Court Opinion

ID: 7193529
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:59:48.346328+00
Date Added: 2024-06-11T16:16:15.050439
License: Public Domain

On Rehearing.
Fenner, J.
The plaintiff is Annie M. Andrews, now the widow of John B. Upshur, and her son and only child, now of age, is co-plaintiff.
The defendant, Mary, is the childless widow of Wm. J, Briscoe, and her co-defendants are his legal heirs.
The action is based upon the following written instrument:
Static oe Louisiana,
Parisli of Tensas.
Know all men by these presents, that I, James Andrews, of said Parish and State, do nominate, constitute and appoint William J. Briscoe, also, of said Parish and State, my true and lawful attorney for me and in my name, to pay or caused to'be paid, to Annie M. Andrews the sum of $700 annually; said amount to be paid at the counting-house of some commission merchant or at some banking-house in the City of New Orleans, in equal, quarterly instalments of $175 eách; said commission or banking-house, to be named and specified before the day of payment to the said W. J. Briscoe, and the said Annie M. Andrews, subject to the conditions and restrictions, hereinafter enumerated, viz: The payments are to be regularly made as above set forth, according to the discretion of the said William J. Briscoe, of the general good conduct of the said Annie M. Andrews, which conduct must, in all respects, comport with the character and bearing of a discreet, prudent female.
The said William J. Briscoe being here present, accepts this appointment and trust, and binds himself to carry out the piovisions of the same, according to its true intent and meaning, and I do further con*149stitute and appoint the said William J. Briscoe, my attorney in fact, to have and receive the sum of $10,000, to he held by him for the benefit of the said Annie M. Andrews, subject to the conditions hereinafter enumerated, viz:
It is understood that the annual payments of $700, as above secured, shall be considered as interest upon the said amount of $10,000, and First, it is provided that in case the said Anide M. Andrews shall, hereafter, marry and leave issue, this amount of $10,000, shall remain invested as heretofore in the hands of the said William J. Briscoe, and the interest shall continue to be paid as heretofore mentioned; and in case of the death of the said Annie M. Andrews, such children, legal issue of her, shall become possessed of the above amount of $10,000, unconditionally, in full possession, to be paid by said William J. Briscoe. Second. It is provided, that in case of my death occurring before that of the said xVunie, the above amount of $10,000, shall be placed unconditionally in her hands by the said William J. Briscoe, provided only she shall have no legal issue. In case, however, she shall at the time of my death have a child or children, legal issue of her body, then the provision heretofore enumerated, shall be strictly adhered to; and Third. It is provided.that in case at the death of the said Annie M. Andrews without legal issue of her body surviving, then the above sum of $10,000, shall revert to me, my heirs or assigns.
Thus done and signed at St. Joseph in said Parish and State this 25th of January, 1857, in presence of Geo. W. Williams and Edgar D. Farrar, competent witnesses.
JAMES ANDREWS.
G. W. Williams,
E. D. Farrar.
And now to these presents, also comes William J. Briscoe, who accepts this mandate in all its clauses, and binds himself faithfully to carry the same into effect, and the more effectually to secure the faithful performance of the same, he also binds himself as surety for the said James Andrews, that the within mandate and all the stipulations therein contained, shall be well and faithfully executed and that the same shall be complied with in all its clauses. Thus done and signed at St. Joseph on the 26th day of January, 1857, in presence of G. W. Williams and Edgar D. Farrar.
Witness: W. J. BBJSCOE.
G. W. Williams,
E. D. Farrar,
*150And at the same time and place, also came the said Annie M. Andrews, who hereby declares that she accepts the above in all its parts and clauses, ratifying and accepting the appointment of said William J. Briscoe, as her trustee, and binding herself to conform and abide by the above mandate in all its provisions. Thus done and signed at St. Joseph on the 26th day of January, 1857, in the presence of George W. Williams and Edgar D. Farrar.
Witnesses: ANNIE M. ANDREWS.
G. W. Williams,
E. D. Farrar.
The objects of the action are: To recover judgment against the heirs or succession of Briscoe; to annul the title held Mrs. Briscoe to the Mound plantation, and to have said plantation declared to belong to the succession of Briscoe and to be subject to the satisfaction of the claim of plaintiffs. Various defenses are interposed, amongst others a plea of Briscoe’s discharge in bankruptcy.
