Court Opinion

ID: 6504568
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:16:54.065003+00
Date Added: 2024-06-11T15:54:42.024899
License: Public Domain

CHILTON, J.
This case has been twice argued, and we-proceed, with all possible brevity and simplicity, to decide the-questions raised by the eross assignments of error. When tho cause was in this court at a previous term, (see 10 Ala. R. 702} it was held by our predecessors, that as to- the property bequeathed by the will of Tod Robinson to William Robinson, for the use and benefit of Eli T. Robinson and his family, and from the employment of which a revenue was to be derived, the interest of Eli was capable of separation by an account ascertaining his share in the nett product, and that such share when so ascertained, was liable to be subjected to the payment of his debts.
The case ivas remanded to- the Chancery Court for a defect of parties, and after its return to that court, the wife and children of Eli Robinson, as- also Edward F. Comegys,. the assignee in bankruptcy, were added as parties defendants, by an- amend - ment to the original bill.
1. The counsel for the defendants insist that the former decision of this court should not be considered as conclusive upon the rights of these new defendants who were not then before the court; and they strenuously contend that the court in that opinion mistook tho law. Are we at liberty to disregard the former decision, were wo disposed to do so, or is it obligatory upon us as settling the law of this case! Ordinarily courts very properly refuse to determine questions affecting the merits of a cause, in. the absence of any person who is a necessary party,, and whose interest may be prejudiced by such decision, for the obvious reason that the rights of no one should be judicially determined, without affording him an opportunity of protecting them. Without, however, now deciding what would be the correct rule when, the decision affects tho rights of parties wholly unrepresented upon the former trial, it is quite sufficient in this case to observe, that Comegys has not been injuriously affected by the previous decision, since, if he has any interest in this fund, that interest consists in having: it declared subject to Eli’s debts, and this is the gist of the opinion sought to be avoided. And as to the wife and children of Eli, they wmre represented, or rather their interest was protected by the trustee, at whose instance the question ©f the liability of Eli’s interest was raised,, and ably argued before and. pressed upon tho court,, as the report of the case will shown We see nothing in this- case which would, justify us- in *412departing from the well established .jjjile, that .when a caséis .brought the second .time-before this ¿court, we .will not question ..the correctness of.the law undqr which it was first decided.—Meredith v. Nash, 4 S. & P. 62; Gee v. Williamson, 1 Por. 321; Goodwin v. McGehee, 15 Ala. R. 239.
2. But it is argued that the Amendment mates a new case, and that consequently it should have been disallowed. We do .not think so. -The object of the original bill ,was to subject the equitable estáte of Eli in the hands of William, to the satisfaction of the.complainants’ judgment, which remained unsatisfied after exhausting their legal remedy. The defendants seek to avail themsebvés .of -Eli’s bankruptcy, as a defence to the bill. To meet this defence, it became indispensable for the complainants to put jn issue such facts, as would either avoid the discharge entirely, or show that it did not operate upon the property sought to be condemned, and this office the amendment to *the bill in the case before us appropriately performs^ — See the opinion in this case, 10 Ala. 702.
3. Having disposed of these preliminary points respecting the former decision/and the case authorized to be made by it, we proceed to tho’.consideration of the alleged error assigned by "Rugely and Harrisqn,; namely, that the chancellor .should have condemned three slaves, Andrew, Parmelia .and George, to the satisfaction of their judgment, and should hate decreed them tq be sold, and the proceeds appropriated accordingly.
