Emmons v. Curlett

9 Del. Ch. 388

• Court: Supreme Court of Delaware
• Decided: June 15, 1911
• Status: Published

Opinion

Pennewill, C. J.,

(delivering the opinion of the Court): A bill in the nature of a bill for an account was filed in this case by the appellees, who were grantors and beneficiaries under a certain deed of trust, against the appellant, the trustee named in the deed. By the deed, bearing date September 26th, 1895, Thomas R. Curlett, David B. Curlett, James Curlett, and others, conveyed a tract of land situated in the City of Wilmington, to Harry Emmons, the appellant, in trust, to sell the land as soon as he conveniently could do so, convey the same to the purchaser or purchasers, and apply the proceeds of sale as follows:

“To the payment and discharge of all liens of record which may bo entered against the said above described promises, also to the payment of the balance of twenty-five hundred and twenty-five dollars due on three certain mortgages, * * * and to apportion and divide any balance of said purchase money thereafter remaining to and among the parties, according to their several rights and interests in the above described real estate at the time of the execution of this indenture, the share of any of said parties against whom there may be liens of record covering their interest in said real estate being chargeable with the amount needed to satisfy and discharge said liens.”

The case was heard below on bill and answer.

The land described in the trust deed was not sold by the ■trustee until 1905 because it was deemed by the parties in interest unadvisable to offer it for sale earlier, and the creditors had agreed with the trustee to forbear the collection of their claims until the sale should be made. After the sale the trustee refused to settle with Thomas R. Curlett, one of the grantors, for his share :n the proceeds of sale, until the trustee had been allowed for the amount paid by him on account of a judgment against the said Thomas R. Curlett; and he likewise refused to settle with Cora Agnes Curlett, administratrix of James Curlett, until allowance had been made for the amount paid by the trustee on account of a judgment against James Curlett. The Chancellor decreed that the trustee be allowed the credits claimed by him on account of said two judgments, and this appeal does not embrace that portion of the decree.

It is alleged in paragraph four of the bill of complaint, and not denied by the answer, that the trustee demanded that the complainant Cora Agnes Curlett, administratrix of James Curlett, settle with him as attorney for David B. Curlett, who claimed that there was money owing to him from the estate of James Curlett, but that said administratrix refused to make any settlement with him as trustee unless he paid to her the full share due to her as administratrix of James Curlett, without making any deduction for the claim of the said David B. Curlett. It is alleged in paragraph eight of the answer that before the execution of the deed of trust, the defendant below, at the special instance and request of James Curlett, and with money furnished to him by David B. Curlett, succeeded in getting all the judgments against James Curlett settled and discharged except one; that the sum of money furnished by David B. Curlett for this purpose amounted to $376.12, and the same was paid by him under an express but verbal agreement on the part of the said James Curlett that the said sum of money should be re-paid to the said David B. Curlett out of the interest of the said James Curlett in the proceeds of the sale of the aforesaid lands and premises when the same should be subsequently sold; that all the judgments so paid were satisfied of record at the request of James Curlett in order to save him from any embarrassment by reason of their being liens against other real estate held by him; that no part of said sum has ever been repaid to David B. Curlett, who claims that he is entitled to the same, with interest. By paragraph fifteen of his answer the trustee claims as a credit against the distributive share of the administratrix of James Curlett in the proceeds of sale, the sum of $761.47, being the said sum of $376.12 advanced and paid out by David B. Curlett as stated in paragraph eight of the answer, with interest thereon from January 1st, 1889, which David B. Curlett demanded from the trustee as an equitable lien upon said distributive share, and which amount the said distributive share is insufficient to pay. Wherefore the appellant, the trustee, avers that there is nothing in his hands belonging to the estate of James Curlett for which his administratrix has any equitable claim.

The Chancellor refused to allow the claim of David B. Curlett as a credit to the trustee, and it is from that part of the decree which disallowed the claim and imposed one-fourth of the costs of the cause on the appellant that this appeal was taken. The five assignments of error filed by the appellant raise practically the same question, viz., whether the Court below erred in decreeing that the claim of David B. Curlett against the share or interest of James Curlett, deceased, in the said trust estate, should be disallowed.

The Chancellor in his opinion said:

"It may be that David B. Curlett, prior to the making of the deed of trust in 1895, had an equitable lien against the share of James Curlett by reason of the payment by him of the seven judgments against James Curlett, or might have claimed to be in equity the assignee thereof to the extent of the amount so paid, and the authorities cited by the defendant seem to establish the principle. * * * But, by the execution of the deed of trust David B. Curlett waived and relinquished such rights; for by that deed, to which both he and James Curlett were parties, an entirely different arrangement was made, binding on both, and this deed provided that the share of James Curlett of the proceeds of sale of the property was applicable to the payment of such debts or claims only as were liens of record at the time the deed was made, and that this excluded all other claims against it, including that of David B. Curlett.’’

The "important question to be determined by this Court is whether David B. Curlett, by the deed of trust to which he was a party, waived and relinquished the right which he might otherwise have had to require the application to his claim against the estate of James Curlett of the latter’s share of the proceeds of sale. Or whether the said David B. Curlett was estopped by said deed from claiming such right. The deed provided that the balance of the purchase money remaining after the payment of all liens of record against the premises, and certain mortgages, should be apportioned and divided among the parties according to their several rights and interest in the said real estate at the time of the execution of the deed, the share of any of said parties against whom there may be liens of record covering their interest in said real estate being chargeable with the amount needed to satisfy and discharge said liens. It is admitted that David B. Curlett’s claim against the share of James Curlett was not at the time of the execution of the deed of trust a record lien. In fact he claims to be entitled to such share only upon the ground that his claim constitutes an equitable lien upon, or an assignment of, the share. The judgments against James Curlett that David B. Curlett paid off and discharged before the execution of the trust deed were record liens; but when they were paid by David they were satisfied of record. The appellant, however, as trastee for all the grantors or beneficiaries in the deed of trust, and as attorney for David B. Curlett in the collection of his claim, insists that even though the judgments so discharged are no longer record liens, nevertheless, under the express verbal agreement made by James Curlett at the time the judgments were paid, the claim of David B. Curlett is still a valid equitable claim against the share of James Curlett, or his administratrix in the proceeds of sale.

