Court Opinion

ID: 9416563
Source: CourtListenerOpinion
Date Created: 2023-08-02 19:49:29.042744+00
Date Added: 2024-06-11T17:13:24.765694
License: Public Domain

Mr. Justice NELSON
delivered the opinion of the court.
This1 is an appeal from a decree of the circuit court of the United States for the district of Maryland.
The bill was filed in the court below to recover of the defend- ' ants the proceeds of the share of James Williams, in what is called the Baltimore Company, which had a claim against the Mexican government, that was allowed under the convention of 1839. The claim was similar to the one under consideration in the case of the administrator of Lyde Goodwin against these defendants, just disposed of. The proceeds of the share, as charged, amount to $>41,306.41.
The main grounds of defence set up in this case are : —
1. The sale of this share in the company to Robert Oliver, for a valuable consideration, by George Winchester, permanent trustee of Williams, who had taken the benefit of the insolvent act of Maryland, in 1819, which was made in pursuance of an order of the court having jurisdiction in cases of insolvency under that act. The sale took place on the 2d April, 1825.
2. A decree of the court of appeals in Maryland, at the June term, 1849, affirming a decree of the Baltimore county court, which, in the distribution of the fund arising from this claim of the Baltimore Company, assigned the proceeds of the share in question to the executors of Oliver.
If the appellees fail to maintain their title to this fund, upon one or the other of these grounds, then the right to the share of Williams in the Baltimore Company, for aught that appears, still belonged to him at the time of his decease, in 1836, and passed to his legal representatives as a part of his estate; and although originally of no legal value, on account of the illegality of the transaction out of which the contract arose, yet, as the illegality has been waived and the money realized, we have seen, from the principles stated in the previous case of Lyde Goodwin, it belongs to Williams’s administrator.
As it respects the first ground — -the sale of the share of Williams, by the provisional trustee, to Robert Oliver, under the insolvent act — we have seen, in the case of Lyde Goodwin, the court of appeals of Maryland held, that this contract of the Baltimore Company with General Mina, being in violation of *250the neutrality act of the United States, of 1794, was so tainted with turpitude and illegality, it could not be recognized under their insolvent laws as property; and that no right to or interest in the share passed to the trustee. And, that this being the construction of the statute by the highest cqurt of the state, and which had a right to interpret its own laws, this court felt bound by it, without inquiring whether that interpretation was correct or* not; and, consequently, as Goodwin’s interest in the share did not pass to the insolvent trustee, it remained in Goodwin himself, and passed to the executors of Oliver, by virtue of his assignment to their testator, in 1829.
In this case the executors of Oliver are obliged to make title to the share in question, under the insolvent trustee of Williams ; the assignment to Oliver, their testator, having been made by the trustee, and not by Williams himself. And it is now insisted on behalf of the executors, that the court of appeals of Maryland in this case reversed their opinion delivered in the case of Goodwin, and held that the interest in the share did pass under the insolvent laws to the trustee, and consequently that the proceeds of the share vested in them under his sale and assignment to their testator in 1825.
Had this, been the decision of the court of appeals in the case of the share of Lyde Goodwin, the interest and proceeds would have passed to Gill, the permanent trustee, instead of to the executors of Oliver.
These re^ults, so contradictory and inconsistent, claimed too as flowing from the judgments of the highest court in a State, •should not be admitted unless compelled, after the most careful and deliberate consideration.
The decision in both cases was made at the same term, June, 1849 ; the one in the present case subsequent to that in the ease of Goodwin. The court in their opinion state, that the grounds upon which they affirmed the judgment in this-ease were, first, for the reasons assigned by them for their decree in the previous case of Oliver’s executors against Gill, permanent trustee of Goodwin.
