Maennel v. Murdock

Le Grand, C. J.,

(with Bartol, J., concurring.)

The appellants in this case had recovered a judgment in the Superior court of Baltimore city, against Falconer and Haskell, upon which they issued an attachment, by way of execution, and laid it in the hands of the appellees, who were trustees under a deed from John Falconer and John H. Haskell. The garnishees pleaded nulla bona, and, on issue joined, the plaintiff offered in evidence the writ of attachment,- and the admission of the garnishees, that at the time of its issual and service on them, they had in their hands moneys of Falconer and Haskell, more than sufficient to cover the amount of the judgment against the defendants.

Upon this state of case, the plaintiffs offered a prayer, (which, was rejected by the court,) in effect denying the efficacy of the deed of the defendants, so far as their claim to judgment, in this case, is concerned. The only questions, therefore, which are now before us, are those which involve the validity and sufficiency of the deed set out in the record.

We shall examine the objections urged to the deed, in the order they have been presented to us on the part of the appellants; who were the plaintiffs below. The deed, as it appears in the report of this case, is separated into sections, and as such, numbered, and, for the purposes of perspicuity, we shall, in what we say, notice the particular parts referred to, by the designation of the number affixed to it.

The second and third sections of the deed recites, that the defendants, under the firm of Falconer and Haskell, carried on business in the city of Baltimore; that in company with John Kynock, of the city of Buffalo, they carried on business in the city of Buffalo and in Canada, under the firm of John Kynock & Company; and also carried on business in company with the said Kynock, in New York, under the firm of Haskell & Company. It is also recited, that the said firms of Kynock & Company, and Haskell <& Company, were dissolved by mutual consent, which dissolution was duly advertised, and that thereupon, and thereby, full power was given to the defendants, to take the assets and wind up the business of said co-partnerships, which they proceeded to do.

*177 To these clauses of the deed are interposed two objections. 1st. That the deed is executed by Falconer and Haskell only/ 2nd. That by uniting in the same trustees, the power to settle the affairs of three distinct firms, the separate creditors of each will be delayed in the acquisition of what belongs to them, until the assets of all be accurately ascertained, and ready for final distribution. In reply to the first of these objections,- it is only necessary to observe, that the failure of Kynock to unite in the deed, can in no sense give' the appellants cause of complaint, whatever right, in this regard, it might afford to the individual creditors of Kyrtock, or to those of the firms of which he was a member/ The appellants have no claim against either Kynock of the firms, as sueh, of which he was a member. All the appellants have a right to ask is, that the assets of Falconer and Haskell, individual and partnership, shall he made liable for the payment of their debts, and this is done by the deed. The second objection, in our view of it, is founded in a misapprehension of the true character of the deed. It contemplates separate distributions; that is to say, the funds belonging to the several firms and to the individuals composing each, are to go, in their proper order, to the creditors of each. The accounts of each cae j«st as readily be kept distinct/ the one from the other, as though separate deeds had been made in each case. Each fund is only to be subjected to the expenses and delays incident, and properly belonging, to it. VYe are unable to perceive the force of the objection. If the trustees fail to discharge their duty in this particular, a court of equity will be always ready to compel them.

It is said, that the 12th clause -of the deed is objectionable for two reason's; first, because it gives a preference to two specified creditors; and second, because a deed of trust stipulating for releases, must not only convey ail the grantor’s property, but, convey it equally for the benefit of all; and, in sup port of these propositions, the case of Powles, et al., vs. Dilley, et al., 9 Gill, 222 , and the act of 1854, ch. 193, sec. 13, are cited. Neither the case in 9th Gill, nor the act of Assembly, is sufficient to invalidate this part of the deed. When *178 speaking of the avoidance of a deed because of a preference,» the court refer to the -operation of the insolvent laws. They say,-to render a transfer to a favored creditor void under the' insolvent system,- the debtor must intend both to apply for the benefit of the insolvent laws, and intend to prefer the particular creditor or creditors; the guilty intent must concur in both particulars. Moreover, that it is incumbent on the complaining party to establish this motive. In the case before us, there is no question touching the insolvent laws; it arises under a deed of trust, and there is no proof of an application for, or intention to apply for the benefit of the insolvent laws. So far from the case cited being an authority against the validity of this clause in the deed, it is an express one in favor of it,declaring, as it does, that the common iaw has always, in the absence of every badge'of fraud, sanctioned the right of one creditor to obtain the payment of his debt from the debtor,to the exclusion of other creditors. The act of 1854, ch. 193, is, as its title declares, “Art act for the relief of insolvent debtors;” and in Triebert vs. Burgess, and others, 11 Md. Rep., 452 , it was d eclared to have no application to a case in which there has been no petition for the benefit of the insolvent laws of the State. In support of this view of the clause in question,several authorities were cited at the bar, but inasmuch as the decisions of our own appellate tribunal are pointed and con-elusive, we deem it unnecessary to indulge in any 'comment upon them.

