Bufford v. Sides

| N.H. | Jun 15, 1861

Sargent, J.

At tbe time of the service of this writ upon the trustees, the firm of Sides & Jenness were owing the principal defendant a note of eleven hundred dollars, which they had secured by a mortgage of certain horses, carriages and harnesses, which they had purchased of said principal defendant, and for which said note was given; and it had been arranged between the parties to said note and mortgage, that the trustees, being the mortgagors, should hold possession of and use this property in their business, until they had paid off the claims of Fern aid & Son, when they proposed to pay this debt and discharge this mortgage.

The case finds that at the time this writ was served upon the trustees, the property thus mortgaged to the defendants had been taken from their hands. But the plaintiffs claim that it had been wrongfully taken from them, and that they had the fight to retake it; or had the means to recover damages for such taking, and that they should be held to do so, and charged accordingly. It may not become material to consider whether the property was taken from the hands of the trustees rightfully or wrongfully. Suppose the property had remained in the hands of the trustees, until after the service of this writ upon them, and had continued with them until the final arrangement between the parties, January 26, 1858, for that would be the most favorable view for the plaintiffs, what rights would the plaintiffs have acquired in or to this property, by virtue of their trustee process ? In this case the property was not held by the trustees in pledge or upon mortgage, but they were the pledgors, the mortgagors, holding the property and using it, and having an interest in it — the z’ight to redeem.

But in any case where a man holds property in pledge, or on mortgage, having a lien upon it for the payment of his own debt, or where it is merely deposited with him, and he is trusteed, the plaintiff does not thereby acquire any right to or lien upon the specific property thus in the hands of the trustee. This is settled in Wolcott v. Keith, 22 N. H. 205; where it is expressly held that the service of the trustee process gave the creditor no right or lien upon the specific property in the hands of the trustee, but would only render him pez’sonally liable for its value, in case of any misappropriation of the property by him, or failure to produce and account for it, according to the provisions of the statute.

It is true that, if the property of the principal defendant was in the hands of the trustee, he might have been made liable for the same, or its value; and for that reason the law would doubtless give him the right to hold the possession against the principal defendant, or any subsequent purchaser or pledgee of the same; and if the specific property had been wrongfully taken from the hands of such trustee, after service of the writ, he would be authorized to bring a suit to recover damages for such wrongful taking, and the proceedings against him may be stayed until such damages may be recovered. Dispatch Line v. Bellamy Manufacturing Company, 12 N. H. 205. Yet this could only be a power or right personal to the trustee himself, and vested in him alone, but giving to the creditor no right or interest whatever in the specific property itself. And it follows that the trustee would have the right to relinquish or waive such right or lien upon the property, either in favor of the principal debtor, or his pledgee, or any purchaser from him. Wolcott v. Keith, ante. By this rule, even though the trustee in this case might have had the property of the principal defendant in his hands, he might have done what he pleased with this property, and all that the creditor could do would be to hold him personally responsible for its value. Brown v. Silsbee, 10 N. H. 521. So that a plain tiff must really in all such cases rely upon the ability of the trustee in the end to respond for the property, as he can acquire no lien upon the specific property itself.

It has been held, to be sure, that the service of the writ upon the trustee who has property or credits of the principal defendant in his hands, is an attachment of the principal defendant’s property, so far as to bring the case within the provisions of the statute which provides for proceedings against non-resident debtors, when their property has been attached in this state. Rev. Stat., ch. 186, sec. 5; Comp. Laws 480; King v. Holmes, 27 N. H. 266; Young v. Russ, 31 N. H. 201. Yet, although for this purpose the service of the trustee process is considered an attachment of the principal defendant’s property, and although it does give the trustee the right to hold such property as against the defendant, yet the plaintiff acquires no right or lien upon the specific property, but only the right to hold the trustee responsible for the amount of it.

But, in the case at bar, the trustees can not be said to be chargeable on account of holding the defendant’s property in possession. The principal defendant, although he had a mortgage of the property, had never foreclosed that mortgage, or demanded payment on his note, or taken possession of the property. He had no attachable interest in the property. Sissons v. Bicknell, 6 N. H. 557; Kelley v. Burnham, 9 N. H. 20; Glass v. Ellison, 9 N. H. 69. All that the plaintiff gained, then, by his trustee process, was to hold the trustees personally responsible for his debt now in suit, on account of their indebtedness to the pi’incipal defendant, upon their note to him. For the principal defendant had no attachable interest in the property mortgaged to him, and the plaintiff' made no effort to attach it as his; and by the service of this writ upon the trustee he acquired no right to or lien upon it. The trustees, Sides & Jenness, were chargeable to the amount of their note to the principal defendant, at the time of the service of the process upon them, and the subsequent transactions between the parties have not changed their liabilityj and although Jenness, by his subsequent promise to pay all these partnership debts, has made himself liable to Sides for the performance of that agreement, yet the plaintiffs have no claim upon him alone, but must hold the firm which was indebted to the principal defendant when process was served upon the trustees.

