45 F. 741 | U.S. Circuit Court for the District of Southern New York | 1891
This is a bill to reverse and set aside a decree of”ibis court, (16 Fed. Rep. 759,) in affirmance of a decree of the district court (Id. 218) adjudging that certain insurance policies, the property of the bankrupt firm composed of Theodore H. Vetterloin aiid Bernhard E. Yettcrlein, and assigned to trustees for the benefit of the wife and children of Theodore H. Votterlein, were so assigned in fraud of the rights of the assignee in bankruptcy of the Vetterloins. The present complainants are the wife and children of Theodore 11. Vetterlein, the beneficiaries named in the assignment of the policies. The defendants are the assignors in bankruptcy, who are the successors of tho complainant in the former suit, and the defendants in that suit. The hill proceeds upon three grounds: (1) That a decree in a collateral suit between tho parties to the original suit, which was put in evidence as res adjudícala upon the issue of fraud, has since been annulled by the court, which rendered it as void for want of jurisdiction; (2) that the use of the collateral decree as evidence in the original suit was in fraud of an agreement made between the parties to that suit; and (8) that tho defendants in the original suit, who were trustees for the present complainants, violated their duty to their cestuis que trustent by omitting to avail themselves of defenses which existed, and setting up defenses in hostility to their trust, — of all -which the complainant in the original suit was aware at the time. The bill has been discussed by counsel as though it were a bill of review. So far as it proceeds upon the theory that the vacating of the collateral decree is new matter, which has arisen since tho original decree, it would state facts appropriate for such a bill, if it did not appear that the collateral decree was void for want of jurisdiction of
The bill cannot be maintained on the first two grounds, because the proofs do not show that the reception of the collateral decree in evidence had any material influence upon the result. The record of the proofs in the original suit has not been introduced, consequently it cannot be ascertained upon what evidence the court decreed. It would seem, however, from the opinion of the judge that there was evidence, irrespective of the collateral decree, to establish all the material facts in controversy upon which the decree proceeded, and that the collateral decree was not regarded at all in reaching the decision.
The bill cannot be maintained upon the third ground, because, irrespective of other considerations, it does not appear that the complainant in the original suit was cognizant of any misconduct of the trustee^ in the defense of the suit. He made the trustees adverse parties, because they were the proper persons to represent the beneficiaries. He is entitled to the benefit of the adjudication he has obtained by his diligence, and cannot Be deprived of it because those who were duly authorized to represent the beneficiaries were negligent or faithless. If the trustees were derelict, the cestuis que trustent must look to them for their remedy. It appears, however, that the trustees insisted that the beneficiaries were necessary parties to the suit, and that they should be brought in. This contention was overruled, and the supreme court held that it was properly overruled. Vetterlein v. Barnes, 124 U. S. 169, 8 Sup. Ct. Rep. 441. The circumstance that the trustees endeavored to have the beneficiaries brought in as parties is quite cogent to show that they intended to protect the rights of the beneficiaries. From all that now appears, there is little room to doubt that the trustees defended the suit to the best of their ability.
The bill is dismissed, with costs.
