109 Ga. 661 | Ga. | 1900
The exception taken which raises the question to be decided in this case is to so much of a final decree as gives priority to two certain claims over general creditors in the distribution of funds in the hands of a receiver. Weeks & Reid, a mercantile firm, were indebted to various parties. Weeks conveyed his interest in the firm property to Reid, and Reid then made a conveyance to Nicholson as assignee, for the benefit of the firm creditors. This instrument embraced the entire property and assets of the firm, and made two of its creditors, to wit The -Imperial Fertilizer Company and J. S. Woods & Brother, preferred creditors. Certain general creditors instituted an equitable proceeding to set aside the deeds of assignment. Reid having died during the pendency of the case, Nicholson, his administrator, was made a party defendant. It also appears that, under the proceedings instituted, Nicholson was appointed receiver and took charge of the assets of the firm, and under order of the court reduced the same to money. The two preferred creditors, the Imperial Fertilizer Company and J. S. Woods & Brother, set up, by their respective answers, that the firm of Weeks & Reid had bought from them commercial fertilizers, and had deposited with said defendants certain customers’notes of considerable amount, as collateral to secure the-payment of the notes given by the firm for the fertilizers ; that when these collateral notes became due, the defendants had sent them to the firm of Weeks & Reid fdr collection, the proceeds of which were to be remitted to the defendants ; that the firm collected a very considerable amount on said collateral notes, but failed to pay the proceeds to the defendants, and used the same in their business; that the assets of the firm had been reduced to cash ; and .that the defendants were in law and in equity entitled to alien, on the firm assets, and the proceeds arising therefrom, superior to the claim of the other creditors, theirs being a trust debt. They also claimed that the deeds of assignment which gave them a preference were legal and valid. At the hearing a bill of sale made by Weeks to Reid was intro
Evidently the judge framed his decree distributing the money in the hands of the receiver on the theory set up in the answers of AVood & Brother and the Imperial Fertilizer Company, that theirs were trust debts. In support of that contention, we have been referred to sections 2790, 3189, and 3424 of the Civil Code. The first two of these provide that liens against trustees dying chargeable with trust funds take priority over all other liens and claims except funeral expenses. The third is the general statute which fixes the priority of debts against the estate of a decedent, and declares that any debt due by the deceased as a trustee, having had actual possession, control, and management of the trust property, shall take priority immediately after unpaid taxes, and before judgments, liens, and other debts. A trust may arise in different Avays. If one uses
Under the facts here, the debtors were the agents of their creditors to make collection of the notes turned over to them. Their duty was not only to collect, but to pay over. There was nothing to manage, nothing to control. The statutes which have been quoted can have no application in a case like this; they apply only when the claim for which priority is given is against a trustee proper, one in whom the title is vested in trust for other persons, and whose duty it is to make returns to the ordinary under the provisions of the code. Lightning Rod case, supra. It is contended, however, that if the debts of the defendants in error are not such technical trust debts as entitle them to priority of payment over the general creditors, their debts are represented by promissory notes, while the debts of the other creditors are represented only by open account, and that for this reason they are entitled to priority. We think this contention can not be maintained. As a matter of fact, no estate of a decedent was being distributed under the proceedings here. Weeks, one of the partners, is in life; Reid, the other partner, is deceased. If the deeds of assignment were good, they did not have the legal effect of vesting the title conveyed by Weeks absolutely in Reid. On the contrary, he would hold the property conveyed as a trustee for the creditors of the firm. But it was adjudicated in this case that the deeds were void and should be set aside, and no exception was taken to
Judgment reversed.