•We have examined this voluminous record with much care tq arrive at a correct knowledge of the situation of this property, and we think it very clear, that ho trust was created by the verbal request made by Tod Robipson of William,, tq give to Eli .the ware-house and ten acres of ground at Lochranza. It was a request which William had an election to comply with, or not, at his pleasure, and the court of equity could not have compelled him to comply w-i,th it. William, however, refused to comply with his father’s request, but allowed Eli to rent the property, and to receive the rents for three or four years. It appears that theproperty was rented to one Tully, who executed his .note for the same payable to William, together with a mortgage on two of these slaves to secure the payment .of the same. The slaves were sold under the mortgage, and purchased in William’s name by one Conly, on the 6th day of March, 1843, ’¡Nilliarq *413Refusing to allow any thing to be done in relation to this matter except in his own.name. He then put them'in possession of Eli, and they were worked in the crop with the other' hands. Assuming that the receipt of the rent by Eli,'mentioned in the answers of defendants, was in these slaves, the question arises, be- '' ihg a gift inter vivos, when ‘did it become complete so as to vest the beneficial property in'the doneeT To answer this question,1 we have but t6 suppose that ".William,"after, fie had purchased these slaves, hacTrefused to deliver them to Eh? could the latter have maintained’any action for their recovery V It is very cer-' tainhé could not.'' It is essential to a gift inter vivos, that'there be a delivery to the donee,’and that the property in'the thing" given immediately pass to him, and that it be irrevocable by the donor. An exception to this rule obtains when the gift is by deed, duly consuminated.—Banks v. Marksberry, 5 Lit. R. 278; Duncan’s Adm’r v. Duncans, ibid, 12; Hunley v. Himley, 15 Ala. 104, and cases cited. In such case the execution 'and delivery of the deed passes the property and réndérs the gift irrevocable. — lb. This gift, being by' parol, was incomplete before; the delivery of the property; and where it is incomplete, equity will not interfere tó 'complete it, .but will leavej the1 parties where the law finds them! — 2 "Story’s Eq. ‘J'ings. "§'706,;a, and cases there cited. Conceding,.'then, ‘that the délivery of these slaves by William to Eli perfected the gift, "we are of opinion that anterior to that period William' reserved' a' control over the rent and the notes given therefor, inconsistent' with the idea of absolute property in Eli.' It follows, therefore, ’aá these slaves were delivered to Eli after he was declared a bankrupt by the decree, of the District Court, ‘they ate not subject to the complainants’ demand, unless they can set aside his discharge for fraud or wil- ’ ful concealment of his effects, 'which should have been-rendered in' his schedule which accompanied his petition,.'
4. Let us then address ourselves to this inquiry, 'as the next' in order.- Conceding that Eli’s interest‘in the property be-" queathed by the will of his father' to William, intrust for the benefit of himself and family,.was such as should have been sur- ’ rendered by him on his petition, "and that he failed to embrace it in his schedule, it doe's ndt ^necessarily follow that the effect of such failure is to vacate in toto the certificate of discharge. It já hardlyto.be expected in any case, that an applicant for the *414benefit of the Bankrupt Act should be able to set forth every article of property and every interest which he may have. Some he omit through mistake; others he may, consistently with the utmost good faith, conclude do not pass to the assignee under the decree in bankruptcy, and therefore need not be mentioned by him. The interest above alluded to, we think, is of such a character as to forbid the inference of fraud as a legal conclusion from the bankrupt’s omission to set it forth in his schedule of effects. Its liability to the administration in bankruptcy was a • question of much difficulty — one upon which learned jurists have differed, and upon which this court was divided, when called upon after solemn argument judicially to determine it. — 10 Ala. *102. That the bankrupt, unskilled as rre presume he is in intricate legal questions, should have supposed it not subject, and have acted upon such supposition, certainly is no evidence of the want of purity of intention, which should overthrow his discharge and stamp his conduct as fraudulent.
To set aside the discharge, there must be fraud or wilful concealment of his property or rights of property on the part of the bankrupt. This is neither averred in the bill nor shown anywhere in the record before us. True, the amendment to the bill charges that Eli’s failure to render it in his schedule amounted to a fraud in law which should vacate the discharge. But this is but the assertion of an erroneous legal proposition by the pleader, unauthorized by the fact upon which he predicates it.—See Lond v. Pierce, 12 Shep. 233; Robison v. Wadsworth, 8 Met. 70; Burnside v. Brigham, ib. 75. It results from this view, that the Chancellor did not err in refusing to condemn these slaves, and that they are not liable, having been acquired after the discharge in bankruptcy, to the complainants’ demand.
5. Let us next proceed to examine the errors assigned by the .defendants below. ■ Their main objection is, that immediately upon the .decree in bankruptcy, the interest which Eli had in this property, (if he had such interest as was subject to his •debts) passed to the assignee, and that the creditors, who have no lieñ~which can override the decree in bankruptcy, cannot resort ,to a court of equity without alleging in the bill that the as-sigriee.refuses to sue for the property, or that he colludes with 'the other defendants, or some of them, with respect to the interest sought to bo condemned.