Since the rendition of our original opinion and decree herein, the Supreme Court of the United States has rendered its decision in the case of Hennequin vs. Clews, reported in 111 U. S. Reports, p. 680, which has altered our conclusions as to the effect of the discharge in bankruptcy.
Since the adoption of the Bankrupt Act of 1867, the State courts and the inferior Federal courts, have been divided upon the question as to the effect and true meaning of the 33rd Section of said act, which declares that “no debt created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in any other fiduciary character, shall be discharged under this act.” .
A similar clause in the earlier Bankrupt Act of 1841, though couched in different verbiage, had been construed to apply only to technical trusts, such as those of public officers, executors, administrators, guardians and trustees, and not to include the implied trusts resulting from the relations of agents, factors, commission merchants, etc. Chapman vs. Forsyth, 2 How., 202.
Some courts have taken the view, that the same limitations were applicable to the terms “ fiduciary character ” as used in the Act of 1867; while others, including this Court, have held that the language of the latter act, being conceived in broader terms, embraced agents, factors, etc., as persons “acting in a fiduciary character,” within the meaning of the law.
*151This vexed question lias now been definitely and authoritatively settled by the Supreme Court of the United States, in the recent decision referred to, which holds, in the sense of Chapman vs. Forsyth, that the terms only apply to technical trusts.
Thus the decisions of this Court in the cases of Benning vs. Bleakley, 27 Ann., 257 and Desobry vs. Tête, 31 Ann., 809, besides others, have been overruled by the Supreme Court of the United States, and, the question being purely federal, we must henceforth adopt the view of the latter tribunal.
We are now satisfied that, acting under onr former jurisprudence, we gave too much weight to the agency declared in the instrument upon which this suit was brought as affecting the question of Briscoe’s fiduciary character, whereas, under the decision just referred to, it is entitled to no weight whatever.
Nor is the term trust, as used in the instrument of greater weight; for the question, after all, is not whether the transaction is called a trust, but whether it is a trust within the meaning of the bankrupt act. Suppose an instrument of this kind to be presented: ‘‘-This witnesseth that A has this day delivered to B $10,000 in cash, upon the trust that he is to pay A interest thereon at the rate oi seven per cent per annum, on the first day of January of each current year, and at the end of five years is to. return to A the said sum of 10,000.” Would anyone contend that such an instrument created a trust within the meaning of the bankrupt act, or was evidence of anything but an ordinary contract of loan Í
Now a close analysis of the instrument here sued on reveals the following essential elements: That Andrews delivered to Briscoe #10,000, for which Briscoe obligated himseli to pay seven per cent interest anT nuallv. This interest was to be paid to Annie M. Andrews, during her life or that of Briscoe, with the discretion, however, of withholding it from her in case of her improper deportment. But the obligation to pay the interest, was, nevertheless, absolute and unconditional, and if he judged- Annie M. Andrews unworthy to receive it, it would have remained as a debt due to the ultimate beneficiary of the capilal. This is apparent from the absence of any indication of a purpose to let Briscoe have the use of money without interest, and from the incongruity of construing otherwise the discretion confided to him of judging of her worthiness to receive it; for, if by deciding against the propriety of her conduct, he could absolve himself from the obligation of paying the interest at all, it would create an antagonism between his duty- and his *152interest, which could find no support in a rational interpretation of the writing. Therefore, we say, he was absolutely and unconditionally bound to pay interest on the money as long as he held it. This, unquestionably, implied the right to use the money and to use it as his own ; for no authority is given to make particular investments of it for account of the beneficiary, and such investments would have been at his own exclusive risk; and, if unfortunate, however prudently made, they would have furnished him no excuse for non-payment of either .principal or interest. It imposed the further obligation of returning the $10,000 (together, as we have shown, with any unpaid interest) to the beneficiary named, or to Briscoe or his heirs or assigns, in certain definite contingencies named and not necessary here to detail. Such is the plain import of the provisions of this so-called “trust.”
In the language of the Supreme Court of the United States: “if the act embrace such a debt, it will be difficult to limit its application. It must include all debts arising from agencies; and indeed, all cases where the law implies an obligation' from the trust imposed in the debtor. Such a construction would have left but few debts on which the law could operate. In almost all the commercial transactions of the country, confidence is reposed in the punctuality and integrity of the debtor, and a violation of these is, in a commercial sense, a disregard of a trust. But this is not the relation spoken of in the act.” Chapman vs. Forsyth, 2 How. 208. Such is precisely the character of the trust reposed in Briscoe—a trust simply in his “punctuality” and “integrity ”—the same trust which lies at the base of every agency and of every loan or other credit. The fact that this trust is expressed in this instrument adds nothing to its nature, force, or effect. Had not' the word “ trust ” been used, it would, nevertheless, have been implied in identical measure and strength.
