Martin v. Rainwater

56 F. 7, 5 C.C.A. 398, 1893 U.S. App. LEXIS 2044
CourtCourt of Appeals for the Eighth Circuit
DecidedMay 1, 1893
DocketNo. 174
StatusPublished
Cited by6 cases

This text of 56 F. 7 (Martin v. Rainwater) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Martin v. Rainwater, 56 F. 7, 5 C.C.A. 398, 1893 U.S. App. LEXIS 2044 (8th Cir. 1893).

Opinion

CALDWELL, Circuit Judge,

(¡after stating the facts.) There is no room for contention as to the nature of the trust set up in the [9]*9bill in the original case, and established by tbe decree therein. The bill, in terms, alleged (hat Smith & French assigned and transferred their property to Thompson for the benefit of their creditors, and that Thompson accepted the trust. The bill was brought to establish and enforce that trust. The court decreed:

“That dining the month of October, 1885, J. L. Smith and It. Ij. French, parties doing a general merchandise business at Talequah, Indian Territory, consulted together, and agreed to make an assignment of their assets, in trust for their creditors, to Johnson Thompson. That said Johnson Thompson agreed to accept the trust, and, pursuant to said agreement, said Smith & French, by written instrument, transferred, assigned, and delivered to Johnson Thompson, in trust for their creditors, all of their merchandise, invoicing S3,229.31; merchandise notes, and accounts invoicing about $4,000; and interest in a note for cattle from one JOirkor for $8,000; and that said Johnson Thompson accepted and entered upon the execution of said trust. * * *”

The attorneys for the plaintiffs procured an order for the allowance of attorneys’ fees for $1,200, upon Hie ground that they bad “succeeded in showing that some seven years ago the firm of Smith & French transferred all their properly to Johnson Thompson for the benefit of their creditors,” and that it was through their efforts “that this fund has been saved to the creditors.” In this court, on appeal, Judge Thayer, speaking for the court, said;

“The chief contention in the lower court related to the existence of the alleged trust. * ® * Willi respect to the main contention in the lower court, wo only deem it necessary tp say that there is abundant evidence in tlio record to support the iinding that a trust was created for the benefit of tlie creditors of Smith & French. We have no doubt, in view of all the testimony, that, by virtue of an agreement between Smith & French and Johnson Thompson, made some time in the fall of 1885, Thompson assumed possession and control of all the partnership assets of Smith & French, and undertook to apply them, as far as they would extend, toward the payment of the partnership debts.” 4 U. S. App. 217-219, 1 C. C. A. 304, 49 Fed. Rep. 406.

It will thus be seen that the lower court and this court treated the original suit as one to establish and enforce a trust in favor of the creditors of Smith. & French, and that the trust was established and held to be valid. It is trae that among other prayers in the bill is one that the assignment may be declared “fraudulent and void as to creditors;” 'and the decree, after establishing the existence of a trust, and requiring the assignee to account for the assigned property, declares that said assignment is “fraudulent and void as to creditors.” The loose and inappropriate use of the term “fraudulent and void” in this connection is inconsistent with the whole frame and substance of the bill and decree, and is inoperative. The very object of the bill was to establish the trust. The trustee denied the trust, and averred that if it existed it could not be enforced, because at the date of the assignment there was no law in force in ilie Indian Territory authorizing the creation of such a trust. Both of these issues were decided against; the defendant. The plaintiffs never attacked the validity of the assignment, but constantly affirmed it, and were seeking its enforcement. The conduct of the trustee, and the disposition he made of the [10]*10trust property, were fraudulent and void as against tlie beneficiaries of the trust, and this, probably, is what the pleader intended to say, and not that the trust itself, which he was seeking to enforce, was fraudulent and void. In conclusion, on this point it is enough to say that this' court 'affirmed the validity of the trust on the appeal. The trust was a valid express trust for the equal benefit of all the creditors of Smith & French, and the bill to enforce it, whether filed by one or more of the creditors, ought to have been filed on behalf of all of them. Story, Eq. PI. §§ 108, 104, 157; 2 Perry, Trusts, § 594.

But the fact that the trust was established and the fund secured upon a bill filed by only a part of the creditors gives them no right or equity to be paid to the exclusion of the other beneficiaries of the trust fund. The most they can ask is- that the other creditors, having, under the deed of assignment, equal claims with themselves upon the trust fund, shall pay their proportion of the costs and expenses. Wait, Fraud. Conv. § 173; Fisher v. Herron, 22 Neb. 183, 34 N. W. Rep. 365; Bank v. Wetmore, (N. Y. App.) 26 N. E. Rep. 551; Clark v. Shelton, 16 Ark. 483. But it is said the decree of the lower court ordered the fund to be distributed to the creditors filing the bill, and that this court affirmed that decree. This is true. There was no suggestion in either court that there were any other creditors, or, doubtless, the usual and appropriate directions would have been given for the distribution of the fund among all the creditors entitled to share therein. The order of distribution, however, did not and could not affect the right of the creditors not before the court, and it acquired ho additional efficacy against the absent creditors by its affirmance in this court. The decree established the trust, and. determined that the complainants were entitled to the fund as against the defendants in that suit. It did not determine that there were no other creditors of Smith & French having equal rights with the complainants in the trust fund. The case entitled In re Howard, 9 Wall. 175, is on all fours with the case at bar. In that case there had been a decree ordering the fund distributed to the complainants and interveners before the court, and this decree was affirmed by the supreme court. When the mandate was filed in the lower court other persons appeared and filed their petitions, claiming the right'to share in the distribution of the fund. The court sustained the claim of some of the petitioners, and thereupon there was an application made to the supreme court for a mandamus commanding the circuit court to execute the original decree, upon the ground that that decree, which had been affirmed by the supreme court, directed the ‘fund to be distributed to the complainants and parties then before the court, and concluded the rights of all parties. In answer to this contention the supreme court said:

‘.‘The general doctrine that where there is a fund in court to he distributed among the different claimants a decree of distribution will not preclude a claimant not embraced in, its provisions, but, having rights similar to those [11]*11oí other claimants wlio are thus embraced, from asserting by bill or petition his right to sitare in the fund is established by numerous authorities both in England and the United States.”

Tbe court reaffirmed tbe doctrine laid down in tbe case of Williams v. Gibbes, 17 How. 239, where the court said:

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Bluebook (online)
56 F. 7, 5 C.C.A. 398, 1893 U.S. App. LEXIS 2044, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martin-v-rainwater-ca8-1893.