Wallace v. Foster

15 S.C. 214 | S.C. | 1881

The opinion of the court was delivered by

McIyer, A. J.

On February 28th, 1857, J. Leroy Davis made an assignment to L. H. Massey for the benefit of his creditors. The deed of assignment provided that the judgments against Davis should be first paid; next, sundry debts for which Massey was liable as surety for Davis; and lastly, creditors generally. Massey accepted the trust, sold all the property and proceeded with the discharge of his duties as assignee until some time in 1861. After the close of the war Massey became insolvent, and, in 1869, was adjudged a bankrupt, and in 1876 removed to the State of North Carolina, where he has ever since resided. Before leaving the state Massey deposited with his attorney in York county the papers belonging to the assigned estate, including the uncollected assets. In January, 1877, William I. Clawson, claiming to be a creditor of Davis, as assignee of one of the judgments against him, filed an ex parte petition in the Court of Common Pleas for York county, stating, among other things, that the petitioner had frequently applied to Massey to obtain his consent to the. collection of the assets, but had been unable to do so, and praying “ that the said L. H. Massey may be removed from his trust, and that a suitable person be appointed in his place to take charge of and settle up the said estate.” Upon this petition the judge of the Sixth Circuit, within which the county of York is embraced, endoi'sed the following order: “ Upon hearing the petition, and on motion of C. E. Spencer, attorney pro pet., it is ordered that L. H. Massey be, and he is hereby removed from the office of assignee of J. Leroy Davis, and that J. F. Wallace, Esq., [the plaintiff herein] be and he is hereby appointed the trustee of the creditors to settle the estate of the said J. Leroy Davis.” It not only does not appear that Massey was ever served with any notice of this proceeding, or made a party thereto, either by publication or otherwise, but it is manifest from the frame of the petition, that it was not contemplated that he should be a party, as there is no prayer to that effect, and no demand that he should answer. Under this order the plaintiff, having obtained possession of the uncollected assets of the assigned estate, brings this action on one of the notes under seal, taken at the sale and made payable to L. H. Massey, assignee of J. Leroy Davis or order.

One of the defences set up by the defendants is a denial that the plaintiff is the legal owner and holder of the note sued upon. The only evidence adduced to show plaintiff’s title to the note was the ex parte order above referred to removing Massey, the payee of the note, from the office of assignee, and appointing the plaintiff “ trustee of the creditors to settle the estate of the said J. Leroy Davis.” The Circuit judge holding that this order “ was not only irregular but utterly void, in so far as it attempts to vest in the present plaintiff title in and to said estate,” sustained this defence, and exception was duly taken. So that the fundamental question raised by this appeal is, whether an assignee can be removed from office and the legal title to the assets of the assigned estate transferred to another by a mere ex parte proceeding, of which the assignee has no notice.

Upon general principles, well recognized and founded in •reason as well as supported by the highest authority, it would seem to be clear that an order or judgment which purports to deprive one man of the title to property and vest it in another, is an absolute nullity, unless such order is made or judgment rendered in some action or proceeding to which the person whose title is thus divested has been made a party and has had an opportunity to be heard. The fact that Massey was a trustee can make no difference. He had the legal title and could not be deprived of it by a proceeding to which he was not a party, and of which he does not appear to have had any notice whatever. But in addition to this he was not a mere naked trustee, for, under the assignment, be was entitled to a beneficial interest, inasmuch as by one of the provisions of the assignment he was authorized to apply the assets to the payment of debts for which be was liable as surety in preference of the general creditors. It would require the strongest and most conclusive authority to induce us to sustain an ex parte order of this character. The cases relied upon for this purpose do not, in our judgment, furnish such authority. In McLaurin v. Thompson, Dud. 335, one McBryde had been appointed administrator of Colin McColPs estate, and upon -his removal from the state the Ordinary granted letters of administration to one McIntyre. In a proceeding before the Ordinary for the purpose of obtaining an account of Colin McColPs administration of the estate of Duncan McColl, to which the defendant was a party as surety on the administration bond of Colin McColl, the question was raised whether the appointment of McIntyre was valid without a formal revocation of the letters of administration previously granted to McBryde, and all that the court decided was that the granting of administration to McIntyre was equivalent to a judgment of revocation of the previous grant to McBryde, and, as he was not contesting the new grant of administration, the court would regard it as a revocation. This case, therefore, does not decide the question now under consideration. The next case relied upon is Ex parte Galluchat, 1 Hill's Ch. 150. In that case an executor, having partially administered the trusts imposed upon him by the will, removed from the state, and having requested that he should be released from his office as trustee, the court, upon the ex parte application of the cestui que trust, appointed a receiver and discharged the trustee. It is very clear that this ease furnishes no authority for the proposition contended for ,here. No question was-raised as to the want of notice to the trustee, and in fact could not be, as the proceedings were instituted at his request. So, too, in the case Ex parte Knust, Bail Eq. *489, the point here made did not and could not arise, for there the trustee not only had notice but resisted the application.