*415It is readily conceded, as a general rule, that -after a person has become bankrupt and assignees are appointed, neither the bankrupt nor any of .the creditors can ordinarily maintain any suit •against a debtor to his estate, or to reduce any of his property into ..possession; for the right belongs to the assignees, and to give the •creditor an equitable right of action, he must aver in his bill some collusion between the assignee and the other party, or that ‘the assignee refuses -to bring suit for the benefit of the banlc-•rupt and of his estate. — Story’s Eq. PI. § 516. These certainly constitute the ordinary grounds upon which the aid of the court of equity is invoked; but it by no means follows that they •are the only facts which give jurisdiction. Cases may and do ;<arise, the .peculiar circumstances of wThich call fully as loudly for equitable interposition, in order to .prevent a failure of justice. We think the case before us is one of them, -asa brief .sketch of it from the record may suffice to show.
The complainants having obtaineda judgment at law in'March, 1886, and a return of u nulla bona” by the sheriff of the county •in which the judgment was rendered, on the 18th September, 1844, filed their bill, alleging that they had exhausted their Ie-..gal remedy, and that the defendant had property bequeathed in ■trust for his benefit, and praying that his interest might be subjected to the satisfaction of their demand. In reply to this demand, the judgment debtor denies that the interest sought to be condemned is subject, and insists also as a defence, that on the 9th September, 1842,'he filed his petition in bankruptcy and obtained his certificate of discharge -on the 25th of May, 1848. A .protracted, and doubtless very expensive litigation ensued. The chancellor dismissed the bill, but this court reversed his decree and remanded the cause. In this proceeding it is ascertained that the assignee in bankruptcy is a necessary party.. He was brought in by an amendment filed-SOth October, 1846 ter a delay of some nine -months, the assignee answers and denies the right of the State court to entertain ju: of the cause. He insists upon his right to the propert; the bill seeks to condemn, and says that he has never ab it, -but claims -it for the benefit of the creditors of the estate, appears from his answer that Eli T. Robinson was decl; bankrupt on the 1th day of December, 1842. It thus that near five years intervened after the decree in bankruptcy, *416and about three years after the-original? bill was exhibited, be- - fore any claim was set up by the assignee, whereas, the bankrupt statute required that “ all the proceedings in bankruptcy ' in each case, shall, if practicable, be finally adjusted, settled 1 and brought to a close by the court, within two years after the • decree declaring the bankruptcyand that “no suit at law or in equity shall in any case be maintainable by or against such as- - signee, .or by or against any person claiming an adverse inter- - est, touching.'the property or rights of property of the bank- - rupt, in any court whatsoever, .unless the same shall be brought • within two years after the declaration and decreet of bankrupts - cy, or after the cause of suit shall have first accrued.” ’ Notwithstanding this provision for the speedy settlement of bank - •- rupts’ estates, .and although this litigation was in progress, and ' the bankrupt had control and possession of this property from 1843, deriving his interest from the will of his father, proved5 and admitted upon the public records of the county in 1838, we say, notwithstanding all this, no claim is set up on the part of ? the assignee to Eli’s interest, nor any'effort made to investigate the character of his title. No proceedings whatever were insti • tuted-inthe bankrupt court, or elsewhere, by him, -to subject this interest to the administration in bankruptcy. And now, that more than six years have elapsed since the original bill was filed, while the record exhibits the assignee as contesting the complainant’s right to subject this property, it fails to showthat he has taken, .or intends to take, any steps to subject it himself. - lie says he claims this property, and ought to be-allowed to assert such claim for the benefit of the bankrupt’s -creditors; but he does not show that any creditors proved their demands in the bankrupt -court. He claims it, but not until after the complainants • have, by a-- protracted suit, ferreted it out and obtained the opinion of this court subjecting it. He connects his claim with no - proposal to become the receiver of it for distribution by tbe appointment of the court,, nor does he tender any amends for the expense which the complainants have incurred- in condemning it. - Under such circumstances we feel fully justified, and indeed required, -by our view- of tbe law, to regard his claim as clamor et' 2)i'ceterea>.nihil..
We will not say that - under all the circumstances attending; this interest, the.assigpee in bankruptcy was bound to make any.--' *417effort to subject tbe property, oFseparatethe interest of Eli. It ’ Mas been held,-and We think correctly, that although all the prop- ' erty and rights of property of the bankrhpt are, by the decree,' * vbsted in the assignee, still he is not bound in all cases to take ' pbssession of'every part.-^6 Law’Rep.-313. There may be' rights of property of such doubtful character, and hedged about With so much of difficulty and embarrassment, as to require-' ntore expense to arrive at!-them thaii they would profit the estate ' When obtained.- In such case the a'Ssigifee should be allowed to ' exercise a ‘ sound discretion at his peril,.-and if he acts in good • faith, and uses due caution, a. couift-'bf equity would always protect him.
