Court Opinion

ID: 4927842
Source: CourtListenerOpinion
Date Created: 2021-09-24 00:59:18.67029+00
Date Added: 2024-06-11T08:13:32.278731
License: Public Domain

A dissenting opinion was delivered by
Whitman C. J.
By the statutes of this Slate, general equity jurisdiction over trusts has, for a number of years past, been conferred upon this Court. Power so conferred embraces whatever is incidental thereto, and necessary to accomplish the object for which the power may have been conferred. Accordingly it was held in Buck v. Pike, 2 Fairf. 23, that the equity powers of this Court extended, as well to implied as to express trusts. In general the jurisdiction of a court of equity. over trusts is held to be exclusive. In Story on Equity the jurisdiction of courts of equity is divided into two classes; one in which they have with the courts of common law concurrent; and the other, in which they have.exclusive jurisdiction; and trusts are set down as belonging to the latter; and it cannot bo questioned, but that there are numerous cases of trusts, in which courts of law are quite incompetent to administer adequate relief.
The bill of the plaintiffs discloses a case of a pure trust, in which the institution represented by them are the trustees. They were to perform their duties gratuitously; and, of course, were not guarantors further than for their own fidelity. They were destitute of power to make gain for their cestuis que trust, other than what the deposits afforded, aided by faithful management on their part. The institution was one of pure benevolence and charity; originating in the kindest feelings, and fondest expectations; having it in view to aid individuals of small means to turn their surplus earnings to a profitable account. In this case it is admitted by the counsel for the defendant, Makin, that those hopes and expectations have been sadly disappointed, by the loss of at least forty per centum of *372the aggregate amount of the deposits. It is not, nevertheless, suggested, nor is there the least proof tending to show, that the management of the plaintiffs has been otherwise than in accordance with every degree of prudence and foresight, which could reasonably be expected. The melancholy reverse of times, which occurred in 1837 and 8, was not foreseen or apprehended by many of the shrewdest and keenest calculators among our men of business. It was in its effects a visitation, not unlike that of a tempest or a whirlwind, prostrating and demolishing every thing before it.
The plaintiffs, on entering upon their trust, made certain regulations or by-laws. These would seem to indicate, that nothing but gain was to be expected; that the idea of a failure or loss scarcely occured to their minds. These were enacted, nevertheless, in perfect good faith. Among other things it was provided, that a depositor should, upon certain terms, have a right to withdraw his deposit; and upon certain other terms, should have a right to do so with four per cent, interest; and, 'finally, that lie should, if he continued his deposit, be entitled, not only to his four per centum interest, but also to his share of the surplus profits. These, it has been contended, amounted to a promise obligatory upon the plaintiffs. But who are the plaintiffs ? They are but the trustees ; and, as such, the agents of each and every of the depositors. The regulations were made as and for them, and in their behalf. These were, then, in effect, the regulations of the depositors themselves. The funds of no one else were to be affected by them. The individual corporators are not responsible; nor are their funds individually, to be affected. If there be a promise, then, who is the promisor? and who the promisee? The depositors are both. It must be deemed to be a case of implied mutual undertaking between them. The regulations amount to an agreement, that they are to divide the profits between them, if any there may be; and, as it would seem to follow of course, to share in the losses, in case any should occur. To effectuate this the plaintiffs are the trustees, agents and factors of the depositors. The case of Bryant & al. v. Russel & al. 23 *373Pick. 508, shows very clearly in what light the promises of trustees are to be viewed. That was a much stronger case of a promise than the one here. It was an unqualified promise to pay certain classes of debts, of a certain firm, a deposit having been made with the promisors for the purpose. Yet the Court held them responsible only for a pro rata division of the fund; regarding them as mere trustees, and as having made the promise under a mistaken apprehension, that the funds received were sufficient. This case shows further, that, when trustees are so answerable, a court of equity will cause equal and exact justice to be done; and not allow any one creditor to avail himself of more than his equitable proportion of a fund so held.
The marshalling of assets in the hands of trustees, is believed to be no uncommon occurrence in equity jurisprudence. Executors and administrators are viewed as trustees. Estates of deceased persons are held by them in trust; constructively so at least. In England they are always so viewed. Having no statute law there, directing how the estates of deceased debtors shall be distributed, when there happens to be a deficiency of assets, application is made, either by a creditor or the executor or administrator, to the Court of Chancery, which will prevent a scramble among the creditors ; and cause a pro rata distribution to be made, similar to what was effected in the case before cited of Bryant & al. v. Russell & al.
