Court Opinion

ID: 5556351
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:41:51.025835+00
Date Added: 2024-06-11T08:35:20.438751
License: Public Domain

Warner, Chief Justice,
dissenting.
This was a bill filed by the complainants against the defendants praying an injunction, and for the appointment of a receiver to take charge of the property and effects, specified in a deed of assignment, executed on the 31st day of October, 1871, by Schaub & Lawton to 'Samuel Mayer, in trust for the payment of all their creditors. The allegations in the bill are, that the creditors were numerous, the property scattered along the line of a railroad, in different counties, and that some of the creditors were proceeding to enforce their respective liens upon the property, whereby, great damage would result to the property conveyed, as well as- loss to the credi*429tors of Schaub & Lawton, who are insolvent. The prayer of the bill is,, that the creditors may be restrained by injunction from enforcing a sale of the property, under their respective liens, and that a receiver be appointed, to collect the property together, specified in the deed of assignment, until the further order of the Court. This bill was not filed for the purpose of setting aside the deed of assignment, but to enforce the. execution of it for the benefit of all the creditors of Schaub & Lawton, as specified in the deed. The Judge granted a temporary injunction on the 8th November, 1871. On the 18th November, 1871, the presiding Judge granted the injunction as prayed for in the bill, and in the order it is recited, that upon a meeting of the parties in this case, and upon their agreement, it is ordered that the injunction prayed for in said bill be, and is hereby granted. It is further ordered, that Samuel Mayer be appointed receiver, to take charge of all the property mentioned and included in said deed of assignment, and that he advertise said property, and sell the same to the highest bidder, at Albany, on the 2d day of December next, for cash. It was further ordered, that William E. Smith be appointed auditor, to hear proof of the amount, and the priority of each claim on said funds, and that his report shall include the amount of the funds which the receiver’s sale shall show subject to distribution, and the amount that may be due each creditor according to the evidence and the law.
The property of Schaub & Lawton, specified in the deed of assignment, was sold by the receiver, under the order of the Court. The auditor made his report of the amount of the sale of the property, and of the amount and priority of each claim on the fond, giving to the claimants who were mechanics and laborers a priority of lien on the fund, and reported in favor of the payment of their claims in preference to the other creditors of Schaub & Lawton. Exceptions were filed to the auditor’s report. When the case came before the Court for trial, it was argreed by the counsel representing the parties before it, that the presiding Judge should act both as Judge and jury — reserving all right of exceptions they might have *430as if the case had been submitted to a jury, and not in any manner to be bound by the arbitration laws. There were several exceptions filed to the auditor’s report, one of which was, “because said fund coming into Court under a deed of assignment, all creditors claim pro rata under that deed, and 'after paying Court costs, auditor’s fees, and attorney’s fees, there are no preference or priorities in favor of any creditors, but they must all come in pro rata, and so much of said report as gives any preference is illegal.” The Court overruled this exception to the auditor’s report, as well as all the others, holding that the words, “equally divide the proceeds between said creditors,” in said deed of assignment, meant equally divide according to the priorities created by law. The Court rendered a decree confirming the auditor’s report, and this is assigned as error. The main question in this case, is whether the decree rendered upon the bill filed to enforce the execution of the trust in the deed of assignment, as set forth in the bill, was made in accordance with the terms and provisions of that deed: in other words, whether the law as applicable to the evidence furnished by that deed, as a part of the record of the case, authorized the decree which -was rendered by the Chancellor. The deed of assignment recites, that Sehaub & Law-ton being unable to pay their debts, and to prevent a waste of their valuable property by useless litigation, conveyed the same to Mayer, to have and to hold said property upon trust, to advertise thirty days for all claims against Sehaub & Law-ton, and upon ten day’s notice, to sell said property at publio or private sale, as said Mayer may determine to be best,’ and upon such sale, to equally divide the proceeds thereof between the creditors of Sehaub & Lawton. Mayer, as one of the complainants in the bill, prayed the aid of the Court to enable him to carry into effect this deed of assignment according to the true intent and meaning thereof.
The property specified in the deed of assignment was the property of Sehaub & Lawton, and they had the legal right, to convey it to Mayer in trust for the payment of all theircredito-rs in the manner therein stipulated, provided their cred*431itors were willing to accept it upon the terms specified in the deed; and when the Court ordered the sale of the property in the hands of Mayer, the trustee, under the deed of assignment, as the property of Schaub & Lawton, the proceeds of the sale thereof should have been equally divided between their creditors claiming under that deed, and not equally divided between them according to the priorities created by law. Such were not the terms of the deed conveying the property, and if the creditors of Schaub & Lawton claim the proceeds of the sale of the property under that deed of assignment, as they undoubtedly do, they must claim it in accordance with the terms and provisions of that deed, and not otherwise. When this bill was filed by the complainants to enforce the execution of the trust created by the deed of assignment, and it was served on the creditors of Schaub & Lawton who were attempting to enforce their laborers’ and mechanics’ liens, enjoining them from prosecuting the same, if they intended to attack and repudiate the deed of assignment set forth in the bill, they should have made their defense thereto, have filed their answers and moved the Court to dissolve the injunction, and have insisted on the priority of their respective liens. They did not do so, but, on the contrary, consented that the injunction prayed for should be granted, the property included in the deed of assignment sold, and the funds arising therefrom be distributed according to the evidence and the law. That - the bill was filed to enforce the execution of the trust created by the deed of assignment for the benefit of Schaub & Lawton’s creditors as therein specified, there can be no doubt, and all the proceedings in the case were had under that bill, and the exhibits attached thereto; that was the evidence before the Chancellor as to the manner in which the fund was to be distributed between their creditors.
