84 N.W. 379 | N.D. | 1900
This is an action brought to compel the beneficiaries under a trust deed to return certain money received by them from the trust estate, to the end that the same may be applied in payment of certain liabilities incurred in the execution of the trust. On a trial to the court the plaintiff succeeded, and the defendants appeal, and ask a retrial of the entire case. This controversy, in a somewhat different form, was before us in Mercantile Co. v. Grover, 7 N. D. 460, 75 N. W. Rep. 911. The plaintiff sold goods to the trustee named in a trust deed, and has not received pay therefor. In the former action he sought to recover against these defendants and others, who are beneficiaries under the deed, upon the ground that they were in fact partners in conducting the trust business, and the trustee was their agent in purchasing the goods. This position was held by this court to be unsound, but in answering the contention of counsel that, if the plaintiff failed in that case, it was without remedy, we said that the trustee became personally liable on every contract made by him in the discharge of his trust. We also said: “It is true that the trustee may claim reimbursement from the funds in his hands for any proper expenditure made by him in the execution of the trust, and this equity is the foundation of the right of the creditor, under peculiar circumstances, to proceed directly against the trust property itself. See Hewitt v. Phelps, 105 U. S. 393, 26 L. Ed. 1072; Clopton v. Gholson, 53 Miss. 466; Norton v. Phelps, 54 Miss. 471; In re Johnson, 15 Ch. Div. 548; Dowse v. Gorton, 40 Ch. Div. 536; Mason v. Pomeroy, 151 Mass. 164, 167, 24 N. E. Rep. 202, 7 L. R. A. 771.” And again we said: “Of course, the parties may agree that the trustee shall not be held personally on the contract, but that only the trust estate itself shall be chargeable with the debt. In such a case, if the instrument creating the trust authorizes this to be done, or even when it does not give such authority, if the circumstances are peculiar, the trustee is not bound, but the fund is. New v. Nicol, 73 N. Y. 127; Gill v. Carmine, 55 Md. 339, 342, 343.” And still further, in speaking of the trustee, we said: “And if he should distribute the estate, leaving
There is no merit whatever in the objection that the complaint shows a defect of parties. True, the trust deed discloses that there were many other creditors of Grover; but they were unsecured creditors, and have received nothing on their claims.' The theory of this action is that these defendants have received money from the proceeds of the trust property which they cannot, in equity, withhold from this plaintiff. Of course, no such claim can exist against one who never has received anything from the trust property. And here it is germane to remark that the defense of former adjudication cannot prevail. As we have seen, the former action was brought against all the creditors of Grover on the theory of a partnership under the trust deed. The issues here raised were not, and could not have been, litigated in that case.
The complaint states a cause of action. True, it does not appear that these defendants ever assented to this particular purchase from plaintiff, but this is not an ordinary trust created by will or the act of the trustor and trustee alone. The beneficiaries expressly agreed to all the terms of that deed. They gave the trustee unlimited discretion in replenishing that stock of merchandise, and they, in terms, agreed that only the net proceeds of the estate, after 'paying all costs and expenses of executing the trust, should bo distributed to them; and counsel concede that the purchase price of these goods received from plaintiffs coirstitutes a part of the expenses of executing the trust. We think the complaint also sets forth the particular grounds which relieve it from looking exclusively to the primary liability of the trustee. It alleges that he has no trust property in his hands, and that he is insolvent. It alleges that the goods for which payment is sought were sold and delivered to him as such trustee. We think this raises a presumption that the estate received the benefit of the goods. In that event, had he paid for the goods, he might have reimbursed himself before any distribution to the
Plaintiff also sought to allege that by the contract between itself and the trustee the goods were sold in the exclusive reliance upon the trust estate, and that by such contract the trustee incurred no liability. The principle seems to be clearly recognized that under a contract of that character the creditor may proceed directly against the trust estate. Gill v. Carmine, 55 Md. 339; New v. Nicoll, 73 N. Y. 127. We express no opinion as to the sufficiency of the complaint upon this last point, or upon the proof under these allegations. The trial court evidently decided the case upon this theory; but, without intimating that the court was wrong in so deciding, we prefer to place our decision upon a more certain ground, but one that was not open to the trial court. Before this case was tried in the District Court, the case of Scott v. Jones had been tried in the same court, and judgment rendered against the defendant for the sum of $1,000. In that case Scott represented the trust estate here involved, and the defendant Jones was the trustee here involved, and that action was brought to' compel an accounting by the trustee. On the trial of this case the judgment in that case was admitted, which, of course, showed the trustee indebted to the estate. It followed that, under the authorities first above cited, had the trustee paid plaintiff’s claim, he would have had no equity that would have permitted him to reimburse himself from the trust estate, because he was already indebted to that estate, and hence he had no equity to which this plaintiff could be subrogated. But Jones appealed from the judgment against him in the District Court, and at this term of this court we reversed that judgment, and dismissed the action as against Jones. See Scott v. Jones, 9 N. D. 551, 84 N. W. Rep. 479. The judgment in that case establishes the fact that the trustee is not and was not indebted to the estate. Section 5713d, Rev. Codes, requires this court not only to take judicial notice of its own judgments and records, but also of the fact that the case now before the court has connection with the one formerly decided by it. .The case is here for trial de novo. We must try it upon the record before us and upon the facts, of which we must take judicial notice. We conclude, as did the