Price v. Merchants' Bank

Bartol, C. J., delivered the opinion of the court. The appellant filed two exceptions to the ratification of the auditor’s account B and supplemental account B, by which a proportion of the trust fund was allowed to the appellee. The second exception is based upon a statement which has been disproved by the testimony of Messrs. Waters, Frick and Emory, all of whom unite in proving that the ^filing of the appellee’s claim was known to the appellant before he paid the money to the creditors, among whom the fund had been distributed by account A. Whether known to him personally, which it is hardly possible to doubt, is not material; it is shown conclusively that it was well known to his solicitor in the cause, whose knowledge must be imputed to the appellant, and precludes him from all equitable claim to protection by reason of his having paid over the money to the other creditors. This exception to the allowance of the appellee’s claim has been virtually abandoned on this appeal. No point is made upon it in [375] the brief of the appellant; and in the face of the positive evidence in the record, this exception could not be for a moment considered. By the terms of the deed of trust the fund was expressly appropriated to the payment of the debt due to the appellee, which is named among the preferred creditors. The trustee had notice therefore on the face of the deed of the appellee’s claim, and after it had been filed in the cause, with full notice thereof, and without waiting for the court’s order, he went on to pay the money to other creditors. The evidence clearly shows that such payment was not made in good faith; but was the result of an arrangement or compromise made by the trustee for his own benefit with the other creditors, without the knowledge of the appellee and in utter disregard of its rights. It is very clear, upon principles of the plainest equity, that the appellant can claim no exemption on account of payments made under such circumstances; and that he must be treated, so far as the rights of the appellee are concerned, as if the fund was still in his hand; unless he can claim relief by reason of the ratification of account A. This raises the question presented by the appellant’s first exception, the only one that seems to be relied on in the argument. The report of the auditor and account A, was finally ratified on the 15th of February, 1864. No further proceedings were had until the term had elapsed, whereby the order had become enrolled, and the rights of parties ascertained *and determined. Marbury v. Stonestreet, 1 Md. 158; Tomlinson v. McKaig, 5 Gill, 256. The general rule is that “ after a decree has been enrolled, the court will not entertain any application to vary it, except upon consent of all parties or in respect of matters which are of. course.” Lovejoy v. Irelan, 19 Md. 56; Williams v. Banks, 19 Md. 528. How far this rule is applicable to decrees or orders distributing a fund in court, has not been precisely determined in this State. In Marbury v. Stonestreet, 1 Md. 158, it seems to have been decided that such an order after enrolment cannot be vacated upon petition, but that an original bill or bill of review would be necessary. All the authorities concur in asserting the principle that where the fund remains in court the application of a creditor, whose claim has been overlooked or omitted, if he has not been guilty of laches, is entitled to favorable consideration, and will always, [376] upon the institution of proper proceedings, be allowed to participate in the distribution. Gillespie v. Alexander, 3 Russ. 130; Lashley v. Hogg, 11 Ves. 602; Angell v. Haddon, 1 Madd. Ch. 285; Sawyer v. Birchmore, 1 Keen, 391, 402, 825; 2 Daniells Ch. Pr. 1199, 1204; Kent v. O'Hara, 7 G. & J. 212. In Whelan v. Cook, ante, p. 12, the petitioning creditors were denied the right to come in and have the final order of ratification opened, after the term had passed; on the plain ground that with full notice they had been guilty of laches and delay in presenting their claims. In this case there had been no laches on the part of the appellee. The record shows that it was ignorant of the proceedings until after account A had been ratified. After the enrollment of that order, upon the petition of Hooper & Sons, Wm. B. Norris and the Citizens' Bank, (the creditors to whom the fund had been distributed by account A,) the Circuit Court, on the 7th of April, 1864, passed an order directing the trustee to bring the money into court, and requiring him to answer the petition which charged him with *a misappropriation of the trust fund, and sought to charge him with interest thereon. While these proceedings were pending, the appellee came in by petition, exhibiting its vouchers, and claiming to participate in the trust fund, and on the 15th of April, 1864, the Circuit Court passed an order “that the said account be referred to the auditor, to state another account, according to the views expressed in the appellee's petition." Whereupon the auditor stated account B and supplemental account B, which were ratified nisi on the nth of May, 1864. By this account, a dividend was allowed to the appellee. On the 20th of May, 1864, the three creditors, Hooper, Norris and the Citizens’ Bank, filed exceptions to account B, which were withdrawn on the 8th of November, 1864. Nothing further was done till March, 1866;’ when the appellant filed his two exceptions to the accounts B. It has been argued that the original account A having been ratified, and the term having pássed, it must stand as the final decree, and that the subsequent proceedings were irregular and void. The order of the 15th of April, 1864, must be construed as a rescission of the previous order of the 15th of February, 1864, and its effect was to re-open the audit, and admit [377] the appellee to come in and participate in the fund; and if it be conceded that it was irregularly passed, still no appeal was taken from it in time, nor any objection made to it till nearly two years had elapsed. It was then too late for the appellant to make his objection. The appellee’s claim being clearly established as equitably entitled to a share of the trust fund, and the appellant being precluded by the lapse of time from objecting to the order of the 15th of April, 1864, whereby the previous order of ratification of the 15th of February, 1864, was in effect rescinded, and the audit re-opened, we are of opinion that the exceptions of the appellant were properly overruled, and that the order appealed from ought to be affirmed. Order affirmed.