4 Ind. App. 407 | Ind. Ct. App. | 1892
The appellant’s complaint is in two paragraphs. The first paragraph in substance is that in March, 1888, Norval W. Cummings made an assignment for the benefit of his creditors, by indenture duly recorded, of all his property to the appellee John R. Musser, who duly qualified as trustee with the appellees, Connelly and McCun’e, as his sureties; that with other property so assigned there was a stallion of the value of $375, and which Avas appraised at $350. At the April term, 1888, of the Parke Circuit Court, in an action by said trustee against the relator to recover the possession of said horse, it was adjudged that the relator had
The second paragraph of the complaint, in addition to the averments in the first, states that when Musser resigned as trustee he submitted to the court an account, or settlement, as to his said trust, showing what property remained in his hands undisposed of, among which was said stallion. Said report was examined and approved by the court, and said trustee discharged ; that afterwards, at the September term of said court, 1889, Howard Maxwell was appointed and qualified as the successor of said Musser in said trust. At said
The court further adjudged that said Ohaver was entitled to $204 for keeping, feeding and caring for said horse, as part of the property of said trust, and the court thereupon ordered :
First. That said trustee sell said horse and other property at public sale, with notice as required by law.
Second. That out of the funds so received and collections, he pay the expenses of his trust, including said $204, except that all other expenses, save said $204, and such expenses as should be incurred by reason of the sale of 'said horse, should first be paid out of the funds arising exclusively from sales and collections other than from the sale of said horse as aforesaid, should first be applied to said $204, along with other expenses, and any residue of said $204 should then be paid out of the proceeds of the sale of said horse, and the balance, if any, should be applied toward the payment of the relator’s said lien. That said trustee Maxwell thereupon sold said horse at public sale according to law, and received therefor $239; that afterwards, in November, 1889, said trustee made his report, showing a sale of said property by him and distribution of the funds in his hands, as ordered by the court, and was then discharged from his said trust; that in said distribution the relator received only $48.14.
A copy of the bond executed by the appellee Musser, as trustee, is filed with each paragraph of the complaint. Each paragraph also contains allegations showing the recording of the indenture of assignment in the recorder’s office and the filing of a copy of the assignment and schedule in the clerk’s office of the circuit court. In the body of the second paragraph of complaint are set out copies of the reports therein referred to, made respectively by the trustees, Musser and Maxwell.
The appellees, each for himself, demurred severally to each
The sustaining of said demurrers has been assigned as error by the appellant.
Where a failing debtor makes a voluntary assignment for the benefit of his creditors, the liability of the trustee is commensurate with the duty the assignment imposes upon him. He is required, to exercise good faith in all his transactions, and use all reasonable diligence and carefulness in the management of the trust; and the legal presumption will be that he has so conducted himself unless the contrary is fully and satisfactorily shown. Where it is shown that the trustee has negligently omitted to do that which is beneficial to the estate, the law, for such breach of trust, will compel him to make good any loss thereby sustained. Burrill Assignments (5th ed.), sections 460, 462; Perry Trusts, section 845 ; Melick v. Voorhees, 2 N. J. Eq. 305; Freeman v. Cook, 6 Ired. Eq. 373; Meacham v. Sternes, 9 Paige, 398; Devaynes v. Robinson, 24 Beav. 86; Litchfield v. White, 7 N. Y. 438; Goodwin v. Mix, 38 Ill. 115; Macubbin v. Cromwell, 7 Gill & Johns. 157.
It was the duty of the appellee Musser, as trustee, to take charge of the property assigned and sell it in such reasonable time as would be for the best interest of the estate. If, tested by these rules, it is shown that there was a negligent omission of duty on the part of said trustee, resulting in actual loss to the relator, then there is a breach of trust for which an action will lie.
In our opinion the first paragraph of the complaint states a cause of action against the appellee Musser as trustee, and his sureties, the other appellees.
The assignment, which included the horse in question, was made in March, 1888. In the following month said trustee was ordered by the court to sell the horse and apply the proceeds
We are not prepared to hold, as contended for by appellees’ counsel, that the order of the court was void when in the action by the trustee to recover from the relator the possession of the horse the trustee was ordered to sell the same and with the proceeds satisfy a lien which in said action it was disclosed the relator had upon the horse. It does not appear from this paragraph of the complaint that the matter of the relator’s lien was in no way in issue or dispute in said action. It is a matter of fair inference and presumption in favor of the action of the court that the matter of the lien was in controversy.
And, moreover, the assignment made by the debtor, Cummings, created the trust. That trust came at once within the jurisdiction and control of the court, and the property assigned was thereby placed in the custody of the court, subject to existing liens, to be disposed of by the trustees, under the direction and control of the court. In such cases the trustee must not only account to, but he must obey the orders of the court possessing jurisdiction of the trust. The power of the court begins with the creation of the trust and
The demurrer to the first paragraph of the complaint should have been overruled..
The second paragraph of the complaint is bad. It is an indirect or collateral assault upon the order and judgment of the court approving the report of the appellee Musser at the time of his resignation and discharge as trustee. That report embraced and accounted for the horse in question.
In proceedings under a voluntary assignment by a failing debtor for the benefit of his creditors, there is a general likeness or analogy to those involved in the settlement of decedents’ estates and guardianships. It is well settled that interlocutory orders or action by the court relating to reports or matters connected with decedents’ estates and guardian-ships can not be attacked collaterally by way of suits on bonds of administrators and guardians. As to all matters embraced in such reports or settlements, the action of the court is deemed to be prima facie correct, and must stand until revised.or set aside in some direct way or proceeding in the court having control over them. And as to the making of all reports and the action of the court thereon, those interested must take notice unless the statute makes provision that notice be given. Lang v. State, ex rel., 67 Ind. 577 ; Castetter v. State, ex rel., 112 Ind. 445; State, ex rel., v. Wheeler, 127 Ind. 451.
These rules are just, and we can see no reason why they do not apply with full force to cases like the present.
To allow a review of the action and decrees of the court in such cases, whether interlocutory or final, by way of suits upon the bond given by the trustee, would be to admit and invite the examination and re-examination of every report
The demurrer to the second paragraph of the complaint was properly sustained.
Because of error committed by the court in sustaining the demurrer to the first paragraph of the complaint, the judgment is reversed, with costs.