The grounds for that decree are stated in the record, and as far as material are as follows : “ They are of opinion that the entire contract (the Mina contract) upon which the claim of the appellee (Gill, the trustee,) is founded, is so fraught with illegality and turpitude as to be utterly .null and void; conferring no rights or obligations upon any of the contracting parties, which can be sustained or countenanced by any court of law or equity in this State; that it has no moral obligation to support it, and that, therefore, under the insolvent laws’ of Maryland, such claim does not pass to or vest in the trustee of an insolvent *251petitioner. It forms no part of his property or estate, within tjie meaning of the legislative enactments constituting our insolvent laws.”
Nóthing can be more explicit or decisive against the- title of the insolvent trustee, or of those setting up a claim* under him, to a share in this Baltimore Company. The court say: “ It has no legal or moral obligation to support it, and that, therefore, under the insolvent laws of Maryland, such a claim does not pass, to or vest in the trustee of an insolvent petitioner. It forms no part of his property or estate, within the meaning of the legislative.enactments constituting our insolvent system.” And this opinion is reaffirmed, ipsisimis verbis, in giving the judgment against the trustee of Williams, then before the court, and with which we are now dealing; and yet it is gravely insisted that no such decision was made in this case as was made in the case of Goodwin; but, on the contrary, the court decided that the- interest in the. share of Williams did pass under the insolvent laws to the trustee ; that he became therebv invested with the title, and was competent to transfer it to Robert Oliver, the testator of the defendants.
The supposed contradiction and inconsistency of the determination of the court is founded upon the second paragraph in the opinion delivered. It is as follows: 2. “ Because, under the proceedings based on or originating from the insolvent petitions of John Gooding and James Williams, and the act of assembly applicable thereto, Robert Oliver acquired a valid title to all the interest of said James Williams and John Gooding in the fund in controversy, for the reasons assigned by Judge Martin as the basis of his opinion in those cases.”
Judge Martin had dissented'from the opinion of the majority of the court, in the case of Lyde Goodwin, being of opinion that the interest, in his share passed under the insolvent laws to the trustee; and had maintained the same opinion in respect to the share of Williams, in the case then before the court. And it is supposed that this opinion was adopted by the other members, in, the determination of the case.
We do not agree' that this is a proper apprehension of the judgment given by the two members of- the court; but, on the contrary, are satisfied that the opinion delivered may well warrant a more natural and consistent interpretation.
The true meaning will be apparent, we think, from the following explanation. Robert Oliver, as we have seen, had purchased the share of Williams of the insolvent trustee, in 1825, and, consequently, if the interest in his share passed under the insolvent laws to the trustee, it had become vested in Oliver, and of course, on his death, in the executors.
*252The.question before the court was between the insolvent trustee and the executors. The court, after reaffirming their opinion in the case of Lyde Goodwin, namely, that no interest in the share passed to the trustee under the insolvent laws, and therefore that he was disabled from making out a title to it, go on in substance to say, that if in error as to this, and the opinion of Judge Martin should be adopted, namely, that the interest did pass to the trustee; it could make no difference in the result, inasmuch as the executórs of Oliver would then be entitled to the proceeds, under his purchase of the share tom the trustee himself, in 1825. Therefore, viewing the case in either aspect, qaacmque via data, the insolvent trustee -had failed in establishing any interest in the fund.
It appears to us that this is obviously the meaning intended to be expressed, though we admit the terms used in the expression of it furnish some plausibility for the criticisms to which it has been subjected. ■ The two opinions, the one in the case of Goodwin, and the other in the case, of Williams, were given at tlie same term, and upon the same question; and, if the interpretation of the defendants is right, are diametrically opposite to each other; and not only so, as the first opinion is incorporated in the second, the judgment rendered in the case of Williams id founded upon two opposite constructions of the same statute, in .one and the same opinion.
We prefer the explanation we have given to this extraordinary and absurd conclusion, as it respects the - proceedings of a respectable court, and one possessing the highest jurisdiction in the State; • •
The change of opinion upon a question of . law, or in the construction of a statute, is no disparagement to a-judge, or a court, however eminent or experienced. The change is oftentimes a matter of commendation, rather than , of reproach. But the ease here presented, and upon which we are asked to turn the decision of the question, is, that two opposite constructions of á statute have been given by the court in the same cause, leading necessarily to opposite results, ancrboth relied on as grounds for the judgment rendered. We 'have already “assigned our reasons for disbelief in any such conclusion, and shall not again refer to them.
