Goncelier v. Foret

Atwater, J. By the Court The assignment by Eoret to St. Cyr, and the acceptance of the trust by the latter, vested him with the title of the property conveyed, to be held and disposed of by him, for the use and benefit of the creditors of Eoret. He was bound to dispose of the property and apply the proceeds in accordance with the provisions of the trust' deed, and his disposition of it, in the manner alleged in the complaint was a clear violation of his duty as trustee. He is not at liberty to consult his own interests or those of Eoret in the disposition of the property, but those of the creditors of Eoret, and is responsible to them for misconduct in the management of the trust he has undertaken. And it is peculiarly the province of a court of equity to afford relief where the trustee errs, or acts in bad faith in the administration of his trust, (Bur. on Assign., p. 518; Comp. Stat., p. 384, sec. 26.) This section provides that “ upon the petition or bill of any person interested in the execution of an express trust, &c., the Court of Chancery may remove any trustee who shall have violated or threatened to violate his trust,” &c. [17] This statute gives the right to “ any person interested in the execution of an express trust,” to bring an action for the removal of the trustee. All the persons interested in the trust are not required to join in the action. But even wei*e it otherwise, the allegation in the complaint that the plaintiff “sues on behalf of himseli and the several other creditors of the above named Joseph Eoret,” would’be sufficient, without naming them severally in the title of the action. (Story's Equity Pl., s. 99, 100, 101, 216. Brown vs. Ricketts, 3 John Ch. 553,) in which the Chancellor says that “ it seems to be material in these cases of creditors and legatees, that the bill should be stated to be on behalf of the Plaintiff, and all other persons concerned in the subject matter, so that the others may all come in under the decree.” (See also, 1 Paige, p. 20; 12 Bar. Sup. C. R. 27; Willard's Eq. Jur. 470; 3 How. S. C. R. 333; Bar. Ch. vol. 2, p. 149.) The demurrer to the complaint raises the objection that this action is strictly in the nature of a creditor’s bill, and that it cannot be maintained by a simple contract creditor, but only in favor of judgment creditors who have exhausted their remedy at law. Under the New' York practice (and the same obtains in other States) there were two classes of actions that might be maintained by creditors in chancery' — the one where a judgment creditor sought a discovery from his debtor, and an application of any property discovered to the payment of his judgment. This was usually known as the creditor’s bill, and was a statutory provision. There was another class of cases not depending on any statute, which were brought for the administration of assets, to enforce the execution of trusts, and to reach property fraudulently disposed of, &c. The bill in such cases was filed on behalf of complainant, and all others standing in a similar relation, who may come in under such bill and the decree to be made. The bill may be filed by simple contract creditors, and does not require a judgment to have been obtained. (2 Bar. Ch. Pr. 149.) The bill or complaint in this action brings the case within the last named class, and the authorities pited by the defendants in support of the objection taken by the demurrer are not applicable, or rather, the objection itself is untenable. The Plaintiff here is not asking [18] the aid of the Court to enforce his claim against the property of his debtor, (Eoret) for he has none. He has parted with the title to his property, and vested it in his assignee St. Cyr, who agreed to take and dispose of it for the benefit of the creditors of Eoret. The assignment is admitted to be valid, and the Plaintiff asks to have the trusts executed in accordance with the provisions of the deed. The Plaintiff, being admitted to be one of the creditors of the assignor, has a right to demand that the assets of the debtor shall be properly applied to the payment of his debts, nor would a judgment creditor have any greater or better right to ask such application, than a simple contract creditor. In the case of Wiggins et. al. vs. Armstrong et. als., 2 John. Ch. R. 144, which is cited in support of the demurrer, it was held that “ a creditor at large, or before judgment, is not entitled to interference of this Court, by injunction, to prevent the debtor from disposing of his property in fraud of such creditor.” And the chancellor says that “ the reason of the rule seems to be that until the creditor has established his title, he has no right to interfere, and it would lead to an unnecessary, and, perhaps, a fruitless and oppressive interruption of the exercise of the debtor’s rights.” But neither the rule nor the reason for the rule have any application to the case at bar. The debtor has no property to dispose of, nor will he be “ interrupted” in the exercise of any of his rights, in granting the relief asked by the Plaintiff. Eoret cannot object that the Court should require the assignee to do that, which he has expressly authorized and required him to do, by his deed of trust. But if there were any doubt of the power of this Court by virtue of its general equity jurisdiction, to grant the relief demanded, we think the statute above cited is applicable to the case, and authorizes the Plaintiff to demand, and the Court to grant the relief sought. The claim of the Plaintiff is upon a note of the Defendant, bearing date Nov. 24, 1857, for eighty dollars, by which the Defendant Eoret promised to pay the Plaintiff that sum in six months from the date of the note, with interest at the rate of three per cent, per month from date. The objection is raised by the demurrer, that the cause of action was not one of which the District Court had any original jurisdiction. Section 5, of [19] Article 6 of the Constitution provides that “ the District Courts shall have original jurisdiction in all civil cases, both in law and equity, where the amount in controversy exceeds one hundred dollars.” But it will be observed, that the Plaintiff sues not only on his own behalf, but also on that of the other creditors of Eoret. These creditors, as shown by the complaint, represent claims to the amount of $8,500 or more. Under the allegations of the complaint therefore, the Plaintiff is seeking to protect and secure this amount of indebtedness, so far, at least, as the assigned property may be sufficient for that purpose. And it is also alleged in the complaint, that the property assigned by Foret, was of sufficient value to pay off and discharge the debts of said Defendant, the most or all of which property was at the time of commencing the action in the hands of the Defendants. The “ amount in controversy” was therefore sufficient to give the District Court jurisdiction of the action. It was also claimed on the argument that Foret has no interest in the result of the suit, and was improperly joined as Defendant. It is unnecessary to examine whether this be so in fact, as, admitting it to be true, the objection cannot be taken by demurrer on the part of all the defendants, as has been here done. (Story’s Eq. Pl. s. 544, N. Y. & N. H. R. R. Co. vs. Schuyler; 17 N. Y. R. 592.) The judgment below must be reversed, and the cause remanded to the District Court of Ramsey county.