2 Paige Ch. 490 | New York Court of Chancery | 1831
The right of the complainants to come in and share with the other creditors the fund created by the trust deed, does not, as supposed by their counsel, depend upon any general continuing equity in their favor notwithstanding their neglect to comply with the condition in the deed. In the case of Dunch v. Kent, it is true, the complainant insisted there was a continuing trust in favor of all the creditors, although they did not come in within the year. But this question does not appear to have been decided. In that case there was an equity in favor of the complainant and all the other creditors of the bankrupt, to be paid out of the fund due to his estate; and if there was any thing to which those creditors who did not come in were not entitled, Lindsey was, as to that portion of the fund, a trustee for the creditors generally. He took the whole fund, as executor of Colville, in right of his wife, and therefore an account was directed. But the lord keeper refused to hear the discussion as to the particular rights and equities of any of the creditors. When the case came before Lord Guilford, on the master’s report, (1 Vern. R. 319,) it turned out that none of the creditors of Colville came in within the year. The real contest in that case was not as to priority of payment between those creditors who came in and those who did not. It was between the creditors, on the one side, and Lindsey and his individual creditors on the other; he having attempted to divert the whole funds to the payment of his own private debts. It was therefore very properly decided that the fund created by the patent was special assets in his hands as executor, for the payment of Colville’s debts; and was not convertible by him to his own purposes. The case of Spottiswood v. Stockdale, (Cooper’s R. 102,) shows that a composition
There is another principle, however, which will entitle these complainants to equitable relief in this case; and some of the other creditors may be in the same situation. It was unquestionably the intention of the person who created this trust, that all of his creditors, as well in Europe as in this country, should have an opportunity to accept of the terms offered by the trust deed ; and that they should be entitled in that case to their proportion of his property. Those who had notice of the trust in time to enable them to come in within the year, but who neglected or refused to do so, must be considered as rejecting the offer thus held out to them in common with the other creditors. As against them, those creditors who accepted the offer are in equity, as well as at law} entitled to a priority. The others have voluntarily relinquished the provision which was made for them by the trust deed, and have no claim except upon the surplus, if any there should be, which passed to the general assignee under the insolvent act. Those creditors, who would gladly have accepted their proportion of the trust fund upon the terms proposed, but who, for want of notice, or from mistake or accident, were unable to comply with those terms within the year, and who have not done any thing since that time inconsistent with the offer held out to them by the creation of the trust, have an equitable right to be let in to share the fund at this time, upon the terms proposed.
A decree must be entered declaring their rights accordingly ; and the complainants, and all others who are in the same situation, will have an opportunity, at any time within six months, to come in before the master and establish their claims as creditors, and to comply with the terms prescribed in the creation of the trust. But before they are to be permitted to come in and establish their claims before their master,
