10 Ga. 273 | Ga. | 1851
By the Court.
delivering the opinion.
By the Rules in Equity, established by authority of the Act of December, 1821, (New Digest, 452,) the Judge of the Superior Courts, at Chambers, has power to pass orders to compel the appearance of non-resident defendants, to dissolve injunctions, to require security to be given upon applications for injunctions, according to the circumstances of the case, and upon such terms as he may deem just and reasonable; they also provide, that bills may be revived by petition to the Judge at Chambers, or at a term time, and that he may order, in vacation, the originals of all deeds, writings and other exhibits, copies of which have been filed with the bill or answer, to be deposited in the Clerk’s office, for the inspection of the adverse party.
And by Statute, the Judge of the Superior Courts is authorized to grant writs of ne exeat, to restrain the person and property of the defendant, in certain demands not due, in favor of co-obligors and securities, in behalf of minors and orphans, remainder-men and reversioners, until security is given for the payment of the demand, or the performance of the outstanding liability. New Digest, 525, 526.
And I apprehend, that it may be assumed generally, that the Judge of the Superior Courts in this State is clothed with the same powers as to ad interim orders or provisional proceedings, as are usually exercised by the Chancellor in England, until the
Indeed, this would seem to be a necessary corollary to the decision by this Court in Beall vs. The Surviving Executors of Fox, 4 Ga. R. 425, 426. We there held, and I doubt not correctly, that we have not only adopted the whole system of English jurisprudence, Common Law, and Chancery, suited to our condition and circumstances, but that we have framed the necessary judicial machinery to give to that system a practical and beneficial effect, and that such is the office and duty of a Court of Equity, and such was the object of the Legislature of 1799, in conferring Equity powers upon the Superior Courts.
And with these passing observations, I shall dismiss this ground, which seems to have been abandoned on the argument.
This point can best be settled by authority.
Mr. Daniel, in his admirable work on Chancery Pleading and Practice, admits that strictly speaking, a receiver can only be appointed-after answer. And he states, that it seems formerly to have been held, that a receiver could not be granted before ; but he adrls, that the rule was broken through by Lord Kenyon, in Vann vs. Barnett, (2 Bro. C. C. 158.) The Master of the Rolls, who sat for the Lord Chancellor in that case, declared, that although the motion for a receiver before answer, was unusual, yet had it been necessary, that he would have made a precedent.
It seems, however, that he was not reduced to this alternative, as Lord Thurlow had, several years previously, appointed a receiver of an infant’s estate, upon the filing of the bill, and before a subpoena to appear and answer had been served. Pitcher vs. Hilliar, 2 Dick. 580. And Lord Bathurst, in a still earlier case, (Trinity Term, 1773, and before the date of our adopting tatute,) granted a receiver before answer. Compton vs. Bearcroft, 2 Bro.
In the case of Curand vs. Chadwick, cited in a note to 2 Russell, 63, the facts upon which the application for a receiver was founded, were made to appear from the affidavit of the complainant alone; and although the motion was refused in the first instance on other reasons, by the Vice-Chancellor, it is stated by the American editor, that the order was afterwards granted.
The appointment here being temporary only, and not affecting the ultimate right, we hold that the discretion of the Court should not be controlled in acting upon the evidence before it.
1. It is contended in the first place, that the assignment itself is void.
First, because the creditors are required, upon receiving their proportion of their debts, from the proceeds of the property, to execute and file, within a limited period, a complete discharge of their demands.
And, secondly, because it is contrary to the provisions of the Act of 1818.
The trusts declared in the assignment are,
1st. That the trustees shall dispose of the property and collect the debts assigned.
2d. Out of the proceeds pay the expenses of the trust, and retain adequate compensation to themselves. •
3d. To pay the residue to all such of the creditors (including indorsers and securities,) as would execute a release within the term of six months.
4th. The rest of the estate conveyed, after the satisfaction and payment of the creditors who should release, to be appropriated to all the other creditors equally.
The deed contains this further provision, that after the payment of all the debts therein specified, the surplus, if any, shall revert to the assignor.