That trustees are under the protection of a court of equity, as well as accountable under its administration, the authorities clearly show. They may, whenever in difficulty, apply to such Court for aid and direction. Dimmock & al. v. Bixby & al. 20 Pick. 368. The plaintiffs are in this predicament. They are trustees, having in their hands funds, belonging to a great number of individuals, in different proportions, according to the amount of the deposits of each. They are sued at law by some of those individuals, who claim to have the whole of their deposits, with interest, returned; and are in danger, from the rules of law, of having an undue proportion of the funds abstracted by those individuals, to the injury of the other de*374positors. This can be neither equitable nor just. They, therefore, apply to this Court for its interposition, to secure the equal rights of all concerned. And it is a case in which, it seems to me, a court of equity could not refuse to interfere. It is equal and exact justice, which we are bound to administer. It is a trite but true maxim, that equality is equity. It would be monstrous to allow the one half of the depositors to exhaust the whole fund, leaving the others without any resource whatever. The right of each depositor to his just proportion of the fund is absolute, and vested. A right in equity, where equity jurisdiction exists, and, especially, where it is exclusive, is as much a vested right as a right at Jaw; and it is not in the power, it is believed, even of a legislative act to take it from one man and vest it in another. In the case of a partnership between two or more individuals, each having a right to so much of the joint stock as might remain after the payment of debts, it would not be competent for the legislature to enact, that one of the partners should be permitted to abstract and retain from the other more than his just'proportion of the stock ; or, if he had got into his possession any greater proportion, that he should be permitted to retain it; and that the other partners should be entitled only to a division of the residue. Nor in the case of a general average of a loss occasioned at sea by jetson, would it be competent for the legislature, after a loss had occurred, to undertake to determine, that either the ship, freight or cargo should be protected in a claim to more than its just and average proportion of the contribution. The case at bar is very similar. A loss has occurred of the joint adventure. It is a loss no more of one of the concern, than of every other. It is necessarily the loss of each, in proportion to his outlay ; and no power can say that it should be otherwise borne. The legislature cannot say, that what is justly due and owing to one man shall be paid to, and become the property of another. The statute of 1842, c. 32, is confirmatory of these principles, and renders them applicable in an especial manner to savings institutions.
*375But it is said, by my associates, in the opinion delivered by them, that a court of equity “ has no power, unless specially conferred by statute, to sequester the funds of a corporation, and deprive it of them, and dispose of them as it may judge to be equitable and just, among those beneficially interested.” This, as a general principle, in the abstract, is not intended to be controverted. But if this corporation is clothed with a mere naked power in trust for others, as seems to be undeniably the case, I do not understand why, upon the application of the trustees in behalf of the institution, a court of equity, for the reasons before given, may not afford its aid in enabling the trustees to do precisely that, which, under existing circumstances, it has become indispensable to have done. The Court in such case do not act in invitum; and we have before seen that trustees are entitled to the aid of a court of equity to enable them suitably to manage trust estates.
Again it is said in the opinion, that the trustees seek for aid “ to enable them to make a disposition of the funds, destructive of the further execution of the trust, not authorized but upon a contingency, which has not happened.” It seems to me that this can hardly be said to be the case. It is true that the contingency referred to has not happened. But a contingency has happened of a much more imperious character. By inevitable accident it has manifestly become impossible for the institution to accomplish the benevolent objects originally in view. This Court having decided, that the institution is liable to a suit at law by each arid every of the depositors, and that each and every of them is entitled to judgment for the full amount of his deposit, a door is thrown open to a general scramble to abstract the funds from the control of the institution. Can it be that trustees, though acting under the form of an act of incorporation, are not, under such circumstances, at liberty to resort to a court of equity for relief? The cases cited in the opinion in reference to this point seem to me to be wholly inapplicable to a case like the present. The corporators here are not the proprietors of any stock, or of any funds. The institution, though factitious, is the merest *376agent and trustee imaginable. It was intended to act exclusively for others, who were to be the sole beneficiaries to be provided for. The corporation is sui generis unlike any, it is believed, that has ever before been the subject of an adjudication. Cases precisely applicable are not therefore to be looked for in the reports.
