Cagger vs. Howard

Cagger vs. Howard. The I39th rule, relative to the appointment of the same person as receiver in different creditor’s suits, only extends to the case of two or more bills filed by different persons against the same judgment debtor; and does not, in terms, apply to cases where the first suit is against two defendants, one of whom is not a party to the second suit. The object of the 139th rule was to save the expense of different receiverships, and to prevent a conflict of claims, between receivers, as to the property assigned to them respectively by the defendants in the different suits. The principle of the rule should therefore be adhered to, even where the same person is made a defendant alone in one suit, and is joined with others as defendant in another suit; when the defendants in the respective suits have-no conflicting claims; and where the receiver in one suit is willing to act as receiver in the other, and to give such additional security as is required by the court. In cases coming within the rule, a receiver who has consented to accept the trust in one suit may be compelled to accept and execute the trust in a second suit; provided both suits are commenced before the chancellor, or before the same vice chancellor ; so as to give the court jurisdiction over such receiver. And if the receiver refuses to give security in the second suit, he may be removed from his trust as receiver in the first; and the court may appoint another person receiver in both suits.- The assignment to the receiver, executed by the defendant in a creditor’s suit, need not contain a reservation of property which he holds merely in the character of trustee for others, upon a valid trust, and in which property he has no beneficial interest. Nor is it necessary that the assignment should excgpt property which the defendant has already assigned to a receiver appointed in a previous suit. But-such an assignment should contain an exception of such property as is by law exempted from sale on execution; where it is made to appear to the master that the defendant is entitled to have any part of his property thus exempted; and this, notwithstanding the general language of the order of reference. This was an application, by the defendant in a creditor’s suit, for an order that the master review his decision as' to the person to be appointed the receiver in this cause, and also that he review his decision as to thé form of the assignment which the defendant was required to execute, under the decree. The suit was commenced in July, 1845, against L. Howard, the only defendant therein; and the usual decree was obtained, including, a direction for the appointment of a receiver, <fcc. according to the provisions of the 191st rule. Upon the execution of the order of reference, it appeared that a former creditor’s bill had been filed before the vice chancellor of the first circuit, in 1843, by T. W. Birdsall and others, against the present defendant and J. Walsh; that soon after the commencement of that suit, W. J. Schenck was appointed a receiver therein, and gave security for the performance of his trust, in the sum of ,$500. The defendant in the present suit, therefore, insisted before the master, that Schenck must be appointed as the receiver in this suit also; and that it was improper to appoint any other person. The complainant however produced proof that Schenck absolutely refused to consent to act as receiver in this suit. The master thereupon appointed D. Hinds such receiver, and required him to give security in the sum of $3000 for the faithful execution of his trust. The master settled the form of an assignment to be executed by the defendant; which the latter objected to, upon the ground that it did not contain an exception of the property which he had assigned to the receiver in the former suit; or of property held by the defendant in trust; or of property which was not liable to execution. The master overruled these objections, and settled an assignment which purported to transfer to the receiver all the estate, real and' personal, chattels real, moneys, outstanding debts, things in action, equitable interests, property and effects whatsoever of the defendant, or belonging to or due to him' or in which he had any estate, right, title or interest, at the time of the commencement of the complainant’s suit; subject to the present and future order, direction and control of the court of chancery in relation thereto. N. Hill Jun., for the complainant. J. Edwards, for the. defendant. [MAJORITY — The Chancellor.] The Chancellor. The master was right, in this case, in refusing to appoint Schenck the receiver, although he had been duly appointed in the suit commenced against this defendant and Walsh about two years before. The 139th rule did not in terms apply; as the language of the rule only extends to the case of two or more bills, filed by different persons, against the same judgment debtor or judgment debtors. The object of the rule, however, was to save the expense of different receiverships, and to prevent a conflict of claims between them as to the property assigned to them respectively, by the defendant, in the different suits. The principle of the rule should therefore be adhered to, even where the same person is made a defendant alone as the judgment debtor in one suit, and is joined with others as .defendants in another suit; where the defendants in the respective suits have no conflicting claims with each other in relation to the property which is directed to be assigned and delivered to the receiver; provided the receiver in one suit is willing to act as the receiver in the other, and to give such additional security as is required by the court. In cases coming within the terms of the rule, a receiver who has consented to accept the trust in one suit has no right todecline it in another. And where the suits are all commenced before the chancellor, or before the same vice chancellor, so as to give the same judge of the court jurisdiction over such receiver, he may be compelled to accept and execute the trust, in a second suit. Or if he will not give the additional security, which may be required of him in such second suit, the court may remove him from his receivership in the first suit, and appoint another person receiver, in both suits, who is able and willing to give the additional security required. Here the first suit was commenced before the vice chancellor of the first circuit, who alone has the power to remove such receiver in case he should neglect to accept the trust and to give the additional security