Case ID: nc_26/html/0486-01.html
Source: Caselaw Access Project
Author: {"author": "Nash, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

JAMES COFFIELD’S EX’RS vs. JOSIAH COLLINS, GARNISHEE &c.
    When money has been received by a trustee under a deed of trust for the purpose of being divided among several persons, and yet remains in his hands for the purpose of distribution pro rata, there not being enough to satisfy all the purposes of the trust, the distributive share, to which one of the persons will be-so entitled, is not the subject of attachment at the suit of a creditor, under our attachment laws.
    The cases of Alston v Clay, 2 Hay. 172, Overton v Hill, 1st Mur- 47, Hunt v Stephens, 3 Ired. 365, Orr v McBryde, 2 Car. L. Rep. 257, Elliott v Newby, 2 Hawks 22, Peace v Jones, 3 Mur. 256, and Gillis v McKay, 4 Dev, 172, cited and approved*
    Appeal from the Superior Court of Law of Washington county, at Spring Term, 1844, his Honor Judge Baxley presiding.
    This was a suit by the plaintiffs, who are citizens of North Carolina, against Judah & Block, merchants of New York, commenced on the 2d of February,-1842, by original attachment returnable to the February Term, 1842, of Washington County Court, Josiah Collins, the present defendant, was summoned as a garnishee, and at the said term filed his answer, in which he stated, that Hugh W. Collins was indebted to the defendants, Judah &. Block, upon a draft on account of' C.. C, Taber, for about $960 93, accepted by the said Hugh W. Collins, with interest from the 24th of October, 1840 — that some time after making this acceptance, the said Hugh conveyed all his real and personal estate to George W. Barney and the said garnishee for the purpose of having the same appropriated towards the payment of the debts of him the said Hugh — that there was due on the said acceptance of the said Hugh, on the 1st of December, 1841, for principal and interest, about the sum of $1023 65 cents— that, according to an estimate which the said garnishee caused to be made of the debts- of the said Hugh, and of the funds that would, when received, be applicable to the ment of those debts, the holder or owner of the said accept-anee would be entitled to receive $798 45 cents, being a loss of 22 per cent. — that there was not, at the filing of the said garnishment, nor at the time of serving the said attachment, any money belonging to the trust aforesaid, applicable to the said debt — that the moneys received under the trust had been applied to the payment of certain debts mentioned in the said trust, and for the remainder of-the sales of the property conveyed by the deed of trust, the garnishee then held notes or obligations, then not due — that a further dividend than that arising from the sales already made might be expected by the creditors of the said Hugh, but what the amount would be could not be ascertained until the settlement of his grandfather’s estate. The said Garnishee further stated, that he had understood that the aforesaid Judah So Block had assigned the above mentioned claim against Hugh W. Collins to one Zalma Rebine, before the serving of the plaintiff’s attachment, and that the said garnishee was advised, and now insisted, that, inasmuch as he held only us trustee, whatever might be in, or come to, his hands, of the estate the said Hugh, applicable to the claim of Judah & Block, could not be attached.
    At March Term, 1844, of Washington Superior Court, having been brought thereby appeal from the County Court, this cause came on for trial, when an issue was submitted to the jury to try whether the assignment from Judah and Block to Zalma Rehine, dated the 18th of January, 1842, was executed before the plaintiff’s attachment was served. The jury found that the assignment was not executed before the serving of the attachment. The counsel for the garnishee admitted, that, since the answer of the garnishee was filed, the said sum of $798 45 cents had been received by the garnishee, but insisted that the same was held by the garnishee, as trustee, and was not subject to attachment; that there was no privity of contract between Judah and Block and the garnishee,: Collins, and that, as the former could not maintain acti°n at law against the latter, the said sum was not sub-jest to the attachment.
    Hig jjonor was 0f opinion that the said Josiah Collins was liable as garnishee, and pronounced judgment of condemnation accordingly. From this judgment the garnishee appealed to the Supreme Court.
    