The opinion seems to contemplate, that the individuals, who have preferred the bill, styling themselves the board of trustees of the institution, are acting for themselves; and that they* are not to be identified with the corporation ; and that the corporation might be considered as an independent party : For it says that the corporation might have appeared upon the notice given, but has not. Its rights therefore must be considered as submitted for decision. It seems to me it would be much more correct to say, that the individuals named apply as representatives of the corporation, and that not having appeared upon notice given, to question the authority of the petitioners to act in their behalf, they must be regarded as virtually the plaintiffs in equity. This is by no means the first instance of an appearance of one or more individuals in behalf of others; and the statute of 1842 manifestly contemplates that savings institutions should so appear in Court. It seems to me therefore that the corporation “ has not been made a party” is incorrect.
The defendant, Makin, in his individual behalf, and as administrator of the estate of Luke Makin deceased, in his answer opposes the granting of the prayer of the plaintiffs’ bill, alleging that he has two suits, one for himself, and the other as administrator, pending in this Court against the plaintiffs ; that in one of them a default has been entered ; and in the other, that a verdict has been returned in his favor ; and sets forth the act above referred to, and relies upon a proviso in the same contained, which purports to exempt from the operation of the enacting part of the act, all suits wherein a default has been entered or a verdict had been returned for the plaintiff; and insists that this Court has no authority to proceed, under this application, but by virtue of that statute; and is therefore concluded by the proviso contained in it.
*377What has already been said is believed to be sufficient to show, that this Court, as a court of equity, had jurisdiction generally over trusts; and that the case stated in the bill, is purely a case of trust; and that such cases are peculiarly under the supervision and regulation of a court of equity; and that such court is vested with ample powers to accomplish, substantially, all that, by virtue of the above statute, was in contemplation of the legislature, with tire exception, however, of what is contained in the proviso. As such court, it clearly had no right to exempt Makin, and his intestate, from the operation of the principle, that equality is equity. Tiie whole of the enacting part of the statute shows most clearly, that the legislature emphatically recognized the principle, that equality is equity; and expressly provides, that the Court shall cause the net funds, in cases like the one here presented, to be “ distributed and paid, according to equity and good conscience, to and among the several depositors in 'proportion to their respective claims.” It moreover provides, upon the sequestration authorized and provided for therein, that the same “ shall operate at law, and in equity as a dissolution and discharge of any and all attachments of any goods, effects, rights and credits of such institution, which shall be, or may have been made, in any suit at law, brought against any such institutions, by any creditor or depositor, or their legal representatives, and shall further operate as a stay and supercodeas of any execution on any judgment, which is or may be recovered in any such suit.” Nothing can be more directly repugnant to such language, than the seeming import of the proviso relied upon.
But it docs sometimes happen that the legislature do not express themselves in conformity to what, from the context, must be taken to be their meaning. The enacting part of the statute is generally considered as more clearly expressing what is intended, than the preamble, or the saving clauses. It is the most natural and satisfactory mode of arriving at the true exposition of a statute, to construe each pari of it iu connexion with every other part, for that best expresses the meaning of the makers ; and such construction, says the 1st Inst. 381, is, *378ex visceribus actus. In Archer v. Bokenham, 11 Mod. 161, Lord Holt says, “ In doubtful cases we may enlarge the construction of acts of Parliament, according to the reason and sense of the lawmaker, expressed in other parts of the act, by considering the frame and design of the whole.” And in the 10 Mod. 115, it is said, “the purview of an act may be qualified or restrained by a saving in the statute.” But in the 1 Kent’s Com. 462, it is laid down that “ a saving clause in a statute, where it is directly repugnant to the purview, or body of the act, and cannot stand without rendering the act inconsistent and destructive of itself is to be rejected.” These authorities do but show, that laws must be interpreted according to what, on the whole, must have been the intention of the law maker; and such intention may well find support when found manifestly in accordance with the rules of equity and justice. Plowden, 465, note.
From the purview and body of the act in question, nothing can be more obvious than, that - the legislature were impressed with a profound sense of the entire justice of an equality of distribution among the depositors, in proportion to the amount deposited by each. Yet the proviso would be directly opposed to such a principle; and destructive of the object of the act, and in violation of its express language in other parts; and, moreover, of the principles of the soundest equity; and indeed in utter disregard of the vested rights of certain of the depositors. To give effect to the proviso taken literally, one or two of the depositors are to be permitted to receive nearly or quite double the amount of their just and equal dividend; and, the additional amount to make it up, is to be taken from the just proportions of the other depositors. The bare statement of such a proposition is enough to show, that it never could have been in accordance with the deliberate will of the legislature.
