Court Opinion

ID: 8297841
Source: CourtListenerOpinion
Date Created: 2022-10-17 11:09:13.704671+00
Date Added: 2024-06-11T16:44:09.620470
License: Public Domain

PETITION TO REHEAR.
Upon petition to rehear,
Ingersoll, Sp. J.,
said r
Complainant, Boyce, has filed a petition to rehear one branch of this complex, consolidated cause, which, with the answers and his replication and rejoinder, has received careful consideration.
1. The ruling specially and most earnestly complained of is that which results in charging Boyce with that portion of the proceeds of sale of the twenty-four-acre lot to Swann, which came to his hands, and requiring him to credit the same on his purchase-money debt. The ground of the complaint is, that: “The opinion of the court in these causes, rendered at the present term, in effect, reverses and *402ignores the opinion and decree of this court in these causes in 1880;” and this is error, as being in violation of the uniform rule, that “after adjournment, this court has no power to review or rehear its own ■decisions in a particular case.”
The case was this:
Boyce had sold a tract of land to Stanton, retaining a lien for unpaid purchase-money. Stanton’s creditors had attached his equitable interest in the whole, ■and in different parts of the tract. Boyce had filed his bill to enforce his vendor’s lien. After consolidation of the cases, a decree of sale had been made, for the satisfaction first, of the vendor’s lien, and then of the claims of the attaching creditors. The sale was for a long time delayed at the urgent request of Stanton, and by consent of the creditors, on Stanton’s representation that he was negotiating privately a sale of the part of the land for a sum sufficient to pay all the debt, and his promise to them that it should be faithfully applied to their payment. After much delay he effected the sale, and paid part of the proceeds as promised; but some he diverted to other purposes. The residue, amounting to several thousand dollars, Boyce, with knowledge of Stanton’s promise aforesaid, and the creditor’s reliance thereon, and the consequent delay of sale, had, on the transfer of Stanton, received from Swann, the purchaser, and applied to his own private gain, instead of crediting it upon his vendor’s lien, or paying it to the other creditors. By the recent opinion the court held that this sale fund was *403a trust fund, for the uses promised by Stanton; that -Stanton was an implied or constructive trustee, bound to apply it as promised; and that Boyce, receiving a portion with knowledge of the facts, was chargeable with it as a trust fund, even though he contracted for it in private speculation; and therefore he must credit the sum received on his vendor’s lien. This is the holding said to be “in direct conflict with the former ruling, reversing it without mentioning it.”
To establish this, citation .is made, not from the former decree, but only of a single sentence, wrested from the midst of a ten-page opinion, and separated from its context and from all the other kindred parts of the opinion. It'is as follows: “We are of opinion that notwithstanding the indebtedness of Stanton, the existence of attachment liens, vendor’s liens, etc., against him, it was legitimate for Boyce to buy the ■contracts' of Swann, upon such terms as the parties might in good faith agree.”
Erom this isolated excerpt is drawn the conclusion that there was a former ruling or adjudication that the attaching creditors could not call Boyce to account for proceeds of the Swann purchase transferred to him by Stanton. But in the decree of 1880, which is the evidence of the conclusion and adjudication of the court in the cause, upon the matters in issue, there is no sentence or expression to this effect, or even looking in this direction. On the contrary, the adjudication is expressly refused .in the following terms: “The court is of opinion that there is in the *404record no sufficient pleadings or averments and issues made by appropriate pleadings to authorize the matters and things in relation to the waiver of the vendor’s-lien, * * * as well as the matters of account ordered by said decree in relation to purchase-money or proceeds of sale of the twenty-four acres of land specified therein as came to the hands of respondent, Boyce, and so much of the’ chancellor’s decree as declares said lien satisfied and orders said account, * * * is for that reason reversed. * * * But from the facts developed in the record, the court is-satisfied that the matters and things embraced in such parts of the chancellor’s decree as arc here reversed, are proper and legitimate matters to be enquired into and adjudicated, * * * under a proper state of pleadings and issues made for that purpose, as indicated by the opinion delivered in this cause; these consolidated causes are therefore remanded” for appropriate pleadings and proceedings “to bring said matters properly before the court for adjudication.”
Instead of adjudging Boyce not liable for these funds, this was an express reservation of the question, until it should be presented for decision on proper pleadings and issues. And this would seem to be conclusive of this matter of former ruling by the court. But recurring to the opinion, and conceding to it, for the nonce, the. same force and effect as to the decree of the court, and considering the single excerpt, relied on by petitioner to show a former ruling adverse to the recent opinion, in connection with other expressions on the same subject, and the *405error of relying on the single sentence of the opinion for the judgment of the court becomes obvious. ■Judge Turney said: “The chancellor decreed that all the attaching creditors, * * * consented to the sale, * * * upon the faith of having, and with the right to have, the purchase-money paid therefor honestly applied, first to the extinguishment of “the vendor’s lien, and next, the extinguishment of the other debts. * * We are not prepared, by the facts of the record, to concur with or dissent from the chancellor. * * * There is enough in the record to indicate the probability that Boyce has in his hands, or under his direction, funds belonging to Stanton, and for which Stanton’s creditors have a right to demand of him an account. * * * Stanton had procured a postponement of the sales upon the ground that he had effected a sale to Swann, and that the proceeds derived from Swann were to be applied to the debts, etc. The creditors agreed to the postponement on condition that they should be so applied. * * * The record does not show what connection, if any, Boyce had with this arrangement, and we therefore intimate no opinion as to its effect upon his rights under the transfer from Stanton to him. The matter may be inquired into under a proper procedure for that purpose in the chancery court.”
