Caldwell v. Hill

176 S.E. 381, 179 Ga. 417, 98 A.L.R. 1124, 1934 Ga. LEXIS 299
CourtSupreme Court of Georgia
DecidedSeptember 15, 1934
DocketNo. 9933
StatusPublished
Cited by11 cases

This text of 176 S.E. 381 (Caldwell v. Hill) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Caldwell v. Hill, 176 S.E. 381, 179 Ga. 417, 98 A.L.R. 1124, 1934 Ga. LEXIS 299 (Ga. 1934).

Opinions

Gilbert, J.

B. H. Hicks conveyed to Caldwell, as trustee, described property real and personal, situate in Chatham County, for the purpose of securing an issue of bonds. Caldwell was and is a resident of Davidson County, Tennessee. Hill and two others, all residents of Tennessee, constituting a committee representing a majority of the holders of bonds secured by the deed, filed in Chat-[418]*418ham superior court a petition seeking the removal of Caldwell as trustee. Service upon Caldwell was made by publication. He filed a plea to the jurisdiction, general and special demurrers, and an answer. The court overruled the plea to the jurisdiction, and the general demurrer. The judge filed an opinion in which it was held that the proceeding was one in rem, within the provisions of the Civil Code, § 5554, par. 6, 7, and stated that such was the contention of petitioners. The defendant excepted and assigned error on the rulings of the court. The plea to the jurisdiction was upon the ground that the defendant had at all times been a resident of Tennessee; that the action was not one in which he could be served by publication under the laws of Georgia and the United States; that only the courts of Davidson County, Tennessee, have jurisdiction of the defendant, and that the service by publication was in violation of the due-process clause of the fourteenth amendment to the Federal constitution. No evidence was introduced. The issue raised by the plea was submitted to the court without a jury. The general demurrer was upon the ground that the allegations of the petition were not sufficient in law to entitle the plaintiffs to maintain their action. The causes alleged for the removal of the trustee were that he was insolvent; that he was surety on various bonds’securing deposits in banking institutions; that there were outstanding against him unsatisfied judgments for large amounts; that he had improperly caused deposits, in banking institutions controlled by him, of moneys paid to him as trustee, and these moneys had been lost by the closing of those institutions; that he had been convicted of fraudulent breach of trust in the courts of Tennessee; that he had acted without the consent and contrary to the wishes of the bondholders; and that in one instance he had -appropriated as an alleged trustee’s fee funds in his hands as trustee, and had refused to resign after request of a majority of the bondholders.

The contention of counsel for the defendant is that the provisions in the Code of 1910, § 5554, for service by publication are not applicable in the present case, because they are restricted to cases “in which the subject of the action is real or personal property in this State,” and “no property is the subject of this action;” that the action is purely one for the removal of the trustee; that the petition shows that the property is actually within the control and jurisdic[419]*419tion of the District Court of the United -States for the Southern District of Georgia under a bill to foreclose, brought by the trustee ; that the present action is in personamJiihd not in rem, and any judgment rendered therein must be “personal to himself alone;” and that no judgment can be rendered in this case which will in any way affect the property of the trust estate.

Among the provisions contained in the security deed the following are pertinent to the issues raised in the case:. The title was conveyed “to secure the payment of said indebtedness and said bonds and coupons evidencing same, and to secure the payment of other indebtedness and charges which may hereafter arise and for which the said owner may be liable, . . and to secure all of the covenants, conditions, and agreements herein by the owner undertaken to be kept and performed.” The trust deed sets out a copy of the bond, in which it is recited that the trust deed is made “for the benefit of the holders of said bonds and coupons, and such trust deed is hereby referred to, and as to all of its terms and provisions is hereby made a part of this bond.” It conveys the property to secure the indebtedness evidenced by the bonds and coupons, and to secure the execution of the trust. “In trust nevertheless for the uses and purposes herein expressed, and for the equal and proportionate benefit and security of all the holders of said bonds, and for the payment thereof,” and to secure the performance of all the things undertaken by the owner. The “trustee,” his successor or successors, was appointed the attorney in fact for the owner “with full power and authority in the name and behalf of the owner to do any and all things which may be found necessary to carry into effect the purpose of this instrument,” with full power to appoint a substitute attorney in fact with the same power and authority possessed by the said trustee. The deed provides that in case of default continuing after thirty days notice to the owner, the trustee may take possession of the property, operate it, and collect the income and profits and apply them to the satisfaction of the indebtedness and expense of administration, that he may sell the property after advertisement for four weeks, and that he may apply for the appointment of a receiver and for .a foreclosure “by a court of proper jurisdiction.” Other provisions are that the trustee may resign the trust, the vacancy to be filled by holders of the bonds; tha,t he does not incur liability as to the right of the owner to make [420]*420the deed; that he shall be reimbursed for expenditures; that he shall be entitled to legal advice and counsel, and fees for the trustee; and that upon payment of the indebtedness he will cancel the deed of trust.

Counsel for the petitioners, in their brief in response to questions from this court, insist that the jurisdiction of the superior court of Chatham County “can be sustained under the principles recognized in 3 Pomeroy’s Equity Jurisprudence, § 1086, to wit: “The power of courts of equity over the removal and appointment of trustees, independently of any statutory authority, or any directions in the instrument of trust, is well established. This power is confined to cases of actual express trusts. It can not, in the nature of things, extend to implied trustees, or trustees in invitum; nor does it apply to those persons who stand in fiduciary relations, and are for some purposes treated as trustees.” That authority on its face does not support the contention; and further examination of the question is required. That necessitates a review of equity jurisdiction as it existed in England at the time when the English laws were adopted in this State, as far as applicable, the judiciary act of 1799 and subsequent statutes, and such additional historical facts as may throw light upon the question. The complete history would require a study of a vast field of judicial literature. Although an extensive study of this question has been made, which included the leading works on equity, and Wigmore’s Panorama of the World’s Legal Systems, the essential facts of such history will be stated as briefly as possible. While the jurisdiction of equity, or chancery as it was known in England, extends far back into the misty past, trustees, as they are known in connection with mortgage bonds or deeds securing issues of bonds, are of modern origin. Mr. Jones in his work on Corporate Bonds and Mortgages states, in the preface to the edition published in 1879, “Prior to the year 1860 the courts had only in a few instances been called upon to enforce railroad mortgages.” The author has reference to mortgages securing issues of bonds.

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Bluebook (online)
176 S.E. 381, 179 Ga. 417, 98 A.L.R. 1124, 1934 Ga. LEXIS 299, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caldwell-v-hill-ga-1934.