It has been suggested that the- statute of Maryland, of 1841, confirming certain defective proceedings in insolvent cases, operated to confirm the sale of the trustee to Oliver, in 1825, and that the opinion of the court of appeals in the case of Williams is founded upon this statute. Winchester, the permanent trustee at the time of the sale, had' not given a bond, with - surety, for the faithful-execution of his duty,-as required by the law; and, *253under the decisions of the courts of Maryland, this omission disabled him from dealing with the estate of the insolvent.
The act of 1841 was passed to remedy defects of this description. It provided that all sales and transfers of property and claims, theretofore made by any permanent trustee, &c., under the insolvent laws of the State, shall be valid and effectual, notwithstanding such trustee shall not have given a bond with security, &c.; and the 3d section provides that the act shall not be so construed as to cure any other defect in the proceedings than the failure to give a bond, with security, or the want of any ratification by the court of any sale made by such trustee;.
It is quite apparent from the provisions of the act, that it was not designed to confirm all sales previously made by the trustee under the insolvent laws, and render them valid and effectual, but simply to confirm, so far as respected any (defect arising out of the omission of the trustee to give the proper security, and also as respected anjn. omission on the part of the court to confirm the sale. These two defects in any previous proceédings were cured by the statute, but in all other respects the proceedings were valid, or otherwise independently of it. It is impossible to maintain that the statute looked to any such informality in the title of the trustee, as that held by the court of appeals in the case of Lyde Goodwin, as well as in the present one. And, besides, it is inconceivable why the court should have reaffirmed their opinion in the case of Goodwin, as a ground for denying the tide to the. trustee, if they had intended to hold that it passed by force 'f the actf'of 1841.' We have no belief thqt such was the opinion intended to be expressed.
The.decree of the court affirming the judgment of the court below has been referred to as favoring the. view of the decision contended for by the appellees. This decree adjudges and decrees, that the judgment below awarding the,share of Williams to the executors of Oliver be affirmed, and that Glenn and Perine, the general trustees of the fund, pay the proceeds of the share to the said executors.
It will be remembéred that the only question before the court respecting this share was between the executors on the .one side, and the insolvent trustqe of Williams on the other; and as the executors were the apparent owners of the fund, -unless a title could be maintained by the trustee, so far as respected the pa ties before the court, the former exhibited the better titlé ; at least, the better title to take the possession and charge of the fund in the distribution among the claimants. The form of the decree, therefore, was very much a matter of course, in the aspect of the case as then presented.
This view will be more fully appreciated when we refer to *254a.'nother branch of this case, presently to be considered. We will simply add, in our conclusion upon this part of the case, that the opinion now expressed was the one entertained by us when the. case involving this share of Williams was formerly before the court, and which will be found in 12 How. 111, 123.
On page 123 we observed “ the counsel for the plaintiff in error sought to distinguish this case from the previous one, the case of Lyde Goodwin, and to maintain the jurisdiction of the court, upon the ground that the act of the legislature of Maryland of 1841, confirming the authority of Winchester, the permanent trustee, was in contravention of a provision of the constitution of the United States, as “ a law impairing the obligation of contracts.”
But we observed in answer, “ admitting this to be so, which we do not, still, the admission would not affect the result; for the decision of the court of appeals upon a previous branch Of the case denied to the plaintiff any right to or interest in the fund in question, as claimed under the insolvent proceedings as permanent trustee, and hence he was deemed disabled from maintaining any action founded upon that claim.
“ It was of no importance, therefore, as it respected the plaintiff, in the distribution of the fund, whether it was rightfully or wrongfully awarded to Oliver’s executors. He had no longer any interest in the question.”
