parties concerned, and administered complete justice on the comprehensive rules of equity jurisprudence. Pendleton v. Perkins, 49 Mo. 565; Thompson v. Scott, 4 Dill. 508; Freeman v. Howe, 24 How. 460. Whatever was the remedy of the plaintiffs, we are clear that, under the circumstances and conditions of this case, when the garnishment was served, and the judgment rendered therein, the trustee was not subject to such process. The judgment of the circuit court is, therefore, reversed, and the cause remanded, with directions to discharge the garnishees and dismiss the action. All concur.