79 F. 454 | U.S. Circuit Court for the District of Eastern Tennessee | 1897
The' bill is brought in this case primarily for the purpose of enforcing due.and proper execution of the trust assignment. It is well settled, of course, that any creditor secured by the assignment, and a beneficiary thereunder, may maintain such a bill. The first question which presents itself is that of jurisdiction
It remains then to determine whether or not a case for equitable relief is presented under the bill. It may be of service at this point to restate certain propositions which are now fnlly established and no longer open to question. Speaking broadly, the whole subject of trust, including trust assignments for the benefit of creditors, and the proper execution of such (rust, with directions and instructions to trustees in regard to their duties, is an original and familiar head of equity jurisdiction. It has been repeatedly decided that, either the assignee, or a creditor under the assignment, may make application to a court of chancery either to restrain the assignee from acts which would constitute mismanagement or wast e, and to have such orders and decrees as will cause a due and legal execution of the trust, or the assignee may himself, in case of doubt or difficulty, apply to the court for instructions and directions in the execution of his trust. Such bill may he maintained not only when the trust is not being properly executed, but whenever there is danger of a loss or waste to the trust fund. When such bill is brought by a creditor under the assignment, the rule only requires that it shall be brought against the assignee, and that it shall be brought on behalf of all other creditors who choose t:o come in on the usual terms. These and other propositions relating to the subject will he found fully stated and sustained by the following authorities: Weir v. Tannehill, 2 Yerg. 57; Shyer v. Lockhard, 2 Tenn. Ch. 365; Burrill, Assignm. § 419; 2 Perry, Trusts, §§ 595, 817; 1 Am. & Eng. Enc. Law; 2 Story, Eq. Jur. 1287.
I may first dispose of the motion to remove the present assignee, E. A. Metz. The grounds of objection to Mr. Metz are, so far as they are material to he now noticed: (1) That he declines to bring suit to collect certain alleged stock subscriptions due to the Timothy Dry-Goods Company; (2) that he has failed and refused to make a proper inventory of the stock of goods, in that he refused to mark the invoice
“(S17) Tlie cestnis que trustent may bring a bill or petition for removal, and the court may remove the trustees from office,' and appoint others in their place, when there has been bad conduct, or the trustee 'is unlit for his office, or to prevent a threatened breach of trust, or any danger to the trust fund; but if the conduct of the trustee proceeds from a misunderstanding of liis duty, or from mistake or from long-continued practice by himself and other trustee, and not from any dishonest, selfish, or improper motives, and the safety of the property is not imperiled, the court generally will not remove him. (818) Proceedings for the removal of trustees and the appointment of others require some little time, as trustees have the right to file answers to the charges against them, and to a regular and full hearing; and, as tlie cestuís que trustent are entitled to have (he fund properly protected, and managed in the meantime, the court may appoint receivers. Thus, If it can be shown that the trustees have been guilty of misconduct, waste, or an improper disposition of the estate; or that they have an undue leaning towards one of two conflicting interests; or that tlie fund is in danger l'rora their insolvency or bankruptcy; or that one of the trustees has been guilty of misconduct, and the other trustees desire a receiver; or that they are incapacitated from acting; or that they are of bad character, drunken habits, and great poverty; or that the trustees are out of the jurisdiction; or that, they so disagree among themselves that the estate cannot be properly administered,—receivers will be appointed; and so where the irasiee was a married woman, and her husband was out of the jurisdiction. In all cases the court will appoint a receiver if the trastees and cosíais que trust agree or concur in the appointment. But the court will require security. (819) The court will not appoint a receiver, and lake the administration out of the hands of the trustees, upon slight grounds. It is not. a sufficient ground, of itself, for a receiver, that one (rustee has disclaimed, another is inactive, and another has gone abroad, if there is still a trustee capable and willing to execute the trust; nor that the trustees are poor, if they are not insolvent; nor that trustees for sale have let the purchaser into possession before the purchase money is paid. There must be good reason to fear that the property will not be forthcoming at the end of the litigation, or the court will not appoint a receiver.” 2 Perry, Trusts, §§ 817-819.
It is to be borne in mind that the plaintiffs in this suit make no attack upon tlie validity of the assignment, but bring the bill to have