In support of such contention the appellant argues that there is nothing in the trust deed that is inconsistent with the existence of such equitable lien. He insists that by no language contained in said deed has David B. Curlett waived or relinquished his equitable lien against the share of James Curlett, nor is he thereby estopped from claiming the payment of the same out of the proceeds of sale. The material and pertinent words in the deed to be considered in this connection have been already quoted, but we will quote them again here.

“And to apportion and divide any balance of said purchase money thereafter remaining to and among the parties according to their several rights and interest in the above described real estate at the time of the execution of this indenture, the share of any of said parties against whom there may be liens of record covering their interests in said real estate being chargeable with the amount needed to satisfy and discharge said liens."

Such was the language used by David B. Curlett, as well as the other grantors, in said trust deed, and judged by such language what must we say was his intention and purpose at the time respecting the application or payment of each share of the balance of the proceeds of sale? It will be observed that the first part of the provision last quoted directs that the balance of the purchase money is to be apportioned and divided among the parties according to their several rights and interest in the real estate sold. If those words constituted all of the direction respecting the application of the balance of the purchase money, it might be very strongly argued, and perhaps conceded, that they contained nothing inconsistent with the payment of an equitable lien which existed prior to the execution of the deed. It would not be unreasonable to hold in an equity proceeding that a division “according to the several rights and interest” of the parties would not preclude the payment of an equitable lien against one of them. But these general words are qualified or explained by the clause that immediately follows them, viz., “the share of any of said parties against whom there may be liens of record covering their interest in said real estate being chargeable with the amount needed to satisfy and discharge said liens.”

Manifestly this language means that a share could be charged only to pay or satisfy a record lien. David B. Curlett and the other grantors undertook to prescribe and direct just how the balance of the purchase money should be applied by their trustee, and such direction was, in effect, that each of the parties should be paid his proportional part unless there were liens of record against him, and in such case his share should be charged with such liens. Such, we think, is clearly the meaning of the language employed, and we are satisfied that at the time of the execution of the trust deed neither David nor James Curlett had in mind, contemplated or intended that any liens other than record liens should be paid out of any share. David B. Curlett, therefore, in and by said deed declared and directed that the trustee should pay to James Curlett his share of the balance of the purchase money after deducting any record liens there might be against him; and the trustee could not, therefore, withhold from James’ administratrix said share because of a claim against him held by David which was not a record lien. If David, prior to the execution of the trust deed, held an equitable lien against the share or interest of James in the lands embraced therein, he released or discharged, by said deed, the lands and the proceeds that might be derived from a sale thereof, from such lien, and cannot in this proceeding be permitted to charge James’ share of the proceeds with the payment of said lien. We are of the opinion, therefore, that the Chancellor rightly held that the trustee could not make such charge or be allowed as a credit therefor.

As to the contention of the appellant, that the rights of David B. Curlett could not be adjudicated in a proceeding to which he is not a party, it is sufficient to say, that whether formally a party or not, the appellant has made him a party in effect by seeking to collect bis claim out of James’ share of the proceeds of sale. David demanded from the trustee the payment of his claim out of James’ share, and the trustee with David’s consent, sought to charge James’ share with the payment thereof. The question, therefore, as to David’s right to collect his claim out of said share has been distinctly raised in this case, and was necessarily before the Chancellor for adjudication in the hearing below.

While we approve the decision of the Chancellor respecting David B. Curlett’s claim against James-Curlett’s distributive share, we do not think that any part of the costs in the cause should have been imposed upon the defendant below—the appellant here. The appellant made three contentions or defenses in the cause below, viz., that he be allowed as credits (1) the amount paid by him to settle a judgment against Thomas R. Curlett; (2) the amount paid by him to settle a judgment against James Curlett; (3) the amount paid by him to settle the alleged equitable lien of David B. Curlett against James Curlett. The first and second amounts so paid were allowed by the Chancellor and the third disallowed. Inasmuch, therefore, as the appellant prevailed, or was successful, in the cause in the main; and inasmuch also as the appellant had some reason to believe that James Curlett’s share might be charged with the payment of the claim of David B. Curlett, and was justified perhaps, as trustee under the deed in making such contention and defense, we think no part of the costs should have been imposed upon the defendant below. Under all the facts and circumstances of the case it would not, in our opinion, be inequitable to require the administratrix of James Curlett, complainant below, to pay the costs imposed upon the defendant below, and we think this should be done.

We find no error in that part of the Chancellor’s decree which directed that the defendant below should settle with the administratrix of James Curlett for the balance of the share of James Curlett, without any deduction on account of the amount claimed by David B. Curlett, and the decree of the Chancellor is in that respect therefore affirmed. But we think that part of the decree which directed that the remaining one-half of the costs of the cause should be divided between the administratrix of James Curlett and the defendant should be modified so that the said one-half of the costs shall be imposed entirely upon the administratrix of James Curlett, deceased.