It is argued, however, that even conceding that the order removing Massey from the office of assignee añd appointing the plaintiff trustee was erroneously granted, the defendants in this case cannot take advantage of it, and that such order must stand until it is vacated by a proper proceeding for that purpose. If the objection to the order was merely a want of regularity in granting it, then, possibly, there might be good ground for this position. But where the order is absolutely void the rule is different. Where an order has been passed or a judgment rendered by a court in a case in which the court has no jurisdiction either of the subject matter or of the parties, such order or judgment is an absolute nullity, and may be so declared in any subsequent proceeding. In this case there is no doubt but that the court had jurisdiction of the subject matter, but that is not sufficient, it must also have acquired jurisdiction over the person to be affected by the order in question. “ Jurisdiction over the person is obtained by service of process, or in some other manner authorized by law, as by the voluntary appearance of a party during thé progress of a cause.” Freem. on Judg., § 119. In this case the,record not only fails to show that' the court had acquired jurisdiction over the person affected by the order by service of process or otherwise, but it does not even purport to make any one a party, being striótly an ex parte proceeding; and there is, therefore, no room for the presumption that the court had, in some way, either by voluntary appearance or otherwise, acquired jurisdiction over the person whose legal rights were sought to be divested. The order was manifestly granted under the theory that it was not necessary that Massey should be made a party, and we cannot presume that any steps whatever were taken to bring him under the jurisdiction of the court.

The order removing Massey and appointing the plaintiff cannot be sustained, as has been argued here, under Section 3 of Chapter XCVII., General Statutes, page 477. That section only provides for the appointment of an agent by the creditors in case the assignee neglects or refuses to assemble the creditors within ten days after the execution of the deed of assignment for that purpose, and that the agent so appointed may apply to the judge of the Court of Common Pleas for an order authorizing him to take into his possession the property assigned, and sell or dispose of the same according to the terms of the deed of assignment. But tbat does not apply to this case. There is no pretence that the plaintiff was ever appointed by the creditors as their agent, nor is there any evidence whatever that the assignee failed to call the creditors together within ten days after the execution of the deed of assignment. On the contrary, the evidence is that Massey did call a meeting of creditors before the sale, though it is not stated what was the purpose of such meeting. In addition to this we are not prepared to say that a judge would be justified in granting such an order without notice to the assignee and an opportunity afforded him to be heard.

The plaintiff’s title to the note resting solely upon the ex parte order above referred to, which, we think, was an absolute nullity, his right to bring this action cannot be sustained.

Under this view of the ease the other questions suggested by this appeal cannot arise and need not, therefore, be, considered. Indeed it would, perhaps, be improper now to do so, for if, as we have seen, the plaintiff has no right to bring this action, any adjudication of those questions now would not bind the legal owner of the note, who is not a party to this case, and his rights ought not to be passed upon until he has the opportunity to be heard.

The judgment of this court is that the judgment of the Circuit Court be affirmed.

SimpsoN, C. J., and McGowaN, A. J., concurred.