Court Opinion

ID: 6950199
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:30:39.592306+00
Date Added: 2024-06-11T16:08:03.310126
License: Public Domain

Walker, J. I concur with the Chief Justice in the conclusion at which he has arrived in the foregoing opinion. But at present, I am unprepared to hold that the earnings of the vessel may be reached by a bill in equity. It, however, being unnecessary in the view I take of the case, to determine that question, I shall decline its discussion at this time. Separate Opinion by Breese, J. I go further than the majority of the court in my view of this case. The facts are, that the appellee, being a creditor of the Lexington Eire, Life and Marine Insurance Company, sued out an attachment, which was levied by the sheriff, Church, on a vessel called “ Buena Vista,” as the property of the company. That the sheriff put her in the possession of Norton, Rogers and Hixon, to be used, either for his and their private benefit, or for their benefit alone ; that Norton & Co., during all the seasons since the vessel came into their possession, used her for the carriage of merchandise, lumber, and other cargo or freight, for hire, and that in such business she was worth, had earned, or ought to have earned, over and above expenses of navigating her, two thousand five hundred dollars in each of the years they had such possession, that is, during the seasons of 1852-4 and 5, and 1856, and up to the time of filing the bill, and were still using her. That in those years she had earned, or should have earned, thirteen thousand dollars, which ought to be applied to the payment of complainant’s (appellee’s) judgment. That complainant has no means of ascertaining the facts, without a discovery from Church, Norton & Co., and each of them ; that they neglect and refuse to account for the earnings, or to bring them into court, or to produce the vessel to answer the judgment; appellee claiming that the earnings and property are subject to the payment of the judgment and costs. That Norton & Co. claim to have sold the vessel, but to whom, or for how much, he is ignorant. These are the principal allegations in the charging part of the bill, and they are followed by the prayer, that the defendants may, each of them, answer under oath, whether the Buena Vista, her anchors, chains, rigging and sails, were not attached by said Church, as sheriff, upon the writ of attachment in favor of complainant, and taken into his possession; and whether he did not let or put the same, and when, into the hands or possession of said Norton & Co., and whether she has not been run by them, or by their assent or direction ; and whether they have sold her, and to whom, and on what terms and conditions, and for how much, and in what trade and for what freight she has been run, and what amount of freight she has earned since said letting. And with the prayer for relief, “ and that your orators may have such other and further, or different relief in the premises, as to equity and good conscience may seem meet.” It will be observed, no relief of any kind is prayed by the bill to which the prayer “ for other and further or different relief” could apply, and it was therefore demurrable for want of form, had the point been made. There is no specific prayer that the proceeds of this vessel be applied to the payment of this judgment, yet that is manifestly the scope and purpose of the bill, and we can carry out that purpose if the prayer of the bill does not forbid; that it does not, is evident. The court could decree according to the case made by the bill and proofs, they corresponding. I do not understand these allegations in the bill as the appellants seem to understand them. The appellee does not claim the legal title to the vessel attached, but rather, as the general ownership was in the defendant in attachment, he had an equitable interest, by means of his levy, to the extent of his judgment, and the sheriff had a special property in the vessel, subject to the rights of all contending parties, and if the vessel was not produced to satisfy his judgment, but was let out or hired to others by the sheriff, the appellee was entitled to an account for her net earnings, and to have his judgment paid out of them, or if sold, out of the proceeds of the sale. This seems to me to present a plain case for the interposition of a court of equity, one of whose familiar subjects of jurisdiction and cognizance is the execution of trusts, and although a court of law might, in a circuitous and expensive mode, effect a remedy by garnishment, or by action on the sheriff’s bond, yet it would not be so searching and effectual as chancery could apply. It cannot be denied that the appellee acquired a lien on the vessel by his writ of attachment; that when the sheriff took it into his possession, he became a trustee, as well for the appellee as for others who might have an interest in her. The sheriff was bound to account for the property, and if he put it out of his power to produce it to be sold under the execution, and, in violation of the laws and his duty, placed it in the hands of other parties, who have made earnings by the use of her, and had finally sold her, and cannot now produce her to satisfy the execution, I think a case has arisen to call into exercise the powers of a court of chancery, which by a searching examination of the consciences of the parties implicated in the transaction, can effect a full discovery of