President of Dedham Bank v. Richards

43 Mass. 105

• Court: Massachusetts Supreme Judicial Court
• Decided: October 15, 1840
• Status: Published

Opinion

Wilde, J.

* By the bill and answers two questions have been submitted to the consideration of the court in relation to the claims of the Washington Bank, and of Theodore T. Kim-ball, on the trust fund in the hands of Mason Richards the trustee, against whom the plaintiffs seek to enforce their claim.

The bill sets out an assignment made by Timothy Gay, an msolvent debtor, to the said Richards, in trust for the benefit of his creditors, and claims payment of the plaintiffs’ demand in full, they being preferred creditors.

The bill alleges that the trustee has received sufficient money from the sale of the trust property, to pay off all the debts due to the preferred creditors. This allegation the trustee denies in his answer, and he states the amount received by him from the trust property, and the amount of claims of the preferred creditors, including the claims made upon him by the 'said Kimball and the Washington Bank.

In the schedule of the debts of the preferred creditors, that of Kimball is set down as amounting to about $4500. But it now appears that his claims actually amount to the sum of $ 5867-27. It is not denied by the plaintiffs’ counsel, that the amount was justly due to Kimball, at the time when he became a party to the assignment; but they contend that his claim is to be limited to the amount inserted in the schedule, or at most to a small amount over; that the plaintiffs became a,party to the assignment after Kimball, and had a good right to rely on the accuracy of the schedule. But on looking into the assignment, it appears very clear that, no reliance could be placed on the accuracy of the schedule.

It was expressly declared in the assignment, that it might not be practicable to make the schedules entirely full and accurate ; and provision was made, that the parties might, “ for the purpose of supplying omissions and correcting mistakes and misstatements, at any time by joint consent, &c., make such corrections and alterations in the schedule, and rectify and insert such items, names and amounts therein, in conformity with justice and the actual state of facts, as shall tend to carry into effect their fair intentions. And it is also agreed, that the specifying of any claim or liability, in any of said schedules, shall not prevent any of the parties of the first or second parts from calling in question or litigating the amount of the same, or any part thereof; and if any claim or liability of any party hereto shall have been stated as greater or less than it really is, such party shall, as respects such claim or liability, be entitled to the benefit of these presents, in manner herein before stated, upon and for, and only upon and for, the amount which may be found justly due thereon.” '

From these provisions in the assignment, it conclusively ap pears that the parties did not rely upon the accuracy of the schedules. They were probably made in haste, and were not supposed to be accurate. The claims, therefore, of the creditors were left open to future adjustment, so that each creditor should be entitled to the allowance of the full amount due, and no more.

If then there were any doubt as to the correctness of the decision in the case of Browne v. Weir, 5 S. & R. 401, cited by the defendants’ counsel, the doubt in the present case would be immaterial. We perceive however no good reason for doubting the correctness of that decision.

In regard to the claim of the Washington Bank, it seems very cleai, that as they have not become a party to the assignment, they are not, by its terms, entitled to any allowance out of the trust fund. The assignment contains a clause for the release and discharge to Gay from all claims proved under the assignment, whether fully paid, or only in part. But the Washington Bank claims the benefit of the assignment without peforming its condition by releasing Gay ; which cannot be allowed.

Their demand is against Gay as principal, and Kimball as surety. As Kimball became a party to the assignment, he might have proved the demand, if it had been assigned to him by the bank ; and he states that he offered so to do, if the bank would discharge him, and that he would give them an order' for the dividends to which he might be entitled bn this demand. The Washington Bank did not accede to this proposal, so that if their claim on the trust fund should be allowed, and they should not receive payment in full, they would have a claim on Gay and Kimball for the balance, against the clear meaning and express language of the assignment.

But if there were no provision for the release of Gay, still the claim in question could not be admitted. By the terms of the assignment, no creditor’s claim can be allowed, unless he became a party thereto, within the time stipulated for that purpose.

The counsel for the Washington Bank, in support of tb?ir claim, relies on the case of Ward v. Lewis, 4 Pick. 518. But in that case, Ward and the other preferred creditors were not, by the terms of the assignment, required to become parties thereto. The trustees were directed to pay, in the first place, all the demands of the preferred creditors in full, and to pay next the demands of the parties of the third part, in said indenture of assignment mentioned, m proportions equal to their respective demands. In that case, a trust had been created for the benefit of the preferred creditors, and the court held, on sound principles undoubtedly, that those creditors had a right to affirm the trust, and claim the benefit of it, without becoming parties to the indenture, that not being required by the terms by which the trust was created. This decision, therefore, has no bearing on the present question. The trust, in the present case, was created ' for the benefit of those creditors only who should become parties to the trust deed ; and it is very clear, therefore, that the claim of the Washington Bank, although it is included in the schedule of preferred claims, cannot be allowed.

Kimball's claim for $ 5867-27 allowed, and the case referred to a master, to state an account.

The chief justice did not sit in this case.