Warner v. Hoffman

4 Edw. Ch. 381

• Court: New York Court of Chancery
• Decided: July 6, 1846
• Status: Published

Opinion

The Vice-Chancellor :

It is one of the objects of the bill in this cause to have a debt of five thousand two hundred and seventy-two dollars and fourteen cents (decreed to the complainant in a former suit) charged upon the capital of the trust estate; and the payment thereof enforced by writ of execution or in some other way. Leave was granted to the complainant to file a bill for this among other purposes ; and this bill has accordingly* been so filed. But, I think the complainant has failed in establishing it as a debt against the corpus of the estate belonging to the children in remainder. The burthen was upon him to show affirmatively that the debt in question was contracted for the preservation of the inheritance or for its permanent improvement ; and in the absence of such proof, the court can extend it no farther than to the interest which Dyett and wife had in this trust estate and which, since the insolvency of Dyett in one thousand eight hundred and twenty-seven, has belonged exclusively to his wife, being a life interest merely in her. In the original suit it was not attempted, on the taking of the account, to carry the liability beyond their life estate. The order of reference to master Clark directed the taking of the account between the complainants and the estate of the defendants Dyett and wife in the hands of the complainant and Mr. Hoffman as their trustees; and the master’s report found, accordingly, that so much was due to the complainant from the said trust estate of Dyett and wife. Now, to carry the liability beyond their present or immediate interest in the estate, something more than has as yet appeared must be shown. In the case of the North American Coal Co. v. Dyett, 7 Paige, 9, the chancellor took care to keep the life interest of Mrs. Dyett distinct from the remainder and to charge the former with the debts contracted as on account of her separate estate. This limit must be observed in the present case.

But it is objected, in behalf of other creditors whose debts are provided for in the decree made in the suit of the North American Coal Company, that the complainant ought not to be let in to disturb their order of payment or to participate with them in any immediate or accruing benefit from this trust estate; and that he is now to be postponed until they are all paid. This objection, in my opinion, cannot be allowed to prevail. It would work a manifest injustice to the complainant, who, for aught that appears, is as meritorious a creditor as any of them. If he had come in before master Maison under that decree his claim must have been admitted. And it is clear, both on principle and authority, that his neglect or omission does not preclude his right to be let in now, provided the other creditors are placed in no worse condition and subjected to no more additional expense than if he had come in before the master and proved his demand : Pratt v. Rathbun, 7 Paige, 269.

The decree which I must make, will, therefore, in the first place, declare and adjudge that the complainant’s debt of five thousand two hundred and seventy-two dollars and fourteen cents, in the pleadings mentioned, is not a charge upon the fee or remainder of the trust estate limited to the children of the said Joshua Dyett and Jessey Ann his wife; and that the bill as to the said children be dismissed with costs to their guardian ad litem to be taxed and to be paid by the complainant. Secondly. That, as between the complainant and the other defendants, the complainant, as a creditor to the amount of his said debt of five thousand two hundred and seventy-two dollars and fourteen cents and interest thereon from the sixteenth day of September one thousand eight hundred and thirty-six and the costs awarded to him in and by the decree of the eighth of April one thousand eight hundred and forty-one, made in the cause of the said complainant against Joshua Dyett and Jessy Ann his wife and Murray Hoffman defendants, is entitled to stand and be let in as such creditor under the decree of the eighth of February one thousand eight hundred and forty-one in the cause of the North American Coal Company, complainants and the said Dyett and wife and others, defendants and to participate with other creditors whose debts are provided for and directed to be paid in and by the last mentioned decree out of the rents and profits of the said trust estate, in like manner as though. the said complainant had gone before the master and proved his said debt or demand in that suit. And for the purpose of enabling the saideomplainant to have the benefit by such decree and to be placed upon a footing of equality with the said other creditors in relation to the rents and profits or net income of the said trust estate, it is further ordered and decreed that Murray Hoffman, Esquire, the trustee of said estate, shall, before applying any more of the income towards the payment of his own debt or the debts of other creditors as directed by the said last mentioned decree, apply the net income in his hands or which may come to his hands from the said trust property towards the complainant’s aforesaid debt, interest and costs, until the payment or payments to him shall be equal pro rata to the payments which he the said Murray Hoffman and the said other creditors or any of them may have received; and when the said complainant shall have been made equal by pro rata payments upon his said debt to what the said Murray Hoffman and the other creditors have received, the said net income shall, thenceforth, be applied to the payment of all the said debts, including that of the said complainant, pro rata, according to their respective amounts and without any preference or priority of payment. And further, that the complainant and the adult defendants each bear their and his own costs respectively of this suit.

July 6, 1846. July 24, 1845.

A rehearing was had in this case ; and the following is the further opinion and decision of the court.