The question as to the validity of a stipulation for a release in an assignment like the present, has never been before this Court directly or collaterally. The adjudications in the Courts of our sister States, have been various, conflicting and unsatisfactory. In Ohio, New York, Maine, Connecticut, Louisiana and Missouri, assignments by a debtor of all his property to trustees, tor the benefit of such creditors as should, within a given time, execute a release, have been pronounced oppressive and void. 5 Ohio Rep. 293. 11 Wend. R. 187. 14 Johns R. 462. 1 Hop. Ch. Rep. 573. 5 Cowen, 547. 1 Ed. Ch. Rep. 77. Ib. 457. 6 Conn. Rep. 277. Ang. on Assignments, 113, 114. 13 Louisiana R. 457. 6 Missouri Rep. 302. Whilst in Massachusetts, Rhode Island, Pennsylvania and New Hampshire, the decisions prepon
And notwithstanding Judge Story, in his Commentaries on Equity Jurisprudence states, that a stipulation on the part of the debtor in an assignment, that creditors taking under it shall release and discharge him from all farther claims beyond the property assigned, will, it seems, be valid and binding, §1036; and that in Halsey vs. Whitney, (1 Mason’s Rep. 226,) the same eminent Jurist ruled, in obedience to what he considered the authority of previous decisions, the same doctrine, yet it is very evident, that on principle, his own opinion was adverse to the validity of these stipulations.
For in the case in Mason, (decided in 1826,) he says, that the objection struck him with great force; for that when the debtor stipulates for a release, he surrenders nothing except upon his own terms. He attempts to coerce his creditors by withholding from them all his property, unless they are willing to take what he pleases to give, or is able to give in discharge of their debts. There is certainly a delay, and if the assignment be valid, to some extent, a defeating of their rights. Has it not a tendency to obstruct the common rights of the creditors ? Is not its design to prevent creditors from receiving compensation out of the debtor’s property, without yielding up some portion of their debts, and conferring on him a substantial benefit which he has no legal claim to demand ?
Chief Justice Marshall, in Broshear vs. West and others, decided by the Supreme Court in 1833, (7 Peters, 608,) seems to yield his own convictions to what he regarded as the tone of authority. He observed that the objection to a stipulation-for a release is certainly powerful, as its tendency is to delay creditors. The weight of this argument he acknowledged he felt, and confessed that he was far from being satisfied that, upon general principles, such a deed ought to be sustained.
The name of Chancellor Kent may undoubtedly be arrayed on the other side of this controversy. 2 Kent’s Com. 532, et seq. and notes, 5th edition. Among other proofs of his bias, he speaks
There is a great dearth of English adjudications upon this subject, owing to the fact, that in consequence of their bankrupt laws, such assignments are rarely, if ever, rendered necessary. Precedents from that country are entitled to little weight here— the bankrupt system being a private policy with the British Parliament and people.
Judge Southerland, in Shever vs. Wakeman, (11 Wend.) said, “ Let the embarrassed debtor assign his property to whom he pleases, but let the assignment be absolute and unconditional; let it not extort from the fears and apprehensions of creditors or any of them, an absolute discharge of their debts as the consideration for a partial surrender; let it not convert the debtor into a dispenser of alms to his own creditors; and above all, let it not set up his favor and bounty at auction, under the cover of a trust to be bestowed to the highest bidder.”
It maybe suggested that such stipulations are at most but propositions io the creditors, which they are free to accept or reject. But the obvious answer to this is, that gaming and usurious borrowing are voluntary transactions, still they are discountenanced by the law. Is not the creditor under these assignments, under equal moral duress with the unfortunate victim of usury ?
Well may one question, therefore, with the very able Court in Missouri, whether debtors should be allowed, by these contrivances, to make bankrupt laws for themselves, notwithstanding the legislative bodies, both Federal and State, have declined to pass such laws, relieving them from their liability to pay their just debts, and whether these stipulations are not against the letter and spirit of the Statute of Frauds, and contrary to the general policy of our laws, as well as to sound views of morality and common honesty.