all the facts necessary to be known. The appellants admit that they are the receiptors of the sheriff —his servants — responsible to him only, and between whom and the appellee there is no privity, either of contract or estate. The sheriff being the trustee for all concerned in the goods attached, if they passed into the hands of his servants for safe keeping or otherwise, shall it be said a court of chancery has no power to compel them to account to the parties interested ? It requires neither privity of contract or of estate for such purpose. The power of the court attaches on the trust property, and it, or its avails, can be pursued into the hands of any and all persons who may have possessed' themselves of it. When the vessel was hired or let to Norton & Co. it was property in trust, and any party interested in it ought to be allowed to compel a discovery as to the disposition of it. The cases cited by the appellants’ counsel, and their argument to the effect that there is no privity of contract between them and the appellee, shows that a suit at law could not be maintained against them by the appellee. The act of the sheriff in thus disposing of this vessel was a wrong act, and these appellants, participating in it, are in the condition of all other persons who enter into an unlawful transaction with one who is intrusted by law with a fund for the benefit of others. All such parties may properly be joined as defendants in a bill in chancery to discover the proceeds of the trust, and to compel an account. All persons implicated in a breach of trust, fraud, or other illegal act, may be made parties, although they may have no interest in the subject. I do not regard this as a creditor’s bill, either in form or substance, and therefore the objection that no mutuality of dealing is shown, can have no influence. It is a bill to get at the proceeds of property on which the appellee had an equitable lien, while in the hands of the sheriff, and which the sheriff, by his own wrongful act, put into the possession of his co-defendants, who made large profits by the use of it, and then sold it for a large sum of money. See Story’s Equity Jurisprudence, 695, where the principle is thus stated on which this bill can be sustained : “ When a trustee, or other person standing in a fiduciary relation, makes a profit out of any transactions within the scope of his agency, or authority, that profit will belong to his cestui que trust, for it is a constructive fraud upon the latter to employ that property contrary to the trust, and to retain the profit of such misapplication, and by operation of equity, the profit is immediately converted into a constructive trust in favor of the party entitled to the benefit; nor is the doctrine confined to trustees strictly so called. It extends to all other persons standing in a fiduciary relation to the party, whatever that relation may be.” But upon the ground of fraud as well as trust, the jurisdiction of chancery in this case, it seems to me, cannot be questioned. In regard to frauds, actual or constructive, courts of equity have adopted broad and comprehensive principles in exercising their remedial justice. And especially where there is any fraud touching property, they will interfere and administer sometimes severe justice in favor of innocent persons who are sufferers by it, without any fault on their part. For this purpose they will convert an offending party into a trustee, and making the property itself subservient to the proper purposes of recompense, by way of equitable trust or lien, and a fraudulent purchaser will be held a mere trustee for the honest but deluded and cheated vender. Ib. 698.' I do not well see how these parties could be reached, except by a proceeding in chancery, where this vessel, its earnings and avails can be subjected to the appellee’s equity. The appellee has no legal title to the vessel, nor is there any privity of contract or of estate between him and the appellants, which he can assert in a court of law, and his remedy must of necessity be in equity. These views sustain the ruling of the court in allowing the exceptions to appellants’ answer. On their being allowed, and the answer adjudged insufficient, the appellants were allowed time within which to file a further answer, which they did not choose to do, and on their failure the bill was taken for confessed, and the matters referred to a master, who, on proof being heard, reported to the court, on which the decree passed. This was all regular, and in strict conformity with the statute. The amount found is sustained by the proofs. The refusal of the court to set aside this default; was a matter of discretion in the Superior Court, but if it was not, it is one of the essential requisites, where a default of this character is sought to be set aside, that the motion shall not only be founded on an affidavit, but a full and" perfect answer shall accompany it. I have looked into this answer, and find it obnoxious to some of the exceptions taken and allowed to the original answer. It does not show any account of their dealings with the vessel from the time she came into their hands, nor of the sale to Boyce & Fisk, or of the five thousand five hundred dollars they paid for her; nor do they show what her earnings were after Boyce & Fisk sold her. On a rule for further answer, a party files a defective or insufficient answer at his peril. The decree of the court below is affirmed. Decree affirmed.