In Copeland v. Stephens, (1 B. & A. 573,) cited in the above case, it was held that under the English bankrupt la:W, -the as-signeo was not bound with regard to leasehold estates to take the lease and charge the estate with the payment of the' rent, because the rent may be more than the vahje of the lease, and thus a' burthen rather than a benefit would he derived to 'the estate. So in regard to this case, it may be that the interest of the creditors has been promoted by the failure of the assignee to take any steps to recover the interest of Eli. Having this election whether to proceed or not for its recovery, -he should have exercised it -within a reasonable time; at least, we think, within two years from the time of the decree, within - which period, the act contemplates the whole business shall be" brought tó a close. Failing to proceed, -the creditor had the right to regard his claim as abandoned, and to proceed, after the assignee had neglected to do so for an unreasonable length of time, td'-subject the interest, disregarding the assignee’s claim. - To turn the complainants out of court, -in order to give the assignee further time to elect, after what has transpired, -would, in: our opinion, be highly inequitable, and is required by no rule of daw.
6. -The claim of-the assignee‘aside, it is quite\clear that the defendants cannot'avail themseltés of the*-- discharge of Eli, to protect him in the enjoyment of-‘property which he never surrendered to the assignee in bankruptcy.'- To hold that the as-signee should hold as against a creditor who never proved his demand in the bankrupt court, all the property which the bank-nipt failed to render - in his schedule, -either throiigh fraud or mistake, would -be to tender, a premium for'fraud or- negligence,' *418and would contravene-the obvious spirit and meaning of the?act. ■But as the record presents this case, neither this property-nor these complainants have had any connection with the administration of the bankrupt’s estate. The interest, as we have said, was never surrendered or claimed. The complainants did not prove their demand in -that court, nor are we advised that they were ever, in any way, notified of -the proceedings there had. Assuming, then, what we have endeavored to show-, that the-as-signee has no claim which he can interpose to defeat the complainants’ right to a condemnation of the interest of Eli, this interest remains subject to be decreed in satisfaction of their demand as though no decree in bankruptcy had been obtained.
7. Neither is there any objection to the State court entertaining jurisdiction. The bankrupt court in a proper-case, and on a timely application by the assignee, in the exercise of the equity powers which were considered as conferred by the-act, in order to render its provisions effectual, might perhaps have controlled the parties so as to have drawn the litigation into that court; but nothing of this kind was attempted oris proposed to be- attempted. So long as the parties are left free to.proceed in the State Court, that court will administer justice between them, irrespective of what might have been done in .the Federal Courts, applying however the rules of inter.petration- of .the bankrupt act which obtain in that court, when they are applicable.—Russell v. Cheatham, 8 Sm. & Mar. 703, and cases cited.
8. It is objected that the complainants have not exhausted their legal (remedy, the return upon the execution by -the sheriff being in .Latin,M mdla bona.”
■Without instituting any inquiry as to the sufficiency df this return, it is a sufficient answer to say .that the bill charges that an-.cxecution issued and was returned “no property ..found,” and the answers of the only parties who are interested in the con- < demnation of the property admit the return as charged, so .that no.issue is.made by the pleadings, and no question was raised either by .Eli or William Robinson, .involving an inquiry as .to whether the complainants had exhausted their legal remedy.
■We think it is quite sufficient that the .parties against whom the decree is rendered, and the ¡only parties .to be. affected by it, distinctly admit the due .issue and return of the fi.fa.
Q. The objection .that ithe execution was.not .sent to the county *419■t>f tbe defendant’s residence, cannot prevail, because it is not shown that the defendant had property in that county on which the writ could have been levied. If the defendant desired to ■avail himself of sueh -objection, and to turn the complainants round to pursue their legal remedy in the county of his residence, he must show that he has visible property which can be taken .in satisfaction in that county.—Brown & Dimmock v. Bates, 10 Ala. 440; Cassidy v. Meacham, 8 Paige 311.