Besides, while conveyances of the whole of his property by a debtor on such terms, have been held as admissible and valid, with respect to these composition deeds, a trust of a part only of the debtor’s property, on condition that the creditors should give a release for the residue, is considered much more objectionable
How far the provision in the deed appropriating whatever surplus might remain, if any, to those creditors who refused to release within the prescribed limit, might affect this principle, if at all, I have not had time, nor do I deem it necessary to examine. Indépendent of any express provision to this effect, a Court of Equity would, I apprehend, decree whatever surplus might remain to those creditors who had not acceded to the deed. 7 Peters, 608.
We confess we do not feel the force of this objection. Thirty years’ experience at the bar, enable me to bear testimony, not only to the convenience and absolute necessity of such proceed
And by this course of procedure, the whole effect of the assignment was, to keep the creditors from the pursuit of the debt- or during his lifetime, and of his estate since his death, by the means the law had provided. This was the perversion of the trust to an unjust and improper purpose, and was a plain violation, of his duty as trustee. If the trustee omits to act when duty requires him to be active, or if he is wanting in necessary care and diligence in the due execution of the trust which he has undertaken, a Court of Equity will interpose. 10 Ala. R. 185.
It is now a well settled principle, both in the English and American law,''and sustained by numerous authorities, that where the conveyance is made directly to the creditors, their assent must be given at the time of the assignment, as it requires the agreement of two parties to make a contract. But if the assignment (as this was) be to trustees for the use of the creditors, the legal estate passes and vests in the trustees, and Chancery will compel the execution of the trust for the benefit of the creditors, though they be not at the time assenting and immediate parties to the conveyance. See Hendricks vs. Robinson, 2 Johns. Ch. Rep. 307, 708, and ihe series of cases there referred to, and to,which may be added, the case of Picklock vs. Syster, 3 Maule and Selwyn, 371, and Bruin vs. Mentum, 2 Gallison, 557.
Waiving for the present, the inquiry, how far the Courts in this State would be bound by the foregoing principle, I propose to test the case under discussion by it.
Vice Chancellor Shadwell was counsel in the cause in Merivale; and in deciding subsequently the case of Ganard vs. Lord Lauderdale, he stated the principle deducible from Wallwyn and Coutts; and that is, that where there is an actual settlement made for vesting an estate or stock in trustees for volun
The Vice Chancellor asserted, that there was no conflict between this case and that of Ellison vs. Ellison, (6 Ves. 662,) and Pulontoft vs. Pulontoft, (18 Ves. 99,) in which Lord Eldon held, that where a trust is once created and accepted, it is irrevocable, and it is not competent to defeat it.
Upon the principles of this case, then, did not the assignees take the legal title to the property; and would not the English Courts, upon their own principles, have enforced this trust for the benefit of the creditors ?
But conceding that the debtor has the right to make the assignment, when made without consultation with the creditors,
Galt vs. Dibrell, (10 Yerg. Rep. 158,) determines, that notwithstanding a trust for the benefit of creditors to whom the conveyance has not been communicated, and who are not privies to the conveyance, merely operates as a power to the trustees, and is revocable by the debtor; yet, unquestionably the revocation must be made before the creditors have received the information and affirmed the trust. And this we hold to be an incontrovertible position. See 2 Kent's Com. 531, 532, 533. 1 Johns. Cas. 205. 12 Johns. Rep. 281. 2 P. Wms. 427. 1 Johns. Ch. Rep. 129.
And in Robertson et al. vs. Sublett et al. (6 Humph. Rep. 313,) it is decided to be too late to revoke a trust deed after the creditors by their bill have adopted and affirmed its provisions. It then becomes obligatory for their benefit.
After a careful and thorough examination of the multifarious points presented by the record in this case, we can see nothing that calls for a reversal of the judgment.
I would simply add in conclusion, that the death of Mr. Alexander, one of the trustees, after the acceptance of the trust by both, might possibly, at a future stage of this cause, render an application to the Court necessary to supply the vacancy, the deed not having provided that less than the whole number might act. It certainly cannot affect the validity of the assignment.