required in the present suit. The evidence before the master who appointed the receiver in 1843, must have showed that a bond in the penalty of $500 was sufficient to cover all the property which the judgment debtors then had. But in this suit, the master has decided that the receiver must give security in the sum of $3000. It is evident, therefore, that the greatest portion, if not all, of the property which.the defendant had at the time of the filing of the present bill, was property acquired by him since the former suit was commenced. Or that the former receiver has been guilty of a neglect of his duty; or that there had been collusion between the purchaser of the complainant’s demand in the former suit and the defendant, to keep the property out of the hands of other creditors. For Schenck, the receiver in the former suit, swears, that although he consented to be appointed receiver in that suit; he never acted as the receiver, and was never called on to act as such; and that he did not know the defendant Howard. Even the defendant himself testified before the master that he did not know that he ever executed an assignment of his property. The receiver also appears to be ignorant of the fact that an assignment was exe • cuted; though, from the testimony of Robinson, it appears that an assignment must at some time have been made, so that it came into the hands of the complainants’ solicitor in that suit. So much of this application, therefore, as seeks to reverse the decision of the master appointing Hinds the receiver, in this cause, must be denied with costs. This disposes of the original application, which was directed to stand over for the purpose of enabling the defendant to procure affidavits, &c. He now shows that 'he was a householder and had a family in this state, before the commencement of this suit, and at the time of the decree in this cause. There was no necessity that the assignment, to be executed by the defendant, should contain an express reservation of property which he held merely in the character of trustee for others, upon a valid and subsisting trust, and in which property the defendant had no beneficial interest. ' For the assignment, upon its face, shows that it is made under an order of the court directing the appointment of a receiver of the money, property, things in action, and effects of the defendant merely. Nothing will pass, therefore, under the general words of that assignment, except property, or things in action, in which the defendant had some beneficial interest at the time of the commencement of the suit. Nor was it necessary to except property which the defendant had already assigned to the receiver appointed in the suit commenced in 1843. However broad the terms of the assignment may be, it is impossible that it should transfer to the receiver property in which the defendant had no interest, whatever, at the time of the execution of such assignment. But in this case, if the defendant had any interest in property which he had assigned to the receiver in the former case, it was proper that the defendant should assign it to the receiver in this suit; so that the latter would have the right to claim so much thereof as might not eventually be found to belong to the complainants in such former suit, and might call upon the former receiver to account for the same. Again, the defendant does not distinctly state that he now has any property, or things in action, in which he had a beneficial interest at the time of the commencement of the former suit in 1843. The defendant’s objection that the assignment, as settled by the master, should have contained an exception of property which was not liable to execution, was much too. broad; as that exception would have embraced all equitable interests, as well as all choses in action, of the defendant. I presume the defendant only intended, however, to claim an exception of such articles as were by law exempted from sale on execution, by reason of the party against whom the execution is issued being a housekeeper or having a family for which he provides. To that extent, the defendant in a creditor’s bill is to be permitted to retain his property. And the assignment to the receiver should contain an exception, by some appropriate words, which will prevent the legal title to such exempt property from passing to the receiver by such assignment; where it is made to appear to the master that the defendant is entitled to such exemption. Even if the order for the appointment of the receiver, and directing the defendant to assign and deliver over his property, is expressed in general terms, and contains no exception of exempt property, the master, upon ascertaining the fact that the defendant is entitled to the benefit of the statutory exemption, should insert the proper exception in the assignment; notwithstanding this general language of the order of reference. (See Fitzhugh v. Everingham, 6 Paige's Rep. 29.) It does not distinctly appear, in this case, whether the debt upon which the judgment that forms the foundation of this suit was recovered, was contracted before or after the act of 1842, increasing the amount of exempt property ¡ though, from the examination of the defendant, it is probable that a part of the debt was contracted as early as 1837. In any event, however, the defendant, as a householder, was entitled to the exemption allowed by the twenty-second section of the article of the revised statutes relative to executions against property. (2 R. S. 367.) The assignment, as settled by the master, must, therefore, be modified by inserting therein the following exception immediately before the commencement of the habendum clause: “ Except such articles of property as were, at the time of making the above recited order, legally exempt from levy and sale under any execution which might have been issued on the judgment, against the said party of the first part, mentioned and set forth in the bill of complaint filed in the cause aforesaid, in the court of chancery; upon the ground that the said party of the first part was, at the time of making such order, a householder, or had a family for which he provided.” Such an exception will protect all the rights of the defendant, whether the debt for which the complainant’s judgment was recovered was contracted before or after the passage of the act of 1842, enlarging the amount of property which is exempt from sale upon execution. And it will, at the same time, secure to the complainant all his legal and constitutional rights to obtain satisfaction of his debt out of the property of the defendant.