Case Name: Holland Trust Company, Appellant, v. George R. Sutherland, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1904-01-29
Citations: 177 N.Y. 327
Docket Number: 
Parties: Holland Trust Company, Appellant, v. George R. Sutherland, Respondent.
Judges: 
Reporter: New York Reports
Volume: 177
Pages: 327–337

Head Matter:
Holland Trust Company, Appellant, v. George R. Sutherland, Respondent.
Trust—When Domestic Trustee of Foreign Corporation Is Entitled to Instructions of Court of Equity as to Interest Fund Held by it and Attached by Creditor of Corporation. A special deposit made by a non-resident corporation with a domestic trust company for the payment of coupons maturing a few days thereafter, not only creates the trust company a trustee for the coupon holders, but changes the title to such deposit from the corporation to the trust company, in whose possession it constitutes a fund for the benefit of the coupon holders, as eestuis que trust; and where a creditor of the non-resident corporation, before the coupons are due, levies an attachment on such deposit as the property of a non-resident defendant, the trust company, acting as the trustee and representative of the coup on holders and desiring to pay them the moneys in question, under a complaint alleging that they are very numerous and unknown to plaintiff and that many of them are non-residents and have deposited their coupons for collection with banks outside of the state, may maintain an action in equity against the attaching creditor, as the only person claiming the fund in hostility to the trust, for instructions as to its duties as trustee in the premises.
Holland Trust Oo. v. Sutherland, 65 App. Div. 252, reversed.
(Argued January 15,1904;
decided January 29, 1904.)
Appeal from a judgment entered March 13,1902, upon an order of the Appellate Division of the Supreme Court in the first judicial department, which reversed an interlocutory judgment of Special Term overruling a demurrer to the complaint and dismissed the complaint.
The nature of the action and the facts, so far as material,, are stated in the dissenting opinion.
George M. Van Hoesen for appellant.
The complaint states a good cause of action. (Coe v. Beckwith, 31 Barb. 339 ; Curtus v. Candler, 6 Madd. 123 ; Dimmock v. Bixby, 20 Pick. 374; R. T. Works v. Kelly, 88 N. Y. 234.) The contention of the Appellate Division that “ trustees are entitled to the aid and direction of the court with reference tO' the law and their duty, only where questions arise under or with reference to the interpretation of the trust agreement,”1 is erroneous. (Welch v. Adams, 152 Mass. 74; Dimmock v. Bixby, 20 Pick. 368; Taggard v. Piper, 118 Mass. 315 ; Hayden v. Marmaduke, 19 Mo. 403; Talbot v. Earl of Radnor, 3 M. & K. 252; Jones v. Stockett, 2 Bland’s Ch. 425 ; Ashbrook v. Reid, 89 N. C. 151; B. Church v. Londonderry, 51 N. H. 424; Edgecombe v. Carpenter, 1 Beav. 171;. Freeman v. Cook, 6 Iredell Eq. 373.) The Appellate Division erred in its view that the power of the trustee to require,, as a condition of accepting the trust, that he shall be reimbursed for legal advice, disentitles him to the privilege of appealing to the court for instructions. (Perry on Trusts, §§ 927, 929; Freeman v. Cook, 6 Iredell Eq. 373; Goodson v. Ellison, 3 Ross, 583.)
Edward Hassett for respondent.
The complaint does not state facts sufficient to constitute a cause of action, (R. L. Works v. Kelly, 88 N. Y. 234; Martin y. Funk, 75 N. Y. 134; Crawford v. Winston, 34 App. Div. 459; Mayor v. Fitch, 9 App. Div. 452; Matter of Brewer, 43 Hun, 600; Greene v. Mumford, 4 R. I. 322; A. P. Assn. v. Brantingham, 57 App. Div. 401.)

Opinion:
Bartlett, J.
It is, of course, clear that interpleader is not the appropriate remedy. If the action of interpleader is brought under the Code or the old equity practice it is essential that the plaintiff should be a mere stakeholder, and that the parties whose claims are conflicting for the funds in his hands should be parties defendant. That is not this case. Hor do I think this case falls within any of the cases cited as authorities against the maintenance of this action. It is well settled that where the trust instrument is plain in its terms and the duty of the trustee clear, he is not justified in coming into a court of equity asking for instructions. It is equally clear that where he is called upon by the nature of his trust to exercise discretionary power the court will not instruct him in such an emergency.
In this case the Delaware Water Company, an Ohio corporation, made a special deposit with the plaintiff trust company of a certain sum of money to pay coupons maturing a few days subsequent to said payment. The effect of that transaction was to make the plaintiff trust company a trustee for the coupon holders whose claims were to be paid out of the fund so deposited. Before the coupons were due, a creditor of the Delaware Water Company levied an attachment on said moneys as the property of a non-resident defendant.
The legal effect of that special deposit not only created the plaintiff trust company a trustee for the coupon holders, huí it changed the title to said moneys from the water .company to the trust- company, in whose possession it constituted a trust fund for the benefit of coupon holders as cestuis que trust.
The trust company adopts this view of the law, and in its complaint expressed its desire to pay these coupon holders the moneys in question, and asks a court of equity for instruction in the premises, based on special reasons. The complaint contains this allegation :
" Twelfth. That said coupon holders are very numerous and are unknown to plaintiff; many of them, as plaintiff is informed and believes, residents of some of the Hew England states, and their coupons • have been deposited for collection with banks and banking houses beyond the limits of the State of Hew York."
This feature of the case distinguishes it from any of the cases to which we have been referred in either of the briefs.
It is stated in the dissenting opinion that if the coupon holders were too numerous to be joined as defendants certain of them should have been selected as representing the class. If this practice exists, where it is feasible, I am of opinion that it would be quite impossible under the circumstances set forth in the complaint. I see no reason why the plaintiff trust company should be compelled in the action between a resident of the state of Hew York and this Ohio corporation to litigate either the validity of the plaintiff's attachment or of the execution which may follow, if the action results in final judgment. That litigation might extend over a period of several years and meanwhile the coupon holders would be deprived of their moneys. It would seem to be a very harsh rule that the trust company should be compelled to pay out this money on the legal advice of its counsel, as it is entitled to a judgment of the court that will protect it in making such payment.
We have here a case where the trustee comes into court as the representative of his cestuis que trust, residents of different states, and many of them unknown, and brings before the court as a defendant the only person claiming this fund in hostility to the trust.
I am of the opinion that the action is well brought, and that the judgment appealed from should be reversed, and that of Special Term affirmed, with costs.