But it is contended that Makin, for himself, and as administrator, has litigated his claims, and has obtained a verdict in one case, and a default in another, and that thus his legal rights are res judicata; and that it is not competent for the Court to interpose, and interrupt his progress. But no act is *379more common, perhaps, in a court of equity, than that of an interposition, by way of injunction, to stay proceedings at law; even when they have progressed to execution, if the proceeding, according to the course of the common law, is tending to produce an unjust result. The rules of proceeding in common law courts are simple and precise, and not sufficiently flexible to accomplish the ends of justice in every possible case. And hence the origin of courts of equity; whose rules are more flexible ; and adapted to supply the defects incident to proceedings under the rules of the common law. The very act relied upon by the counsel for Makin, is predicated upon the ground, that power exists to prevent injustice by staying proceedings at law. The act itself goes much further. It undertakes, in one part of it, to annul all judgments obtained against an institution in the condition of that of the plaintiffs. Whether such an act is within the scope of legislative power it is unnecessary here to inquire. It is certainly incident to a court of equity to stay proceedings at law, whenever it becomes necessary to do so in order to effectuate purposes within its legitimate jurisdiction. Although the act is silent on the subject of authority to issue injunctions, yet, as it is a power belonging to a court of equity ordinarily, and as the act distinctly recognizes our right, in cases of this kind, to proceed according to the rules of equity, I can have no doubt of our power to issue injunctions as prayed for in the bill.
Jane Gardner, one of the depositors, appears also as a defendant ; and has filed a demurrer to the bill, denying the authority of the Court to take cognizance of the subject matter of the bill; and questioning the constitutionality of the aforesaid act, upon the ground that it is ex post facto, and tending to impair the obligation of a contract, which she contends she had made with the plaintiffs. She had, before its passage, commenced a suit to recover her deposit against the plaintiffs. I can but regard this defendant as having entertained an erroneous view of the subject. Her contract with the plaintiffs was only, that they would be faithful in the management of her funds, deposited with them as her trustees and *380factors. Of the want of such fidelity no complaint is made; and the act does not propose to interfere with any such liability. If she had deposited her money with an individual, as a trustee, to be employed for her benefit, and he had by inevitable misfortune, or notwithstanding the exercise of due care on his part, lost it, she- would be without any right of claim against him.. Her claim against these plaintiffs is merely equitable; and as such must be subject to the rules of equity. Although an action for money had and received will lie in such a case, as held in Makin v. The Institution for Savings, 19 Maine R. 128; in which a plaintiff may be allowed to recover such an amount as in equity and good conscience he is entitled to receive, that being a proceeding in the nature of a bill in equity, yet the appropriate remedy is in a court of equity, which has power to adjust all the cross equities hetween the parties, and ascertain such balance as may reasonably be recoverable.
The proceeding of the plaintiffs in this case is not in strictness an adversary suit against the depositors. It is rather a proceeding in their behalf, seeking for them the best means to secure a restoration to each and every of them, of what, in equity and good conscience, they should receive. In this view the plaintiffs may be regarded as the agents of the depositors, the cestuis que trust in this case, who have virtually, in their behalf, assented to the above named act, which seems to obviate any objection on account of its supposed interference with the rights of the depositors. This assent, on the part of the plaintiffs, will surely authorize the Court to adopt the provisions of the act, and to exercise the powers in equity as therein prescribed. Her demurrer therefore, should be overruled. And as her counsel has intimated, that in case the demurrer should be overruled, she had no further defence to make, the bill as to her may be taken pro confesso.
■ Unless the plaintiffs had culpably mismanaged the funds of 0 the institution, or were likely to do so, it would be unprecedented, it is true, without their consent, to disturb them in the discharge of their appropriate functions; and we should be authorized only to lend them our aid in furthering the- objects *381of the institution. But in this instance, they pray that a receiver may be appointed to receive and disburse the funds of the institution, as in and by said act seems to be directed ; and that a commission may be instituted, as in the same act is contemplated ; and it seems to me that those who have appeared as defendants should be enjoined from proceeding further at law. And on the whole, I cannot entertain a doubt of the suitableness of the course suggested to accomplish the ends proposed. But my associates, for whose discriminating powers I entertain great respect, have taken a different view of the matters in controversy: which led me to hesitate, and carefully to re-examine those' taken by me, without being enabled to discover their fallacy. And a decree must be entered according to their decision.