Nor can the plaintiff, by holding the trustees chargeable upon the note, hold the property which they had mortgaged to the principal defendants to secure that note. The only attachable interest in such property, before foreclosure, is the interest of the mortgagor — his right to the property, subject to tbe mortgage. This right may be attached, but only on the debts of the mortgagor. A person having a debt against the trustees, might have attached their interest in this property; but there is no provision in our statute authorizing the plaintiff, when he summons a man as the trustee of his debtor, to attach the trustee’s property, as security for his being able to respond, in case he should be charged as trustee. So that in any possible view of the subject that we have been able to take, we can not discover that the plaintiff acquired any right to or lien upon this property thus mortgaged, by the service of his writ on the trustee, or on the ground that he holds the trustee chargeable, as indebted to the principal defendant, upon the note which this property was mortgaged'by the trustee to secure.

I know that it is held in Massachusetts and in some other states, that the service of the trustee process constitutes a lien, for certain purposes, in favor of the plaintiff, on the specific property of the debtor in the hands of his trustee. Burlingame v. Bell, 16 Mass. 318; Platt v. Brown, 16 Pick. 553; Rockwood v. Varnum, 17 Pick. 289. But it has been distinctly held the other way in this state, as we have already seen, in Wolcott v. Keith; and, beside, if it had not been so held, the Massachusetts doctrine does not go far enough for this case, as in law, for all the purposes of attachment, this mortgaged property was, as we have seen, not the property of the debtor, but of the trustee.

But it is claimed by the plaintiff that the trustees are to be charged upon another ground; that this note of the trustees which came into their hands, together with the mortgage given to secure it, after the service of the process upon them, is to be treated, so far as creditors are concerned, as an unpaid note and an uncanceled mortgage of some third person, which had come into the trustees’ hands, after the service of the process on them, and for which they should be charged, or, at least, for the $300, which they have never paid, and a receiver appointed to collect said note, by disposing of the mortgaged property, and appropriating the proceeds for that purpose, under the 15th and 16th sections of chapter 208 of the Revised Statutes.

This view can not be sustained, however. The note was either an outstanding note, due from the trustee to the principal defendant, or some assignee of his, or it was a note paid and canceled, .and, of course, void. And the same would be true of the mortgage. As to some persons and for some purposes a note may be paid and canceled, while as to other persons and for other purposes it must be treated as unpaid and uncanceled. Suppose the trustees had, after service of the plaintiff’s writ on them, gone and paid the defendant the full 'amount' of the note and interest, and taken it up, with the mortgage, and destroyed both, as they did in this case. The transaction would, perhaps, have been honest as to all the world except this plaintiff, but it would have been a fraud upon him and his rights; and, therefore, the whole transaction, as to him, would have been void, and the note would, as to him, be treated as still due and unpaid, and the trustees would be charged as before. Nor does it alter the case that the trustees paid only $800 on the note. The defendant agreed to take that sum in full payment of the note, and he can not now claim that it is not paid. Whether it was all paid, or half paid, or given up without any part being paid, is immaterial; it was all a fraud, as to this plaintiff and his rights, and, as to him, was all void, and left the parties standing, as to him, just as before, leaving the trustees as much chargeable to him for the $800, which they really paid, or procured to be paid, as for the $300, which was not paid. And it would be the same if nothing had been paid.

The entry that the trustee should be charged for the note and mortgage, should not have been made; nor should any receiver have been appointed, as this case does not come within the provisions of sections 15 or 16 of chapter 208 of the Revised Statutes (Comp. Laws 529), which are the only cases where receivers are provided for hy our laws. Sections 18 and 19 of the same chapter contain the only provisions of the statute under which these trustees can be charged. They being indebted, at the time the writ was served, to the principal defendant, upon a promissory note, made and payable in this state, &c., and other parties having been duly notified, and it not appearing that such note had been transfei’red before the service of said writ on the trustees, and as whatever has been done since such service is merely a fraud, so far as this plaintiff is concerned, and has not changed the relations of parties, nor their liabilities, toward him, judgment is to be rendered against the trustees for the whole amount of the $1100, note and interest, or so much thereof as is necessary to pay this plaintiff’s claim against the defendant, which we understand to be a much smaller sum; and as no receiver should have been appointed, and as there is nothing that he can now properly do with the note or the mortgage, or the property mortgaged to secure the note, the plaintiff’s motion must be denied. The only proper entry to be made in the case is: Trustees, Sides and Jenness, charged, upon their disclosure, for the full amount of the plaintiff’s claim against the principal defendant.