87 N.J. Eq. 595 | N.J. | 1917
Lead Opinion
The opinion of the court was delivered by
The bill of complaint is exhibited to collect a judgment at law out of a fund placed in trust for his own use by the judgment debtor. Such a bill will lie to prevent a fraud upon tona fide creditors. Biat. Frauds § 11; Chancery aci § 70.
Upon three previous occasions similar bills were filed by the same complainant, who in each case obtained the relief prayed for. Upon the filing of this fourth bill the vice-chancellor who heard the cause and who had made the previous decrees became convinced that the statutes of this state were being used not to protect a bona fide creditor of the settler of the trust, but to unable such settler to -do what he could not lawfully do, viz., to regain the corpus of the trust fund. Some of the reasons that led the vice-chancellor to this conclusion were stated by him to counsel upon the argument as follows: “When on three successive occasions; namely, in 1910, 1912 and 1914, Mr. Parker has -borrowed on the dates named, respectively, ten thousand, twelve thousand and thirteen thousand dollars in the same manner, and on each occasion the bank has been obliged to resort for the collection of the loans to the same method now pursued, namely, a judgment in New Jersey, personal service upon Mr. Parker out of his own state, in the New Jersey law suit—service which it is reasonably apparent is made possible by Mr. Parker for the convenience of the bank—then a bill in equity in New Jersey identical with the present bill with personal service on Mr. Parker procured in the same way, is not the bank chargeable with knowledge of circumstances that make it impossible to escape the conclusion that when they make the fourth loan in the same manner they are simply making themselves the instrument for Mr. Parker to accomplish indirectly what he cannot accomplish directly?”
The fact that these remarks were made to counsel while the
The vice-chancellor had, moreover, the advantages of the familiarity with the case gathered in previous litigations, and of the presence before him of the witnesses. Without these advantages we are in danger of dealing with the case upon more legal abstractions, whereas he dealt with it as the practical application of an equitable remedy to the given case.
In his final conclusions the vice-chancellor, referring to the ■previous litigation, said: “In that litigation complainants became fully apprised of the fact that the trust was void only as to bona fide creditors of Parker’s, and that Parker could not in his own behalf recover from the trust company, the principal of the trust funds. The three subsequent loans made by complainant to Parker, and the proceedings taken in each instance by complainant for recovery from the trust company of the money so loaned, render it impossible to escape tire conclusion that in making the loan here in question complainant deliberately and knowingly constituted itself an agency to enable Parker to regain control of his property. The circumstances that complainant actually advanced money and sought to make a profit for itself is immaterial; the practical status which complainant has deliberately assumed is that of a permanent conduit between Parker and the trust company from which Parker may draw funds at pleasure; complainant has constituted itself a creditor for the sole and definite, purpose of appropriating to itself the superior benefits of that status, creditors’ rights'which appeal to equitable protection are of an inherently different quality. * * * I am fully convinced’that this court cannot be properly made the involuntary machinery for carrying out an arrangement of that nature for the ultimate benefit of Parker.”
We fully concur in the conclusions thus reached by the learned
A positive demonstration of actual fraud is not necessary. In the well-considered opinion in the case of Watts v. Worth, 76 N. J. Eq. 299, Mr. Justice Parker points out that when parties having a. right of action at' law seek the aid of a court of equRy, such court will examine not only the transaction in question, but the relations of the parties and all of the surrounding circum-stances, to the end that if “an atmosphere of suspicion surrounds and permeates the whole case,” a court of equity will refuse its extraordinary relief ' and leave the complainant to his legal remedy. That is this case.
The circumstance that in the ease just cited the same vice-chancellor sat below gives concrete emphasis to the -fact that “stare decisis” is only a more technical term for judicial consistency.
The decree of the court of chancery is affirmed.
Dissenting Opinion
(dissenting).
The trust in this qase was created by Parker himself. As soon as he attained his majority he assigned securities amounting to more than $150,000 to his mother and she immediately assigned them to the Camden Safe Deposit and Trust Company. The declaration of trust provides that the income shall be'paid to Parker during his life for his sole and separate use so that the same shall not be liable to or for his debts and contracts or for debts or contracts or under the control of ,anjr other person; immediately after his death the property is to be. assigned to such person and for such uses as he shall by will appoint in default of a .will to his mother if living, freed and discharged of the trust; but if she die before Parker, then to such person as she may by will appoint; and in default thereof to such persons as would be entitled under the laws of Pennsylvania to. the estate of Parker. A right is reserved to Parker with the consent of his
We have not heretofore adopted in this state the doctrine of “spendthrift trusts,” and our legislature has evinced hostility-to them by subjecting income in excess of $4,000 to supplementary proceedings at law, even where the trust is created by another. We are now by this decision going far beyond any doctrine .of spendthrift trusts-that has ever come under my notice. 'And "we are doing it without any evidence that Mr. Parker needs the protection of the court as he certainly does not ask for it.