The property involved in this suit is the same which was in controversy in the case of the North American Coal Company above referred t>; and I need only refer to the report of that- case in 7 Paige, for the purpose of showing what are the trusts. And ¡he only additional facts having an intermediate conneeion with the trusts are that Mrs. Dyett has survived her husband and that there are several children of the maniage in esse, who are parties to this suit and are yet minors. The interest Mr. and Mrs. Dyett had in the property under the trust deed and which devolved upon her solely, by the happening of her husband’s insolvency in one thousand eight hundred and twenty-seven and by his subsequent death and the interest which her children took or became entitled to from the time of their respective births, were separate and distinct interests or estates in the property. In the parents, an equitable estate for life ; in the children, a remainder in fee. Both capable of being charged with debts, separately contracted, on the credit or for the benefit of the one or the other or for both as the case might be. And hence it was that, in the case of the North American Coal Company, it was held that debts contracted on account of or for the benefit of Mrs. Dyett’s equitable interest in the property, as a trust estate, were chargeable upon and were to be paid out of the rents and profits belonging to her and not out of the capital or fee belonging to the children. The complainant contends, however, that his is a debt of a higher character—that it originated in professional services rendered by him for the preservation of the inheritance, as well as for the protection of Mr. and Mrs. Dyett’s interests as cestuis que trust—and, consequently, that he is entitled to a decree that shall reach the inheritance or fee of the property and subject it to a sale for his benefit—such is one object of his bill in this cause. The answers deny his right to such a decree ; and so far, as facts are alleged, as entitling him to it, they are put in issue. And, yet, no witness has been examined on that branch of the case. He relies altogether upon the proceedings, orders and decrees in two former suits in this court for the evidence to sustain his claim to such relief; and insists that it appears to be a matter already adjudicated in his favor. He is met, however, with the objection that the proceedings and decrees in those suits can have no effect upon the rights of the infants who were not parties to them ; and I do not see how any thing that has heretofore been said or done, even though it should seem to have a direct bearing upon their rights of property, can be allowed to affect them. They have had no opportunity, until they were brought before the court in the present suit, to be heard or to have their rights properly attended to; and they now deny that the indebtedness was contracted for their benefit or for the preservation of their estate. The burthen of proof is thrown on the complainant, He is bound to show the debt was contracted. It is matter of evidence; and the proceedings in other suits, though of record, are not that sort of evidence which the court is bound to require in a case of such vital importance to the interests of these infant children. But, taking the pleadings, proofs, master’s reports and decrees in the former suits as we find them and admitting them as evidence (for they have been read and referred to as such in this cause) and what facts do they establish as being necessary to the complainant’s case against these infants? I do not understand them as proving that he was employed for the protection of the infants’ estate in the property and that the services he rendered were on their account as beneficiaries under the trust or as owners of the fee. Wherever the words trust estate or trust property or words of like general import are used in the various proceedings alluded to, they must be regarded as used solely with reference to the trust as it existed in favor of Dyett and wife and to the interest or estate which they had in the property, because there was no other or greater interest in the property than such as they were entitled to necessarily or properly involved in the litigation then going on. There were no parties to the suits as defendants other than Dyett and wife and their trustees. And the chancellor, necessarily, said in the case of the North American Coal Company that, if there were any creditors whose debts were chargeable upon the trust property generally, capital as well as income, they should make their claim by a distinct bill and to such a bill the children of Mrs. Dyett should be made parties. Hence, in their absence and upon a bill not filed for that purpose, the question of so extended a liability could not properly arise or be considered, much less be adjudicated. That it was not considered or passed upon in the suit in this court of the present complainant against Dyett and wife and Mr. Hoffman, as trustee, instituted for the purpose of taking an account of the complainant’s demands and of having the amount due to him ascertained and determined, is manifest from the final decree made in that cause on the eighth day of April one thousand eight hundred and forty-one; for it is there, expressly, provided, among other things, that the complainant should be at liberty to file a bill as he might be advised for the purpose of making his debt (ascertained to be five thousand two hundred and seventy-two dollars and fourteen cents) and his costs of suit a charge upon the capital of the trust estate and to have payment and satisfaction out of the same by writ of execution or otherwise. Thus showing that his debt had not, yet, become a charge and was not to be so made by that decree., Pursuant to the leave thus granted, the present bill has been filed, but the complainant has entirely failed, in my judgment, to support, by proper and sufficient evidence, this particular object of his bill. It is made a point, on this rehearing, that if the complainant has placed undue reliance on the proceedings in the former causes, as prima facie evidence to make out his case, he ought now to be permitted to correct the mistake and to be allowed still to take proofs. I know not how this can be done without departing from all rule in the practice and proceedings of this court. There is nothing shown to warrant me in adopting the suggestion within any of the principles on which the court acts in allowing causes to stand over, (as in Cox v. Allingham, Jacob’s Rep. 337,) to enable a party to supply some unforeseen and unexpected defect in his testimony or to produce some newly discovered evidence.

Again, it is asked that the court institute an inquiry before a master, as to the character of the complainant’s services and how far they contributed to preserve and benefit the inheritance, so that a portion, at least, of the debt may be charged thereon. But, the answer to this is, that the complainant has not shown, by any legal or competent evidence, that any part of his debt accrued for such service; and without some proof to that effect, in the first instance, there is no foundation on which to institute an inquiry with a view to an apportionment between the life interest of the mother and the fee of the children.

Upon the whole, it appears to me that I can make no decree more favorable to the complainant than the decree which I directed at the conclusion of my opinion of the ninth of April one thousand eight hundred and forty-five.

Let that decree be drawn up and entered.