The national Republican. [volume] (Washington City [D.C.]) 1866-1870, 1869-10-18
THE COURTS.

n
Nelson Of al. VS.. stott. This case had
been referred 10 special auditor, and upon
the coming In Of his report Judge Olln made
an order confirming II, and directed tho ap-
pointmeut Of new trustee.
rhDnIx Mutual Insurance Company vs.
ELIZA Bailey. This case grows out Of q
Sle'm ~ the defendant Of the amount Of the
IRE insurance OF her husband. The plaintiff
brings suit to have the policy of Insurance
delivered up TO DO cancelled, on the ground
that i was obtained by fraudulent repre-.
sentations. The case was ordered TO be en-.
fed to the court In general term.
Himber vs.. Tracey Of al. Order extending
time for taking testimony.
Trook vs.. Levy & Levy. Exceptions TO
defendnnts answer overruied.
Yates & Sclby vs.. seltz. In this case n
short time since the following report OF spo.
cal Commissioner 1ngle was, on exception,
sustained by Judge Wylie. The report pre-,
sents a full statement Of the case in which il
was rendered,
This is bill Of the kind commonly but
inaccurately denominated a "creditor's bill, !"
brought by the complainants, who are judg-
ment creditors Of the defendant, George
Soitz, In behalf OF themselves and other
creditors, to subject to the payment and
satisfaction OF their claims certain real es-
tate which was conveyed by the defendant
IN trust 70 secure the payment Of certain
preferred debts. The bill alleges that all
the debts so secured have been paid of and
saushedi but the answers and other proceed
ings show that some Of them have not been
paid In full, but only partially. though over
due before the filing OF the bill, small bal
ances being still due on two Of them.
A large number OF creditors, most of them
by Judgment, but some by simple contract,
have come In by petition.
A decree was passed for the sale of the
premises mentioned In tho bill. A sale was
made April 10, 1860, for eli, 450; one third
OF the purchase money In cash, the balance
In SIX and twelve months; and the report OF
the trustee appointed to make the sale has
been referred to the special auditor to state
the trustees account and the distribution of
the fund In his hands.
The following notice was given:
In ihe Supreme Court ofths Di,irici of Columbia.
yates X seiby vs.. Ueorse Seiiz ct al. No.
l,0So-Equiiy. Notice 10 hereby given to the
parties to this osuse and to the creditors OF
George SeitI that on Monday, June Is, 1870, at
No. Columbian Law Building, Fifth street,
At u O'Clock, m, all state the trustees &C.
count and tho distribution OF tho fund In hi.
hands. o. IsoLE
Special Auditor.
Mr.. Phillips appeared for J. T. Mitchell,
bhu - AZ huhiot JuhiOt JuukmtUt
No other counsel appeared.
The accompanying SCHEDULE A, /" ex-
hiblts the trustees account.
Tho fund In the hands OF the trustee Is
not sufficient to pay the Judgments In full,
and touching the proper distribution of that
fund question has been raised and argued
which has never yet been authoritatiyely de-
termned In this Jurisdiction.
That question Is; Shall the judgments be
paid according to their respective prlorltlesl
or shall the Judgments, or the Judgments
and the simple contract debts be paid pro
rata, without regard to dignity or prlorltyi
In the old Circuit Court the decree In Scott
VS.. Lynch, decided In 1915, (not reported
was always supposed to have settled the
question by directing payment Of the liens
aud encumbrances, according to their legal
and equitable priorltics. In that case, how.
ever, the fund was insufficient to pay the
FIRST specific lien, and no opportunity to- test
the question was afforded.
For long time the late auditor, Mr..
Redin, considering the rule In Scott vs.. Lynch
TO be the law OF the court, Invariably fol-
lowed II; and for some time after the orgaul-
zation Of this court he continued to do so;
always, however, expressing strong doubts
OF Its .proprlety. No exceptions have ever,
10 single Instance, been taken; and thus
this highly Important question has yet to be
passed upon by the court.
Finally, however, In the case of Moore VS..
Kirk, the late auditor, for the purpose of
bringing into review rule which, he says,
always appeared to him to be erroneous, re-
yersed his previous rulings, and distributed
the fund pro rata among the Judgment cred
ltors. This, however, If the views which
will be submitted In this report are correct,
was not test case.
No exceptions were taken In Moore vs..
Kirk, and the question remained Just where
1t was before.
1t may be added that the present auditor
OF the court has followed the ule OF Scott
VS.. Lynch.
The late auditor seems to have assumed
In all the cases, indiscrimlnately, that the
assets" were equitable, not drawing dis.
tlnction which will be stated presently. It
Is intimated by him that the decree In Scott
VS.. Lynch was In conflict with the previous
case Of Law VS.. Law, . Cranch c. @. Il. 1874,
decided In 1928, and therefore overruled II.
In Law vs.. Law the question arose be.
tween Judgment creditors and creditors by
simple contract and speciality; and II was
held that the proceeds OF the sale Of an
equitable title to land are equitable, not
legal, assets. But In that case the defendant
never had the legal title, and the court
merely decided that 1t was not like the case
Of q Judgment creditor who has n right to
redeem a mortgage, and, by so doing, ac-
luires legal lien, the legal estate being
thereby relnvested In the mortgage without
reconveyancc. The act Of Assembly of 1904,
CHI. 10, sec. 10, authorizes the chancellor to
decree a sale Of an equitable interest In land
upon bill filed for that purpose. The pro-
ceeds OF sale In that case are, therefore,
equitable assets In the stricter sense OF that
term about to be indicated.
In Moore vs. Kirk also the legal title was
outstanding, (although that fact was not
discovered until after the property had been
sold under the decree, and the owner of the
legal title was not made party, aud the
audlto passes over the fact without remark,
rs II deeming 1t entirely immaterial to his
Consequently, even IL the
auditors report had been confirmed upon
exceptions, that case would not be conclusive
Of this.
The true canon Is terscly stated by the
author OF tho Treaties Of Equity; illegal
assets, although you cannot come at them
the assistance Of equity, shall be
applied In course of administration. Other
wise, where you raise assets where there
we're none In law. Yet even there real
securities shall be first satisfied, and then
he debts by bond and simple contract to be
paid In average, for any other method would
become impractlcable." e Fonb., 4O2.)
In most OF the cases which have bearing
upon the distinction between legal and equit-
able assets, the controversy has been between
'reditors by speciality and creditors by simple
contract, claiming payment out Of the estate
If a dacedent.
Among creditors by bond and simple con-
ract, equitable assets, 1t Is admitted, a |
court Of equity will distribute pari I,dssu or
.qually. See Deg VS.. Deg, 9 p. W. Az;
Cox's case, Id. 34l. But will 1t follow the
'amc method In the case OF creditors by
udgmcnti Admitting now, for the sake Of
he argument, that the fund In question Is
equitable assets, let us examine the authorI-
les upon this point.
Wilson vs.. Fielding, 90 Mod. 426,) has
been cited by text-writers as an authority for
he doctrine that equity will sometimes
iecree a pro rata distribution even where
here are judgment creditors. That was Il |
'ase where assets were created by u court of
'quity, where there were none at law. The
Executor had paid large portion Of mort.
snge debt ont OF the personal estate, and the |
isscts, by reason OF such payment, becom- |
ng insufficient to discharge the debts by |
lmple contract, bill was brought by the |
'reditors against the heir, whose Inheritance |
rad been exouerated by the executors pay
nent, to compel him to refund, so far as
night be necessary to satisfy the creditors. |
)ne OF the creditors had obtained q judg- |
nent In an action at law against the ex-
,cutOr and he claimed n nreFarence In tho |