      Heath for the plaintiff.
    1. The terms of the attachment law are sufficiently broad to embrace the facts of this case : under it, “ any estate,” may be attached: there is no limitation confining the operation of the attachment to legal estates, or legal liabilities. The enquiry is, what is the garnishee “ indebted to the defendant, and what effects of the defendant he or she hath in his or her hands.” Rev. Stat. ch. 6, sec. 5.
    2d. The case of Peace v Allen, reported in 3 Murphy 256, is, in principle, the same as the present case, and must govern it; for an action of assumpsit, for money had and received, would lie against the defendant, at the instance of Judah and Block, and when that action can be maintained, the debt may be attached by a creditor of the cestui que trust. Peace v Jones, ut supra-
    
    3. It is said, the plaintiffs cannot prevail, because there is no privity between Judah and Block, and the garnishee; if that privity be necessary, as it probably is, Stephens, N. Prius 334, it exists here : the garnishee has accepted the trust created by Hugh W. Collins, in favor of Judah and Block, with other creditors, has sold the property conveyed, taken notes or bonds therefor, declared a dividend, collected the money due on the notes or bonds, has it on hand, and cannot now defend himself for want of privity. Stephens ut supra.
    
    
      Badger for the defendant.
    The money in the hands of Josiah Collins, (the garnishee) is held by him as a trustee, to be applied to the payment of the debts according to the provisions of the deed of trust. It is not liable to attachment, because it can only be reached upon a proceeding, to which all the persons interested in the fund, (that is the creditors) shall be parties.
    Such a proceeding can only be instituted in Equity — and the consequences might be serious, if trusleess were liable to be summoned as garnishees in twenty different suits at the same time at the instance of so many creditors. Besides, the expense of such proceedings would be an unjust infliction upon an honest man, only discharging his duty as trustee, and claiming no interest in the fund.
    That the property held in trust cannot be reached by attachment, until the funds are satisfied, and a residue is left payable to the debtor, is believed to be fully established by the cases of Peace v Jones, 3 Murph. 256. Gillisv McKay, 4 Dev. 172. Simpson v Harvey, 1 Dev. & Bat. 202. The fact that, in this case, no difficulty may arise from assuming the jurisdiction, is no ground for assuming it. If an attachment will lie to reach property in the hands of a trustee before the trust is closed — -and to have an execution of the trust adjudged in a court of law, in favor of a particular creditor — then such attachment will lie in every such case, whatever questions and difficulty will arise.
   Nash, J.

The defendants in this case are citizens of, and resident within, the State of New York, and the plaintiffs, under the act of the General Assembly, commenced their action by an attachment. The attachment served was upon Josiah Collins, and he summoned as a garnishee. In his garnishment, he states that Hugh W.. Collins becoming indebted to the defendants in this action, conveyed to him and another person all of his property in trust to pay this debt, together with others — that, after paying the other debts mentioned in the trust, from the proceeds of the property so conveyed, there remained in his hands the sum of $798, liable to the claim of the defendants, which sum was insufficient for its discharge. The garnishment then submits the question to the court, whether the money in his hands is liable to the process of attachment. His Hostor, who tried the cause, being opinion that it was, gave judgment against the garnishee, condemning the money in his hands to the nseof the from which judgment the garnishee appealed to this court. We think the opinion is erroneous, and that the money in the hands of Mr. Collins is not liable to the plaintiff’s claim, in the way in which he seeks to subject it.

The language of the attachment law, in describing the interests of a debtor liable to its operation, is very comprehensive. It authorises the issuing the process “ against the estate of the debtor wherever the same may be found, or in the hands of any person or persons indebted to or having any of the effects of the defendants.” Rev. Stat. ch. 6, sec. 1. In pointing out the oath of a garnishee, it directs, that he shall upon oath state “what he is indebted to the defendant, and what effects of the defendant he hath or had in his hands at the time of serving the attachment,” sec. 6. It then sets forth the judgment to be pronounced by the court against the garnishee when, from his garnishment, any judgment can be pronounced against him. “ It shall be lawful, upon his appearance and examination, to enter up judgment and award execution against any such garnishee, for all sums of money due to the defendant from him, and for all effects and estateof any kind belonging to the defendant in his possession or custody.” This language, upon its face, is comprehensive enough to embrace every species of property, which the garnishee may have in his possession or custody, belonging to tbe defendant in the action, and all moneys, which he may owe him, regardless of the character in which he may hold the one or owe the other. In the construction of statutes, it has become an established maxim, qui hasret in litera Insret in covtice, and the courts, in carrying this statute into execution, found it necessary to depart from its letter. This was necessary in order to give efficacy to the Legislative will, which consists more in the substance of their enactment than in the mere words in which it is clothed, and, also, to preserve tbe symmetry of the Law. The first decision on this branch of the act, of which we have any report, is that of Alston & Co. v Clay, in 2 Hay. 172. The Court then decided, that money paid into the hands of a clerk on an execution, was not the subject of an attachment against the plaintiff in the execution.