Our conclusion, therefore, upon this part of the case is, that according to the law of Maryland, as expounded by .the hignest court of the State, no title to or interest in the share of Williams in the contract of the Baltimore Company, under General Mina, passed under the insolvent 'laws of that State to the insolvent trustee; and, consequently, no interest in the same became vested in the executors of Robert Oliver, by force of the assignment from the trustee to him in 1825.
2. The next question is as to the conclusiveness of the decree of the Baltimore county court, making a distribution of the fund among the several claimants, and which was affirmed by the court of appeals, upon the rights of the administrator of Williams to the proceeds of his share in the fund. The decree in the Baltimore county court was rendered in December, 1848, and affirmed June term, 1849.
Williams died in 1836, and no letters of administration were taken out upon the estate till 1852. It appears, therefore, that Williams had been dead ten years when the first decree was made, and thirteen at the date of the second; and no representative was in existence to whom notice of the proceedings could affect in any way the interest of the estate ir> the fend.
Now, the principle is well settled, in respect to these proceed *255ings in chancery for the distribution of a common fund among the several parties interested, either on the application of the trustee of the fund, the executor or administrator, legatee, or next of kin, or on the application of any party in interest, that an absent party, who had no notice of the proceedings, and not guilty of wilful laches or unreasonable neglect, will not be concluded by the decree of distribution from the assertion of his right by bill or petition against the trustee, executor, or administrator ; or, in case they have distributed the fund in pursuance of an order of the court, against the distributees. David v. Frowd, 1 Miln. and Keen, 200; Greig v. Somerville, 1 Russ. and M. 338; Gillespie v. Alexander, 3 Russ. 130; Sawyer v. Bichmore, 1 Keen, 391; Shine v. Gough, 1 Ball. and B. 436; Finley v. Bank of the United States, 11 Wheat. 304; Story’s Eq. Pl. § 106, Wiswall v. Sampson, 14 How. 52, 67.
The general principle governing courts of equity, in proceedings of this description, is more clearly stated by Sir John Leach, master of the rolls, in David v. Frowd, above referred to, than in any other case that has come under our notice.
That was a case where one of the next of kin, who had no notice of the administration suit, filed á bill against the administratrix and distributees to obtain her share of the estate. The' bill was filed some two years after the decree for distribution had been made and carried into effect.
The mastet of the rolls observed, that “the personal property of an intestate is first to" be applied, in payment'of his debts-, and then distributed among his next of kin. The person who takes out administration to his estate, in most cases, cannot know who are his creditors, and may not know who are his next of kin; and the administration of his estate may be exposed to great delay and embarrassment. A, court of equity exercises a most wholesome jurisdiction for the prevention of this delay and embarrassment, and for the assistance and protection of the administrator. Upon the application of any person claiming to be interested, the court refers it to the master^ to inquire who are creditors, and who are next of kin, and for ’that purpose to cause advertisements to be published in the quarters where creditors and next of kin are most likeiy to be found, calling upon such creditors and next of kin to come in, and make their claims before the master, within a reasonable time stated; and when that time is expired, it is considered that the beet possible means having been taken to ascertain the parties really entitled, the administrator may reasonably proceed to distribute the estate among those who have, before the master, established an apparent title. Such proceedings having been taken,, the court will protect the administrator against any future claim.”
*256“ But itis obvious,” he remarks, “ that the notice given by advertisements may, and must in many cases, not reach the parties really entitled. They may be abroad, and in a different part of the kingdom from that where the advertisements are published, or, from a multitude of circumstances, they may not see or hear of the advertisements, and it would be the height of injustice that the proceedings of the court, wisely adopted with a view to general convenience, should have the absolute effect of conclusively transferring the property of the true owners to one who has no right to it.”