From these and other expressions in the opinion, it would seem clear that the opinion and decree concur in correctly expressing the determination of the -court not to rule upon the validity or effect of Boyce’s *406purchase from Stanton of the Swann fund, upon the-record as it then stood, because, in the language of the opinion, there was “no pleading authorizing any action of the chancellor upon questions of usury, speculation and fraud; ” the causes were therefore remanded and the pleadings filed and proof taken, and' the' record on which the cause has now beeti heard and determined.
But if, as petitioner urges, the court should restrict itself in this matter to the single sentence quoted, and decide the question upon it rather than upon the whole opinion, or upon the decree, it is difficult to see how the result would be changed. The utmost claimed for Boyce upon that quotation is that he could buy from Stanton the Swann contracts “upon such terms as the parties might in good faith agree.”' Stanton could not “in good faith” sell to Boyce for his own private advantage, because he had promised, on the consideration of delay, to appropriate these proceeds from the Swann contracts to the payment of the debts sued on in these causes. Boyce, having knowledge of this promise, and of the reliance of the creditors thereon for payment of their debts, and occupying toward them the relation of a first mortgagor to a second incumbrancer, could not, in legal “ good faith ” toward them, engage in a contract by which they should be deprived of these funds, and he gain them for his own profit. Nor was his duty to apply these trust funds coming to his hands to-the purposes of the trust, according to Stanton’s agreement, in any way affected by the consent decree,. *407whereby the creditors released the twenty-four acre tract from their liens, for they therein make this express reservation: “ This release is not to have any reference to the proceeds of the sale of the same, or the rights of any one thereto, or the liability of any one therefor.” Equity and good faith require that Boyce hold the remnant of the Swann fund acquired by him with notice of its character, just as Stanton, his assignor, held it. in trust for the creditors to whom it was promised : 1 Perry on Trusts, sec. 217.
And it is not material to inquire whether the consideration Boyce paid for it were sufficient and valid. In the section above cited, Mr. Perry states the doctrine declared and recognized in numerous cases, and without conflict, to be: “ Even if one pay a valuable consideration, with notice of the equitable rights of a third person, he shall hold the property subject to the equitable interests of such person. * * * This rule applies not only to express trusts * * but also to constructive trusts, or those trusts that arise from fraud/5
A majoi’ity of the court are of opinion that this holding does not conflict with the former opinion and decree of the court, and that the equitable doctrines of trust above stated were' properly applied to the transactions of Boyce with the Swann fund, and therefore the recent opinion is adhered to on this point.
Whether under this ruling Boyce is chargeable with the proceeds of twenty-eight or of only- fourteen *408bonds is rather difficult of determination. A majority of the court thick that he should be charged only with the proceeds of fourteen bonds and such interest as he actually received on all the bonds under his assignment Irom Stanton; and that the debts aud incumbrances paid off with the other fourteen bonds, which, though Boyce bad received them from Swann, and taken Plock’s receipt tor them, had never actually come to his hands, should be treated as satisfied with the funds of Stanton. A decree will, therefore, be made accordingly. This will dispose of the questions made with regard to the "Watkins debt and other debts paid out of these fourteen bonds. The It. Inge Smith debt was paid out of the thirty-four ' bonds, and need not, therefore, be noticed further.
Boyce urges that if held liable as trustee, he should have compensation as such for attorney’s fees and expenses out of the fund to the extent of, say $10,000. Courts of equity often . make such allowances, sometimes even when the position of trustee is voluntarily assumed, if the trustee has been diligent and faithful to his trust. But Boyce ignored this trust, denied it, sought to appropriate the funds to his own use, and thus deprive the creditors of them, to whom they had been promised,’and to whom in equity they belonged; the trust has been forced upon him by these suits against his continued resistance even to this time, and as a consequence he seems to stand before ' the ■ court in the attitude off an executor de son tort. He has all the liabilities, but none of the *409privileges of a regular trustee: Williams on Ex’rs, 255. The funds which he is compelled to account for as trust funds he cannot be allowed to apply to his indemnity for attorney’s fees and expenses: Sharp v. Caldwell, 7 Hum., 417-18.
A majority of the court are also of opinion that the report of Referees should be modified as to the matter of costs, so that Boyce should be charged with only one-third of the costs of this court instead of one-half, as recommended by the Referees, and that the attaching creditors should pay the other two-thirds; in other particulars the costs will bo ■disposed of as recommended in the Referees’ report.