His Honor, Judge Taylojb, in delivering the opinion of the Court, said, “ It has been several times decided, that money in the hands of a Sheriff cannot be attached. Those decisions are analogous to the present. They were made on the ground, that judgments of Courts of justice should be effectual.” The same principle was decided in the case of Overton v Hill, 1 Mur. 47; and in the late case of Hunt v Stephens, 3 Ire. 365. In the first case cited, that of Alston & Co. v Clay, the Court considered it as settled law, at that time, that money in the hands of a Sheriff, received by virtue of his office, cannot be attached. And in the case of Orr v McBryde, 2 Car. L. Repository, 257, they affirm the doctrine, “ because, say the Court, it would interfere with the rights of others, embarrass, and sometimes render ineffectual the process of the Court, and produce endless litigation.” In this latter case, however, they decide that a surplus of money remaining in his hands is liable to attachment, because it is not in his hands, virtute officii. The precept commanded him to raise a particular sum, and return that to Court; all over that amount, whether taken from the defendant in the execution or received on the sale of property, belongs to the defendant, and is held by the Sheriff for his use, and might have been immediately demanded of him and its payment enforced, and consequently any creditor of the defendant entitled to the benefit of the attachment law, might subject it to his claim. In the case of Elliot v Newby, 2 Hawk. 22, it was held by the Court, that the interest, which the next of kin had in negroes, in the hands of the administrator, was not liable, under the attachment law, to the claims of a creditor. The reason assigned is, because a court of law is incompetent to take an account of the assets, to order a payment on terms, to have all the parties interested in the fund before the Court, for the safety of the administrator. The ^me f^e 9ues^on came before the Courts, so far as deeds of trust were affected, was in the case of Peace & Peace v Jones 3 Mur. 256. In this case the Court decided, as in Orr v McBryde, that a- surplus remaining in the hands of a trustee, after the payment of the debts secured by the deed of trust, was money due to the cestui que trust, for which lie could maintain an action of indebitatus assumpsit, and was therefore liable under the attachment law to the claim of a creditor of his; and they say further, “It seems to be a better criterion, whether property be liable to attachment, to ascertain what would be the rights of the defendant in the attachment against the garnishee, than to enquire whether the property would be liable to execution against the defendant.” The case of Gillis and McKay, 4 Dev. 172, is we think, in principle, decisive of this. It decides the general question, that, when a trustee holds slaves to divide among several persons, at different times, the interest of a cestui que trust eannot be attached in the hands of the trustee. It became necessary for the Court to decide, whether under the act of the General Assembly subjecting equitable interests to execution, ch. 830, Rev. Code, (Rev. Stat. ch. 45, s. 4,) the case before them came within its operation. They decide that it did not, because the trust was created, not alone for the defendant, but for him and others, whose rights were separate and distinct from his. So here the trust is created not alone for the benefit of the defendants in the attachment, Judah and Block, but for others no way concerned with them. It is not, in the language of the Chief Justice, a pure trust, on which alone the act operated. In the language of the Court in the case of Elliott and Newby, the better criterion to decide, whether in such cases, as the present, the property sold by the trustee is subject to attachment, is to enquire what would be the rights of the defendants in the attachment. Apply that rule to this case; could Judah and Block have maintained an action at law to recover the sum now sought .to be recovered by the plaintiffs ia this action 7 Very clearly they could not; their only redress would have been in a Court of Equity, where all persons interested in the fund would have been before the Court, and the interests of all parties properlyprotected. The garnishment discloses, that the available funds in the hands of the garnishee are not sufficient to liquidate the demands secured by the trust, but that they had to abate pro rata, and that other funds might still come into his hands, belonging to the cestuis que trust, from the estate of a grand-father. All these facts present questions, which could be settled properly only in a court of Equity. Nor do we conceive, that it would have made any difference in this case, if the other debts secured by the trust had been fully discharged, and the whole of the money now in the hands of the garnishee was applicable solely to the debt of Judah and Block. To recover it they would have been compelled to go into a Court of Equity.

From the principles established by the cases which have been reviewed, we are of opinion that the money in the hands of the trustee, Josiah- Collins, was not liable to the attachment of the plaintiffs, and that the interlocutory judgment in this case is erroneous.

Per Curiam, Ordered to be certified accordingly.