The Supreme Court has held that a commission merchant who has made away with goods consigned to him by his customer, and failed to account for the proceeds, or a pledgee who has disposed of collaterals and failed to produce or account for them when his debt is 'paid, are not exempted from discharge under the terms of the act. See eases above cited, cmd also Neal vs. Clark, 95 U. S. 704; Wolf vs. Stix, 99 U. S. 1. It would be a mockery of reason to hold such debts subject to discharge, and exclude such an one as that of Briscoe. The commission merchant and pledgee, above alluded to, had committed acts of positive fraud and turpitude, punishable under the criminal statutes of this State. What has Briscoe done ? He merely ventured the money *153confided to him, as he had the right to do, and lost it as he ran the inevitable risk of doing. In failing to pay according to the obligation assumed, in the language of the U. S. Supreme Court, “ lie is not regarded as guilty of a breach of trust, but only of a breach of contract.”
Indeed, considering the language of the acf, which refers only to “debts created while acting in afidudcwy character,’1'1 we incline to adopt the opinion of the Supreme Court of Massachusetts, “that the phrase implies a.fiduciary relation existing previously to, or independent of, the particular transaction froni which the debt arose.” Cronan vs. Cutting, 104 Mass. 246. This would entirely exclude Briscoe’s case, because all his obligations arose out of the very transaction which gave rise to the trust.
But, under every aspect of the case, considering the authoritative construction now placed upon the act, we conclude that Briscoe’s debt was discharged by the bankruptcy.
It is urged, however, that, as the discharge in bankruptcy is not pleaded by the heirs of Briscoe, but only by his widow, whose title to the property sought to be subjected to the debt is herein attacked as a fraudulent simulation, the latter is not entitled to the benefit of such discharge which is personal to the bankrupt. The plaintiffs, in support of this proposition, rely upon the case of Moyer vs. Dewey, 103 U. S. 301. That case is differenced from this by two distinctions which destroy its application, viz: 1. The transfer of the property there attacked took place prior to the bankruptcy, while that here assailed arose subsequently thereto, so far as Mrs. Briscoe is concerned; 2. Judgments had been rendered against the debtor in that case subsequently to the bankruptcy although founded on debts existing prior to his discharge.
Thus the attacking creditors, in that case, were unquestioned creditors at the date of the transfer, and they remained creditors by subsequent judgment at the date of their suit. But here the transfer to Mrs. Briscoe took place after the discharge in bankruptcy at a time when the debts here sued on wore barred and without revival by subsequent judgment. As we have held in the case of Scott vs. Castleman, decided this day, the heirs we estopped from attacking Mrs. Briscoe’s title in their own right. We cannot admit that, by simply omitting to plead the discharge of their ancestor, they can turn loose upon Mrs. Briscoe the creditors of their ancestor, whose debts were barred at the time when she acquired her title. Mrs. Briscoe, deriving her title, as is alleged, from 'Briscoe, is entitled to the full benefit of the position in *154which he stood at the date of transfer and to all the defenses resulting therefrom. She cannot be deprived of the benefit of his discharge in bankruptcy by the failure of his heirs to plead it, but is entitled to plead such discharge in her own defense.
This dispenses us from the necessity of reviewing our former decision on the. merits-of this controversy, and we content ourselves with the remark that all that was there said may be considered as not having been said.
The heirs who are sued as representatives of the succession of Briscoe, having failed to plead the discharge in bankruptcy, the personal judgment against the succession must stand, which, however, we understand to be of no moment, as its execution is restricted to the property of the succession which consists of milla bona. And this, doubtless, is the reason why the plea has been omitted.
It is, therefore, ordered, adjudged, and decreed, that our foimer decree herein be revoked and set aside; and it is now ordered, adjudged, and decreed, that the judgment appealed from be amended so as to condemn the succession of Briscoe to pay to plaintiffs the sum of seven hundred dollars with five per cent interest from January 1, 1872, and the same sum with like interest for each succeeding year, and the further sum of ten thousaud dollars and costs of suit; and that, in all other'respects, including the limitations on said moneyed judgment, the same be now affirmed, plaintiffs and appellants to pay costs of this appeal. -