Court Opinion

ID: 6406987
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:49:43.796046+00
Date Added: 2024-06-11T15:51:14.621276
License: Public Domain

Shaw C. J.
delivered the opinion of the Court. From the very voluminous examination of Colvin, the trustee, and the extensive detail of facts and particulars disclosed in his answer, it is difficult to come to a satisfactory result ; and it would be indeed quite impossible to settle the account of the trustee and state a balance, without a more careful examinution of the facts, and a more exact computation of the interest and other particulars of the account. But this we think is not necessary for the purposes of the present inquiry, the object being only to ascertain whether the trustee is liable for any thing, and not to state the balance and determine the precise sum for which he is liable.
The general facts disclosed in the answer are, that Paine & Ray, the principal defendants, in July 1829, made an assignment of certain machinery and other property to Caleb Colvin, the trustee who answers, and to Caleb Cook, which assignment is referred to and made the basis of the answer *365By the terms of the assignment, the assignees were to be responsible for the sums by them respectively received, and not each for the other ; and as it appears by the answer of Colvin, that he was the sole acting assignee, and has received all the money that has been received as the proceeds of the trust property, it may be considered as if the assignment bad been to him alone, for all'the purposes of this inquiry.
It appears, that the assignment was executed by none but certain preferred creditors particularly named. It further appears, by the explanatory answer of the trustee, to which there is no objection, that after the execution of the assignment, and after the service of the trustee process in this case, which was made in 1829, many of the creditors of Paine and Ray, among whom was the plaintiff, entered into an agreement of composition, accompanied with a letter of license, by which they stipulated to give the debtors a license for five years and two months, on condition to pay the original amount of their debts, without interest or costs, in ten semi-annual instalments of ten per cent each, and on such payment said creditors to receipt the same in full satisfaction and discharge of their claims. But it was further stipulated, that those of said creditors who had obtained any security by attachments, should not be bound to relinquish them, but should be at liberty to continue their actions in court, without prosecution, until default should be made in the semi-annual instalments stipulated to be paid. This letter of license and deed of composition is submitted and made part of the answer. It appears, that the instalments were paid for some time, and to the amount of fifty per cent of the debts, and then the debtors became unable to pay, one of them having died. Pursuant to the stipulation in this agreement, this action was continued in court, from time to time, till 1834 or 1835, when the trustee was called upon to answer, and the further proceedings have been had. The trustee states, that until the failure to pay the instalments, he was not called upon by any person interested, to sell the trust property, or to take any steps to carry the purposes of the assignment into effect.
The trustee has now submitted his answer, upon which several questions arise for the consideration of the Court and have been fully argued.
*366The Court are of opinion, that in stating the account oí unds with which the trustee ought to be charged, the value of the machinery sold to Wilder ought to be included, on several grounds. It does not distinctly appear, that the trustees were authorized to sell on credit; but further, the note given by Wilder, made payable to the bank and discounted there, was prima facie evidence of a payment, and the fact that Colvin, the trustee, became surety upon the note, does not rebut this presumption. Again, a trustee is bound to take as good care, at least, of the trust property as of his own, and, therefore, when the trustee, having demands of his own and those of his trust, at the same time, against Wilder, obtained satisfaction in part, then as between him and the parties interested, in the trust fund, he ought to consider them satisfied pari pajsu, and this would render him liable for about five sixths of the debt. But for the reason first above given, that the note was a payment, we think he must be chargeable with the whole amount, with interest from the time of the sale.
The Court are also of opinion, that there is not enough on the trustee’s answers, to warrant the Court in declaring the assignment fraudulent and void, especially as the possession and interference of the assignors, from which, in great part, such an inference must be drawn, if drawn at all, are accounted for by the letter of license, and the implied permission arising from it, to which the plaintiff assented, that such permission and interference should be allowed, and were intended to oe authorized.
On the next point, we think there are no sufficient facts appearing in the answers of Colvin, to warrant the Court in finding, that the notes claimed by him to be paid out of the trust fund were without consideration or fraudulent, or otherwise void.
The Court are further of opinion, that in stating this account for the purpose of determining whether the trustees art chargeable or not, they are not to be charged with the rent, hire or use of the machinery, or other trust property, because 1. it was no part of the trust to let out or use the property for profit, and they state explicitly, that they received nothing by way of rent or use of it; and 2. they are not liable on the *367ground of delay and negligence in selling the trust property and converting the same into money and paying the debts, because by the letter of license, to which the plaintiff was a party, made soon after the attachment, and with manifest reference to the trustee attachments then pending, it was stipulated by the plaintiff, that he would not proceed in his attachment, for the term of five years, unless default should be made in the payment of the semi-annual instalments, then stipulated to be made, by which, if made agreeably to such stipulation, the debts would be fully paid and the attachments discharged. This was an express agreement on the part of the plaintiff, to allow delay and forbearance in his attachment, and by necessary implication, to allow a reasonable forbearance to the trustees, in settling and closing the trust, and permitting to the assignors the qualified use of the property as a means of continuing their business.
In stating the demands which are to be allowed as a charge on the funds, the trustees are to be permitted to charge interest on their own and the other creditors’ demands, up to the time of the sale of the property and realizing the proceeds, for the reasons mentioned under the last head, viz. that the plaintiff and the other attaching creditors, by the extraordinary course of stipulating to continue their actions in court, and not proceeding upon their attachments, for such a length of time, and contingently, upon payment of certain instalments therein specified, to give up and relinquish them altogether, must be presumed to have intended to allow a much greater latitude of indulgence to the trustees in the management and application of the funds, than would have been allowable, had they proceeded promptly in the due course of law ; and under the circumstances the rule adopted is an equitable one.
The trustee having admitted certain funds in his hands liable to the attachment, is responsible if he do not fully and clearly discharge himself, and in this respect the burden of proof is on him. In pursuance of this principle, the charge of $365-69, the expense of finishing a double speeder, is to be stricken out, unless, upon a more accurate examination of the answer, it turns out that a part of it is to be allowed, as warranted bv the assignment.
*368So the trustee having admitted that $ 100 towards expenses, &c. were paid by the principals, Paine & Ray, that sum is to be deducted from the charge of expenses.
On the same grounds, the sum of $ 34-37, paid to Cook for services, is to be deducted, the trustee leaving it at least uncertain whether he had paid it.
We are also of opinion, that the sums received by the trustee, by way of dividend, from the estate of Paine, towards his own debt and towards the debts chargeable on the trust fund in his bands, are to be deducted, because they obviously diminish the amount thus chargeable on the fund, and leave a larger amount for which he is chargeable upon the trustee attachment.
These charges and deductions show a'balance in the hands of the trustee, for which he is liable in this action, and therefore we are of opinion that the trustee must be charged.
For the reasons already stated, we have not thought it necessary to attempt ascertaining the amount for which the trustee may be chargeable ; and any opinion which we might express upon that subject, in this stage, would be premature.
It will no doubt be necessary that an account be stated upon the principles here expressed, that there should be a more rigid scrutiny of the facts," and a more exact computation of interest. This may be probably done by an auditor, if the parties shall so agree, either in the present stage of the cause ór upon a scire facias.

Trustee charged on his answers.