The 13th clause of the deed is assailed on the ground, that* it directs the. trustees “to pay in such order and priority, and out of such part of the trust funds, as by law they may be entitled to be paid, all such creditors of the parties of the first part, being creditors in any of the co-partnership or individual relations aforesaid, as shall, within sixty daj's,” &c. It is rather' difficult to comprehend an argument which rests, for its support, on the ground, that it is unlawful to do that which the' law approves. So far from this provision of the deed being obnoxious to censure, we think it evinces, very clearly, a disposition not to do anything forbidden by the law, and the grantors, in the use of these broad and comprehensive terms, dis *179 play a becoming and upright intention to submit, as far as they .could do so, all legal questions for the adjudication of the tribunals constituted for that purpose. As to the order of distribution, there ought to be no difficulty. 'Where priorities have been secured, they will, of course, be respected and enforced, and, for the rest, the law of distribution is pointed out in the cases of McCulloh vs. Dashiell, 1 Harris & Gill, 106, and Glenn vs. Gill, 2 Md. Rep., 15 . The deed being one of trust, (although this circumstance does not necessarily oust the jurisdiction of a court of law, 7 Md. Rep., 387 ,) yet, it enables equity to take cognizance of the matter, and to marshall and distribute the assets.

The 10th clause is claimed to be fatal to the deed, because, by it, the sale is not to be made at once, but the trustees are empowered to make it “whenever they shall think proper and most conducive to the interests of the trust.” In support of this objection, the case of the American Exchange Bank vs. Inloes, Garn. of Turnbull & Co., is relied upon. That case was before the court on two occasions, and will be found reported in the 7th and 11th volumes of Maryland Reports. The clause which was there held to be fatal to the deed, was one which expressly empowered the trustee, at his discretion, to sell, “gradually, in the manner and on the terms in which, in the course of their business Turnbull & Co. had sold and disposed of their merchandized'' This the court held to be an indefinite postponement of the execution of the trust, and not a mere discretion, which, to some extent, must be confided to the trustee. A reference to the case, as reported in 7 Md. Rep., 390 , and 391, will show, that the court did not intend to go any farther than to declare, that the law will not tolerate any hindrance in assignments for the benefit of creditors, “beyond what may be necessary for the purposes of the trust f and also, that it was not its purpose to overrule the case of Beatty vs. Davis, 9 Gill, 211 , or, to deny, on this point, the force of the case of Macham vs. Stearns, 9 Paige., 398. When the case came again before the court, ( 11 Md. Rep., 184 ,) the following language is employed: “It does not follovi, from the views we have expressed, in reference to provisions of this kind, that sales *180 must be always made immediately and fqr cash, whether the interests of creditors will be affected or pot. The trustee may pe left to the exercise of a sound discretion, but the assignment must not confine him by unreasonable provisions. * * * if these assigntnents are fairly and bona fide made, the creditors, if consulted by the trustee, will know best how the trust should be conducted, and if sales, in any particular manner, will yield larger results, they will have the best reason for assenting to that mode. Thus the creditors can prescribe a law for the guidance of the trustee, which will fully protept him, and may ¡accomplish for them what, under the terms of the deed, he may not be able to' effect. And, where the trustee is appre? hensive of difficulty, or, for any reason, desires protection in the performance of his duties, he may invoke the jurisdiction pf a court of equity, and proceed under its direction.” These pbservations relieve this clause of the deed from the objection urged against it.

Clause No. 16, which prqvides, that neither the trustees, por their representatives, shall be answerable for, or bound to piake good any deterioration or loss that may happen to the paid trust estate, effects and property, unless the same be consequent upon their wilful commission, omission or neglect, does nothing more than declare what the law ascertains, as the pxtent of their liability: 6 Watts & Sergt., 313, and the case of Gray, et al., vs. Lynch & McDonald, 8 Gill, 403 .

The next, and only question remaining to be considered, relates to the 9th section of the deed, which authorises the trustees “ope or inore attorney or attorneys under them, for the purpose of executing the trusts herein contained, to appoint at pleasure and to remoye, and such .appointment to revoke and annul.” This, it is said on behalf of appellants, is a new and wholly indefensible clause in such a conveyance. We do not concur in this opinion. This is not a case to which fire maxim pofestas delegata non potest delegari, will apply. Here, the authority to make such appointments is expressly given, and the only inquiry therefore is, whether the grantors had the right to confer it? And we answer it in the words of |jre Supreme Copi't of Pennsylvania, in the case of Hennessy *181 vs. The Western Bank, 6 Watts & Sergt., 312: “We see nothing wrong in that part of the deed which, in order to facilitate and hasten the object and purposes of the assignment, gives full power to assignees to appoint and employ, according to their discretion, one or more agents or attorneys under them, with full or limited powers, and the same at pleasure to dismiss and revoke. There is nothing more in this clause, than what is usually contained in every letter of attorney.”

(Decided March 11th, 1859.)

From what we have said, it follows, we are of opinion the court below properly rejected the prayer of the plaintiffs.

Eccleston, J.

— I am of opinion that the deed is void on its face, because it exacts unconditional releases from the creditors of Falconer and Haskell, of all claims against them as individuals and as partners, they being interested in firms of which Kynock was a partner; and the deed not including Kynock’s property. This objection is conclusive, and the plaintiffs in this case have a right to make it. This relieves me from passing on the other clauses of the deed, in regard to which 1 pronounce no opinion.