The master of the rolls further observed, “ that if a creditor does not happen to discover the proceedings in the court, until after the distribution has been actually made, by the order of the court, amongst the parties having, by the .master’s report, an apparent title, — although the court will protect the administrator, who has acted under the orders of the court,— yet, upon a bill filed by this creditor against the parties to whom the -property has been distributed, -the court will, upon proof of no wilful default on the part of such creditor, and no want of reasonable diligence on his part, compel the parties, defendants, to restore to the creditor that which of right belongs to him.” The master of the rolls then applied this principle to the right of the next of kin, the complainant in the bill, and observed, “ that it had been argued that the case is extremely hard upon the party who is to refund, for that he has a full right to consider the money as his own, and may have spent it; and .that it would be against the policy, of the law to recall the money, which the party had obtained by the effect of a judgment upon a litigated title. But, he observed, there is here no judgment upon a litigated title; the party who now claims by a paramount title was absent from the court, and all that is adjudged is, that, upon -an inquiry, in its nature imperfect, parties are found to have a primd facie claim, subject to be defeated upon better information. The apparent title, under the master’s report, is, in its nature, defeasible. A party claiming under such circumstances, has no great reason to complain that he is called upon to replace what he has received against his right.”
In the case of Gillespie v. Alexander, also above referred to, Lord Eldon observed, that, although the language of the decree, where an account of debts is directed, is, that those, who do not come in, shall be excluded from the. benefit of it; yet the course is to permit a creditor, he paying costs, to prove his debt, as long as their-happens to be a residuary fund in court, or in the hands of the executor, and to pay him out of the residue. If the creditor does not come tiff after the executor *257has paid away the residue, he is not without remedy, though he is barred the benefit of that decree. If he has a mind to sue the legatees, and bring back the fund, he may do so, but he cannot affect the legatees, except by suit, and he cannot affect the executor at all.
These principles are decisive of this branch of the case, as they establish, beyond all controversy, the right of the administrator to assert the title of 'Williams, the intestate, to the proceeds of the share in question, notwithstanding the decree of distribution by the Baltimore county court. There has been no laches, on his part, or, on the part of those whom he represents.
The cases above referred to relate to the rights of creditors, and next of kin; but the principle is equally applicable to all parties interested in a common fund brought, into a court of equity for distribution amongst the several claimants.
It is worthy of observation in this connection that, the decree, however conclusive in its terms, in the distribution of the fund amongst the apparent owners then before the court, possesses no binding effect upon the rights of the absent party, whose interests have not been represented on the subject of litigation. The opinion of the court given, and decree in pursuance thereof, applies only to interests of those ■ amongst whom the fund is distributed.
These observations furnish an answer to the argument on behalf of the appellees, drawn from a reference to the terms of the decree of the court of appeals of Maryland, in this case, by which the. fund is adjudged to the executors of Oliver. As between all the parties then before the court, this adjudication was doubtless proper, and conclusive upon their rights.
It is agreed in the' case, that but five eighths of the fund in controversy is in the hands of the executors, the residue having been paid over in the administration of the assets of the estate.
If this portion had been paid over by the executors in pursuance of an order of the court in an administration suit, the defendants would be protected to that extent, and the complainant compelled to proceed against the distributees. But no such fact appears in the case.
Without saying, at this time, that an executor, in all cases, may be compelled to account to a party making title to a portion of the estate, after distribution, among the legatees and next of kin, unless first procuring an order of the court having charge of the administration, we perceive no reason, under the circumstances of this case, for exonerating them, or turning him round to a bill against the distributees.
Upon the whole, after the fullest consideration we haye been *258able to give to this case, we think the decree.of the court below was erroneous, and should be reversed.
Mr. Chief Justice TANEY, Mr. Justice McLEAN, and Mr. Justice DANIEL dissented.
John S. Williams, administrator of James Williams, dec’d appellant, v. Robert M. Gibbes and Chas. Oliver, ex’ors of Robert Oliver, deceased. And John Gooding, Junior, administrator de bonis non of John Gooding, deceased, appellant, v. Robert M. Gibbes and Chas. Oliver, ex’ors of Robert Oliver, deceased.
Appeals from the circuit court of the United States for the district of Maryland.