If a judgment creditor of Schaub & Lawton had filed a bill against Mayer, the trustee, to enforce the trust for the benefit of their creditors generally, it would have been a waiver of his judgment lien upon the fund: Jones vs Dougherty, 10 Georgia Reports, 274. So, if their creditors who *432liad prior liens upon their property as laborers or mechanics consented that the property conveyed to the trastee by the deed of assignment should be sold, and that they would clai'm the proceeds of the sale thereof, it was a waiver of the priority of their liens, and they cannot assert them in the distribution of the fund. There is no consent in the record that the fund should be distributed according to the priorities of the respective creditors’ liens, and Sehaub & Lawton most certainly have not consented that the proceeds of the sale of their property-should be distributed in that manner between their creditors,, when they had expressly provided in their deed of assignment that it should be equally divided between them. By consenting to come in and claim the proceeds of the sale of the property as the creditors of Sehaub '& Lawton under the deed of assignment,- they adopt and affirm its provisions. There is no attempt to set aside the deed of assignment by any of the creditors of Sehaub & Lawton, and they are not parties before the Court; but, on the contrary, the sole object of the bill under which the entire proceedings were had, was to enforce the execution of the trust as specified in the deed created by them for the benefit of all their creditors. But it is insisted that inasmuch as the order of the Judge granting the injunction and appointing the receiver, recites that it was done by the consent of the parties, that that alters and changes the status of the claims of the creditors as specified in the deed of assignment, in regard to the manner in which the same should be paid out of the fund arising from the sale of the property conveyed by that deed. The order appointing the auditor directed him to hear proof of the amount, and priority of each claim on said fend, that is to say, the fend arising from the sale of the property included in the deed of assignment, which the Judge, in the same order, directed to be sold. To' ascertain the amount and priority of each creditor’s claim is one thing, to order the payment of such claims out of the fend arising from the sale of the property conveyed by the deed of assignment, according to the legal priority of such claims, is another and quite a different thing, and much the *433most important question, in view of the express words of the deed conveying the property.
It will be noticed that the auditor is not only required by the order to hear proof of the amount and priority of each claim, but he is also required by the order to report the amount of the funds which the receiver’s sale shall show subject to distribution, and the amount that may be due each creditor, according to the evidence and the law. Although some of the creditors of Schaub & Lawton may have had prior liens upon their property independent of the deed of assignment conveying their property in trust for the benefit of all their creditors, still, when they claim under that deed of assignment, the law is, that they must take in accordance with its terms; they cannot claim under the deed of assignment and repudiate any essential part of it. The order of the Judge directing the auditor to hear proof of the amount and priority of each claim, did not necessarily require him to report in favor of the payment of any particular class of claims in preference to others, out of the fund in the hands of the receiver • but he was required to report the amount that may be due each creditor according to the evidence and the law, and if the evidence showed that he was a creditor of Schaub & Lawton, then, under the law as applicable to this deed of assignment, he was tó be paid in accordance with its terms and provisions, and not otherwise. It would be an unreasonable and forced construction to hold that the words in the deed of assignment, to equally divide the proceeds of the sale of the property conveyed thereby between said creditors of Schaub & Lawton, meant to be equally divided according to the priorities oi'eated by law.
The exceptions to the auditor’s report, and the assignment of errors thereon to the rulings of the Court, are all specially and distinctly set forth in the bill of'exceptions presented to the Judge for his signature, and he has certified that the same are true — one of which is, “that the Court, after holding that the deed of assignment from Schaub & Lawton to Samuel Mayer was the law of the case as to priority, erred in constru*434iug the words, equally divide the proceeds betweeu said creditors in said deed of assignment, to mean, equally divide according to the priorities created by law, and then holding that Vogt & Company had no lien on the fund.” Now, if the Judge did not distribute the fund arising from the sale of Schaub & Lawton’s property under the deed of assignment, and according to his construction of the words of that deed, then his certificate that he did do so is not true; but I take the certificate of the presiding Judge to be true/ and that he decided, as he has certified that he did, in construing the words contained in the deed of assignment, which construction was error, in my judgment. I am, therefore, of the opinion, that the judgment of the Court below should be reversed.