Dunlap v. C. Beckes & Son

23 Kan. 154 | Kan. | 1879

The opinion of the court was delivered by

Horton, C. J.:

There are several questions suggested by counsel in this case, but the only important ones to be determined are, whether the answer of Beckes & Son contained any defense to the petition of the plaintiff, and if it did, whether the trial court erred in its direction to the jury. As the answer charged that Riggs, the assignee of Beckes & Son, together with his partner, the plaintiff, with full knowledge of the trust, appropriated to their own use the trust property, it must be conceded, we think, that for such conversion the firm of Riggs, Dunlap & Co. (composed of S. B. Riggs and Howard Dunlap) were liable to some one for the actual value of the property thus converted. It is well settled that trustees cannot directly and openly, or secretly and covertly, sell themselves trust property; and even if the assignee intended to act in the utmost good faith in the disposition of the mill machinery, boiler and engine, belonging to the trust property, yet the sale was not valid, and the firm must account for the full value of the property so appropriated, regardless of the price agreed upon between the assignee and his firm, or rather between the assignee on behalf of the trust, of the one part, and the assignee, as the agent of Riggs, Dunlap & Co., of the other part. The assignment of Beckes & Son was in 1872. At the time of the conversion of the trust property, Riggs, Dunlap & Co. were the owners of the notes sued on. The suit on the notes was not commenced till 1876. A sufficient time had elapsed between the date of the assignment and the commencement of this action ordinarily to close out the trust under the assignment. The answer alleged that the debts of Beckes & Son did not exceed $3,000, and that the property assigned by said firm was largely in excess of that sum; and it further alleged that all the property was converted by Riggs, Dunlap & Co. If these allegations were proved true, a full defense would be established, as the plaintiff would have had no right to recover in his action. If the firm of Riggs, Dunlap & Co. have appropriated of the trust property, assigned for the benefit of all the creditors, sufficient to pay themselves and all other debts of the assignors, the mere transfer of the claim of Riggs, Dunlap & Co. to one of their members would not authorize such- member to again recover thereon, or, in brief, to get a second payment of the claim.

Notwithstanding these views in regard to the sufficiency of the answer, the direction to the jury cannot be sustained. Upon the trial, the testimony showed that Riggs, Dunlap & Co. only appropriated the grist-mill machinery, together with a boiler and engine. All the other property was fairly and properly sold by the assignee. From such other property there was realized $1,214.70. The evidence as to the value of the grist mill, engine, etc., was very conflicting — varying all the way from $1,500 to $4,000.

In the sixth instruction given to the jury, the court seemed to assume, that with the $1,500 which Riggs, Dunlap & Co. were to pay, or did pay to the assignee, said assignee had sufficient funds to satisfy all the debts of Beckes & Son, exclusive of the notes sued on, together with all the costs and expenses of carrying out the trust, for the direction was to deduct the value of the grist mill, engine, etc., over and above $1,500, from the amount of the notes in dispute, and give the plaintiff a judgment for the balance. If the value of this particular property in excess of $1,500, exceeded the amount of the notes, then -they were to find for the defendants. We say the trial court must have assumed the facts above stated, otherwise the $1,500 would have been as much an off-set as the value of the grist mill, etc., in excess of that sum. If the instruction was not based upon this view, then it must have been based upon a theory equally as erroneous, viz.: that as the assignee only accounted for the sum •of $1,500, for the value of the grist mill, etc., the creditors of Beckes & Son were only entitled to said sum as the value of the mill, and the true value, in excess of said sum, belonged to the latter firm. Whether given for the first or second reason, or any other, it misdirected the jury. The court had no right to assume as a fact, that the ‡1,500, added to the proceeds of the other property, were sufficient to pay the debts of Beckes & Son, exclusive of the notes sued on, as the testimony of the amount of the debts was conflicting; neither had the court the right to limit the interest of the creditors of Beckes & Son, in the mill, to $1,500, simply because the.assignee had reported that sum as the price received from his firm. The excess over $1,500 should be distributed pro rata .among all the creditors of Beckes & Son, in proportion to the original clainjs against them at the date of the assignment, first deducting from all the assets of Beckes & Son, the costs, expenses, and compensation of the execution of the trust, and only the pro rata share of such excess should be applied on the notes sued on, and deducted from the amount thereof. If the pro rata share of the excess was less than the notes, the plaintiff would be entitled to a verdict for the balance. If the pro rata share exceeded the notes, or if the actual value of the trust property converted by E., D. & Co., together with the proceeds of the other trust assets, exceeded all the debts of the defendants, including the notes, with the costs, expenses and commissions of the trust, the verdict ought to be for the defendants.

Under the circumstances, the assignors, Beckes & Son, in ■consequence of their continuing liability to the creditors, for whose benefit they executed the deed of assignment, and of their resulting trust, might have brought a suit to compel the assignee to account, but their interest in the property assigned being equitable merely, they had no right in this' action to off-set the trust property against the claim of the-plaintiff, except as a pro rata payment of the claim, in proportion to the original claims against them, or unless there' was an excess of trust property appropriated by Riggs, Dunlap & Co. over and above the amount of the debts of Beckes & Son, and costs and expenses of the trust, exclusive of the-notes. We have treated the plaintiff as though the action had been brought by Riggs, Dunlap & Co., as he, .in fact,, stands in their shoes.

' A few words will dispose of the case, so far as the defendant in error E. B. Peyton is concerned. No judgment was rendered in the district court, either for or against him. In the transcript before us, outside of the bill of exceptions,, ■which legitimately ought to contain only the decisions and proceedings of the trial court, not of record, it does not appear that Peyton was ever served with any summons in the-case, or that he had any connection therewith, other than being charged as an indorser in the petition. Of course, therefore, the' plaintiff in error has no right in this court to ask any order or judgment as against such defendant in error.

On account of the misdirection of the jury, the judgment of the district court will be. reversed, and case remanded for a new trial between plaintiff, and defendants, Caleb Beckes,, and Baxter Beckes, late copartners as C. Beckes & Son. The costs will be paid by C. & B. Beckes, except the costs arising from making E. B. Peyton a party in this court, and these costs will be taxed against the plaintiff Howard Dunlap.

All the Justiees concurring.