Case Name: Robertson, et als. vs. Sublett, et al.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1845-12
Citations: 6 Hum. 313
Docket Number: 
Parties: Robertson, et als. vs. Sublett, et al.
Judges: 
Reporter: Tennessee Reports
Volume: 25
Pages: 313–316

Head Matter:
Robertson, et als. vs. Sublett, et al.
1. A court of chancery will compel a trustee to distribute funds in accordance with the trust deed; and if he has failed to do so, he will be rendered personally responsible.
2. Creditors are entitled to the benefits of a deed made for them without their knowledge, if accepted before a revocation by the debtor. It is too late to revoke after bill filed by the creditors praying a distribution of the fund in accordance with trust deed.
This bill was filed by A. B. Robertson & Yeatman, partners, and others, .creditors of King, against Sublett and McElroy, seeking a distribution of certain funds in accordance with the terms of a trust deed, in which , they alleged there were beneficiaries.
The bill was filed in the chancery court at Murfreesboro’, and was heard at the July term, 1845, by chancellor Cahal, on bill, answer, replication and proof. A decree was entered for complainants, directing an account.
The defendants appealed.
Ready, for complainants.
E. A. Keeble, for defendants.
The complainants are not the cestms que trust under the deed from King to McElroy; the deed was made for the protection and indemnity of Sublett and McElroy, at their request, and without the assent, knowledge, or procurement of the complainants; Sublett and McElroy were, therefore, the cestuis que trust under the deed. — Field vs. Arrowsmith, et als., 3 Hump. 442.
The creditors complainants were not contracting parties when the deed of trust was made, nor did any consideration move from them to the bargainor. If, therefore, the deed had been made to the trustee to secure them, under such circumstances, without the intervention of Sublett, it would -have been revocable by the bargainor at any time, at least, before their assent and affirmation. — See Lewin on Trusts and Trustees, page 107.
The principles established by the above cases were recognized by Story on Equity Jurisprudence, 2nd vol. page 439, sec. 1196,. where he refers to the cases above cited, and to Page vs. Brown, where the same principle was adhered to.— 4 Russell, page 6.
The doctrine laid down in Acton vs. Woodgate was recognized by our Supreme Court in Galt vs. Dibrell, 10 Yerg. 158, with the reservation that the creditors could prevent the revocation by an affirmation previous to the revocation.
All the above authorities decide that creditors not privy to the execution of the deed of trust, are not, but that the debtor himself is, the cestui que trust, under his own deed, with a power of revocation.
But, in this case, defendant, Sublett, is the cestui que trust, for the reason that his liability for the bargainor; as accommodation endorser and surety, is a sufficient consideration'to support the deed; and he, therefore, had the right to direct the application, hy the trustee, of the funds to the same extent that the bargainor could, after making a voluntary deed, and before the creditors had been informed of, and had affirmed and assented to it.
If the trust fund had been in the hands of the trustee at the filing of complainant’s bill, it is probable that relief might be granted, by acting upon the fund itself; but, being out of the hands of the trustee, having been applied to save and secure the security, according to the purport of the deed and the intention of the parties, the subsequent bad faith of Sublett could not render the trustee liable.
The trustee would not be liable, if the funds were in his hands, until judgments were obtained and executions returned nulla bona. — Nashv. Bk. vs. Grundy & Hays, Meigs 256.

Opinion:
Gueen, J.
delivered the opinion of the court.
It appears from the records, that E. A. King, being indebted to various persons, the complainants in this suit, for the payment of which debts the defendant, Sublett, was his surety, and being also indebted to the defendant, McElroy, made a conveyance of a negro girl and various articles of merchandize, to McElroy, in trust, reciting all said debts; and that he might make certain and secure the said Sublett and McElroy, it was stipulated that the said McElroy, as trustee as aforesaid, should take into possession all the hats, boots, shoes, caps, slippers, desks, chairs, skins, gaiters, tables, and all the books, notes, accounts and receipts of the said hat, boot and shoe store, and dispose of the same, as trustee, as he should think most conducive both to the interest of said King and his said security.
It was also stipulated that the said King should remain in possession of all the other property conveyed, until it should become necessary for the security of the said Sublett and the said McElroy, that the, same should be sold; and the said trustee is empowered, if K. should not pay said debts aforesaid, when they respectively become due, and save harmless the said Sublett and McElroy, to expose all of said last mentioned property to sale for cash, after giving twenty days public notice; the said McElroy, as trustee, if King should not pay any or all of said debts as aforesaid, should, after selling said property, to appropriate the proceeds of the sale — first, to the necessary expenses and costs; secondly, to the satisfaction of all the said debts and liabilities as aforesaid; and, thirdly, to pay the balance, if any, to King.
McElroy accepted the trust, received the property and sold it, paying himself the debt due him, and the balance of the fund was paid into the hands of Sublett, the security; none of the debts due from King have been paid, and his creditors file this bill, insisting on the provision made for them, and claiming a distribution of the fund.
The defendant, McElroy, insists that the deed of trust was made for the indemnity of Sublett, who was King's security for the payment of the debts to the complainants, and not for the benefit of the complainants; and that the payment of the fund into Sublett's hands, was strictly in discharge of the obligations of the trust.
It is certainly true, that King's primary object was to provide an indemnity for his surety, Sublett; but that indemnity, according to the deed, was to consist in an application of the fund to the payment of the debts for which Sublett was bound. King did not intend to indemnify his surety, by placing the fund in his hands and leaving his own debts unpaid; that would have been a silly arrangement, unless the object had been to defraud his creditors. But the deed itself plainly declares that the trustee is to appropriate the proceeds of the property to the payment of all the debts and liabilities aforesaid. That was the method by which King chose to indemnify his surety, and the trustee was bound to apply the fund in that manner.
But, it is said this deed was made without consultation with the creditors, and without their knowledge, and that, therefore they had no interest in the matter, as King might have revoked it at any time.
This court held, in Galt vs. Dibrell, 10 Yerg. R. 158, that creditors were entitled to the benefit of a deed made without their knowledge, if they affirmed it before a revocation was made by the debtor.
In this case, King has not revoked the provision made in this deed for the benefit of his creditors; and it is now too late for him to do so. The creditors, by this bill, have adopted and affirmed the provisions of the deed, and it becomes obligatory for their benefit.
Certainly the trustee had no right to take upon himself to apply the fund differently from the manner designated in the deed. Having done so, he is personally responsible to those who are entitled to the fund.
Affirm the decree.