Court Opinion

ID: 6313268
Source: CourtListenerOpinion
Date Created: 2022-02-18 20:18:48.644141+00
Date Added: 2024-06-11T08:59:09.109184
License: Public Domain

The opinion of the Court was delivered by
Sergeant, J.
It appears that the accountant, William Wilson, became assignee with another person under a voluntary assignment made by Knox, Boggs & Co. in May 1837, and having accepted the trust, they went on and received large sums of money *174belonging to the estate, and disposed of property, and paid the creditors under the assignment. They filed accounts of receipts and payments of the bulk of the estate in March 1839, and June 1840. By the death of the other assignee Wilson became sole assignee, and continued the execution of the trust in the same manner. In October 1840, he filed a third account, and in February 1841, a fourth. All these accounts were audited, and the moneys distributed among the creditors by decree of the court. In December 1841, Wilson filed a fifth account; and whilst this was before an auditor, in November 1842, he filed a sixth account; and in November 1844, a seventh and final account. All these accounts were between the assignees and the respective preferred or releasing creditors claiming under the assignment. Mr Okie was not present at any of the meetings; nor did any person contest the assignment, or the claims of the creditors under it, till the 27th June 1843, when Mr Okie appeared before the auditor, claiming the whole fund received by the assignee, Wilson, without regard to the claims of creditors, on the ground that the assignment was null and void. It further appears that, in October 1837, John Knox and James Boggs were discharged as insolvents by the Court of Common Pleas of Philadelphia county, having first executed assignments to Philip Kelly and Hosea J. Levis; they, however, never acted and never appeared as claimants on any occasion. In May 1842, they were removed, and Mr Okie was appointed in their stead.
The present case is an appeal from the decree of the court below confirming the report of an auditor appointed by that court to audit, settle and adjust the 5th, 6th and 7th accounts before mentioned. The auditor decided, on the authority of Hennessy v. The Western Bank, (6 Watts & Serg. 300), that the assignment was invalid. He refused to charge the accountant, as was desired by Mr Okie, with all former payments to creditors under the assignment, or retained by himself as a preferred creditor individually or jointly with others ; but awarded to Mr Okie all the funds in the hands of the accountant, consisting of the balance of the last account, $10,277.67 and $5456.22, amounts in former accounts awarded to preferred and releasing creditors, but not paid over by the accountant, and disallowed commissions, $513.27—total $15,584.15—to be paid to Mr Okie, in his character of trustee under the proceedings in insolvency, subject to deductions for charges and expenses.
It thus appears that this case, which was originally merely ar account between an assignee under a voluntary assignment and his cestuis que trust, filed by the assignee, and referred to an auditor to audit, settle and adjust, that is to say, to ascertain the correctness of the debts and credits, and strike a balance, under the trust and as between the assignee and the cestui que trusts solely, was turned into the trial and determination of an issue between *175Mr Okie, the assignee under the insolvent act, asserting the trust to be a nullity, and Mr Wilson, the voluntary assignee. In going into this question it seems to us plain that the auditor exceeded his authority, and undertook to try and determine questions not submitted to him. Plis duty was limited to the auditing and adjusting the accounts between Mr Wilson, the assignee in trust, of the one part, and the claimants under that trust, of the other part. Now, Mr Okie is not one of these. He does not claim under the trust, nor is in any wise interested in it: on the contrary, he comes to overthrow it entirely, and set it aside. He may have a right to do so, but this is not the mode in which he can assert that right. Nor had the court jurisdiction in this proceeding to make a decree affecting his rights, or those of third persons not comprised within the trust, but claiming in opposition to it; nor would even consent give jurisdiction. This is a proceeding between other parties, and for a different purpose. On the one hand, the creditors under the trust have been paid or claim their debts; on the other, the accountant claims credit; and the litigation is between them alone. The accountant might originally have renounced the trust, and thereby got rid of it; but having accepted it, and proceeded in the execution, sold the assets, and received the proceeds, he was bound to pay those assets over according to the trust, or show some legal reason for not doing so. But that was entirely his own concern ; and he has actually paid over the much larger part according to the trust. He is, of course, bound by that payment, and it is too late for him to question its propriety. Nor does he, but asks a credit for them. And why should he not receive such credit in the settlement of his accounts with the creditors 1 That he may be ultimately responsible to others for so doing, is no reason, that I can perceive, why he should not have this credit, nor why he should not have his accounts with his cestui que trusts settled. If Mr Okie, or any other person, has a claim against the accountant for the sums he has received at any time, they must assert it by adversary process, and then the question will fairly arise between the proper parties, and disputed facts can be tried by jury in the usual manner, and it can be legally ascertained how far this assignment was void under the statute 13 Eliz.; and as to what description of creditors; and what steps they were bound to take to avail themselves of their rights; and how far the general creditors under the insolvent law are now precluded by laches, neglect or acquiescence, from coming forward, after lying by without proceeding against the property or the accountant, and suffering him to go on and execute the trust, make titles to property, receive and pay over large sums of money under and in pursuance of the trust without notice, claim, suit, judgment execution, or otherwise. All these are very grave questions, of immense moment to the parties concerned, and not to be thrust into a proceeding between parties litigating mat*176ters amongst themselves with which these questions have no concern, and where the mode of trial and course of proceeding are different; and the object in view by the Legislature in giving the Court of Common Pleas a summary, equitable, special jurisdiction, was simply to settle the accounts between the trustee and the cestui que trusts, and not to try all these questions, foreign to the subject of the accounts, and in derogation of the trust. It was for this reason, no doubt, that, by the Act of 14th April 1836, sec. 19, it is only a co-trustee or co-assignee, or person interested in the trust estate or fund, that can issue a citation. Besides, we should hesitate to say that an assignee under a voluntary assignment, duly recorded, who has entered on the trust and given security to perform its duties, after selling the estate and collecting the assets, is then, without adversary suit or process against him, to come to a dead pause, and refuse to distribute them under the trust, because possibly, at some distant day, it might be made to appear that there was some flaw or defect in the assignment; and that he cannot be permitted to file his accounts for settlement, or be cited to file them, nor distribute them according to the trust. And if he cannot take this ground, it follows that he must proceed in the discharge of the duties he has undertaken, subject to all the requisitions of the law, until he is checked or stopped by some adversary process, and then he must abide the legal results of that process, whatever they may be. But that is a matter in which third persons are concerned, and is between him personally and them; whereas the matter of the accounts between him and his cestui que trusts remains the same, with all the liabilities and duties of the trustee and cestui que trusts under the law, to file and settle them between themselves.
So far, then, as regards the money already paid over by Mr Wilson under the trust, or retained by him for his own debts, he is to receive a credit for it, as it does not appear that there is any appeal or exception, on the part of the accountant or the creditors under the assignment, in regard to it.
So far as respects the money in hand, and not paid over, it will be for the accountant either to pay and ask credit, or to object to payment under the trust, and claim to pay it to others, or hold it as stakeholder, to respond to adverse claims that may exist against it, for his own security; and it will be for an auditor to state the account of it, and decide, in the first instance, what course the accountant is legally bound to pursue; and these will be matters entirely between the accountant and the persons interested in the trust, with which third persons claiming against the trust have nothing to do in the present proceedings.
Decree reversed, and case referred again to an auditor, to adjust and settle the accounts accordingly.