10. The objection that the other creditors -of Eli Robinson were not brought before the court, cannot be allowed. It does not appear that there are other judgment creditors, -and ¡as we have shown the fund sought to bo subjected is unaffected by the proceedings in bankruptcy, the rights of the complainants are the same as in ordinary cases of judgment creditors obtaining a prior right of satisfaction by the use of superior diligence in first ■obtaining their judgment, and after exhausting their legal reme<dy being the first to file their bill, by which they acquire a prior lien upon the equitable assets. We think they may well file the •bill for themselves alone.—Hendricks v. Robinson, 2 Johns. C. R. 283; Eaton v. Patterson, 2 Stew. & Por. 9; Lucas v. Atwood, ib. 378.
11. The first three exceptions to the master’s report were .properly overruled by the -chancellor. The -will of Tod Robinson does not provide eo .nomine, for the support of Eli and his family; but the property is bequeathed to William, in trust, &c., for the use and benefit of Eli and hisfamily. The interest ■of Eli being capable of being separated from that of the other ces-luis que trust, in the profits arising from the employment of the property, -as was previously decided, it was not proper to make .-any allowance for the support of the family, that not being the declared object of the trust. This point, however., is substantially decided by the previous decision.—10 Ala. 702.
■12. As to the claim made, for the first time before the master, for the allowance of overseer’s wages to Eli, for his services in superintending the business of the trust estate, we think the views of the chancellor entirely -correct. Such demand is no -where put in issue by the pleadings. Eli, in the account fur-mished by him in his answer, sets up no claim of the land, and it does not appear that there was any understanding or agreement between him and-the trustee, that he should have compen*420sation for his services, 'other than such as acferued from the pCs-' session and control of the propér-ty. He voluntarily assumed tú a'ct, and cannot make, by such voluntary services performed, without request, the trust estate his debtor nolens volens.
13. As to the four negroes, Jake, Abel, 'George and William',' which were purchased'and to b'é |>aidfor out of the trust estate, ‘ vie are of opinion that-the record-shows no reason why their ser-' vices may not be taken'into the estimate, as the other trust pro- ’ pterty. They are to W-regarded.'as property subject to the in- ' cidents which pertain to’ the other trust estate, notwithstanding they may not have been paid for, the trust property being bound.' for their payment.' And if the lien which William Robinson has upon them for the purchase money forbids, by its provisions,' that the product of their labor should be regarded as a part of' the trust estate, this should have been shotfn by the production ' of the mortgage.
14. We think it sufficiently appears from the report of the ' register, that the slaves Parmelia and Andrew wére taken into" the account as trust property, and the products of their labor, ’ so far as Eli’s interest wits concerned, subjected tó the complain-' ants’ demand,’ and this constituted one of the exceptions taken by the defendants below, and is here assigned for error, We have already showh that tliese slaves niiist be regarded as the prop-' erty of Eli, 'acquired since his discharge.' That William re-táined the control over the rents, taking the evidence of Tully’s" indebtedness for it in his oivn name, as also the mortgage, to pre- ’ vent its liability to Eli’s debts, is not máterial. ■ He was not' bound to give it 'to Eli, arid he could well refuse tó' 'perfect the/' gift as long as he pleased, ivith the avowed object nf preventing-'" Eli’s creditors from interfering with it. And so long as it re - ‘ nidined imperfect'for want of delivery, the creditor!? could ac- ‘ quire no right to subject’it.' When the delivery wad made, the" property in the tbiüg given would vest, and hot before, 'although." there was the previously declared intention "té give.' So that we think the argument that this was a seciet par'ol trust, design-' ed to defraud .creditors, is' not sustained sby the record. Haíd.' the request made by the 'testator of his son William created k/ trust in favor of Eli, theri'the argument would ap’ply with much ’ force; but as William had h 'right to do1'as he pléased with his ’ bwn, provided he injured ho' crie, it is ndt'for the creditor to coiri'-'' *421.plain that he would not so complete the gift as fo render the property liable to the debts of the donee. It is;clear we think that he did not complete it.until after Eli’s discharge. Hence the .property is not subject to the complainants’ demand. It follows that the court erred in charging the product of the labor of these .two slaves as trust property for. división. -They should not have been taken into the estimate.
We believe that ,we have now noticed the several errors assigned, and we are unable .to .perceive any error in the record .except that last abqve referred to. For this, the decree must be reversed, and the cause reipanded, that the report of the master may be corrected as to the,slaves Andrew .and Parmelia. In all other particulars, the decree is correct and must be a®rmed? ,JLet Rugely & Harrison pay .the•cost of this.cpp.rt.