Unknown County MI Archives Court.....Suydam, V. Dequindre 1837 ************************************************ Copyright. All rights reserved. http://www.usgwarchives.net/copyright.htm http://www.usgwarchives.net/mi/mifiles.htm ************************************************ File contributed for use in USGenWeb Archives by: Deb Haines http://www.genrecords.net/emailregistry/vols/00003.html#0000719 August 9, 2008, 8:27 am Source: Cases In Chancery Written: 1837 CASES IN CHANCERY. FIRST CIRCUIT Richard Suydam and others v. Antoine Dequindre and others. Bill to enforce a trust: Parties. To a bill to enforce a trust, it is not necessary to join as defendants parties having a prior interest subject to which the assignment was made. (a.) The trust being under a general assignment for the benefit of creditors, some of the creditors filed a bill to have the assignment set aside as fraudulent, or, in case it was sustained, then to have the trust enforced. The bill averred that certain other creditors had been paid their demands in full. Held, not necessary to make such persons parties to the bill. One of the creditors who had not been paid was made a defendant instead of complainant. Held, that as complete justice could be done between the parties on this bill, the fact of his not being made complainant was not good cause of demurrer. The fact that a time is limited in the assignment for the closing of the trust, will not preclude the filing of the bill before that time has expired, where the bill alleges that the assignee has done nothing in the execution of the trust. Assignment: Acceptance. An assignment for the benefit of creditors absolute in its terms, and which is accepted by the assignee, dedicates the property absolutely to the purposes of the trust, notwithstanding it is made without the knowledge or concurrence of the creditors. By the execution and delivery of the assignment the relation of trustee and cestui que trust is constituted at once, without any express assent of the creditors; and it cannot afterwards be revoked except upon the dissent of creditors. Assignment for the benefit of creditors: Receiver. The court in decreeing the execution of the trust under an assignment, under the special circumstances of the case, appointed a receiver for the purpose. The complainants in this case file their bill as creditors of Antoine Dequindre, seeking to have an assignment made by him to Peter J. Desnoyers (who is made defendant), and which purports to be for the benefit of his creditors generally, set aside as fraudulent, or, in case it is sustained, then to have the execution of the trust thereunder compelled, and for the appointment of a receiver for the purpose. James Boyd, jr., one of the creditors, was made a defendant; others were not made parties at all, the bill averring that their demands had been paid in full. The assignment was set out in full; it bore date October 24, 1836, and the trustee was directed to proceed to sell the assigned property at private sale, and that such of it as should not be thus disposed of within eighteen months should be sold at public auction within two years thereafter. The bill was filed before this two years had expired. The Detroit and Pontiac Railroad Company, which appeared by the recitals in the assignment to have rights in some of the assigned property, was not made a party. The bill averred that the assignee had taken no steps in execution of the trust. The defendants demurred to the bill. A. D. Fraser, for defendants. E. C. Seaman, for complainants. The Chancellor,—The first point made in support of the demurrer is that the time limited in the deed of assignment for closing the trust had not expired at the time of filing the bill in this cause. The deed of assignment was made on the twenty-fourth day of October, 1836; the time limited for closing the trust expired on the twenty-fourth day of April, 1840, and the bill was filed on the ninth of March, 1840. The bill alleges that the assignment was fraudulent, and it is further alleged that the trustee, up to the time of filing the bill, had neglected to take possession of the property, or to take any steps towards executing the trust, and had declared his intention not to execute it. The demurrer cannot be sustained on this ground. The complainants who are judgment creditors were authorized under these circumstances, and before the time had expired for closing the trust, to resort to this court either for the purpose of setting aside the assignment or to procure the aid of this court to compel an execution of the trust. Other causes of demurrer were suggested ore tenus: First, that the Detroit and Pontiac Railroad Company should have been made parties. I think this was unnecessary. Their rights accrued prior to the execution of the deed of assignment, and are set forth in that instrument, which is recited in the bill, and if a sale of the premises shall become necessary, they must be sold subject to the rights of the company. (Eagle Fire Company v. Lent et al., 6 Paige, 635.) It is also urged that several persons who were named as creditors in the assignment are not made parties to the bill; as to all those persons it is alleged in the bill that the debts due to them have been paid and extinguished. This is sufficient upon demurrer. If the allegations in the bill in this respect prove true, it was not necessary to make them parties. The other objection is that James Boyd, jr., should have been made a complainant instead of a defendant. It would seem to me to have been preferable if the bill had been so framed, but he has been made a party, and the court will be able to settle and adjudicate on his rights in the case, under the present bill. It is merely a technical objection, and not sufficient to sustain the general demurrer. Demurrer overruled and leave to answer. The defendant Dequindre put in an answer denying all fraud, and claiming the right to revoke the deed of assignment on the ground that the creditors were not parties or privies to the deed, and never claimed any benefit under it until about the time of filing the bill in this case. After the filing of this answer, the complainants' solicitor moved for the appointment of a receiver. E. C. Seaman, in support of the motion. 1. The deed from Dequindre to Desnoyers created a trust, which Desnoyers accepted by executing the deed and putting the same on record. (See Jeremy Eq., 138.) 2. Desnoyers, having accepted the trust, was bound to execute it faithfully, and a court of equity has power to enforce its execution in behalf of the cestui que trust (2 Story Eq., 303, 304; Jeremy Eq., 20; Sands v. Codwise, 4 Johns., 536); and if the trustee dies or is incompetent or refuses to act, or if there has been an omission to appoint one, the court will appoint. (Jeremy Eq., 20, 163.) In this case Desnoyers utterly refused to act as trustee before the bill was filed, and the time within which he was authorized to sell expired in April, 1840, and he is now a naked trustee holding the legal title without the power to sell. 3. As Desnoyers has refused to act, and his power to act has expired, a receiver should be appointed to collect the rents and profits for the benefit of the creditors, as well as to take charge of the property. In all cases where there is danger of trust property being squandered, a court of equity will appoint a receiver. (Story Eq., secs. 827-829, 836; Jeremy Eq., 174, 248; 2 Madd. Ch., 189; 12 Vesey, 4; Hart v. Crane, 7 Paige, 37.) 4. Desnoyers, as well as Dequindre, is liable for the rents and profits of the trust property accruing since the execution of the trust deed, and should be ordered to pay the same forthwith to a receiver for the benefit of the creditors (Sands v. Codwise, 4 J. R., 536; Ib., 604, 605); and a court of equity will hold a trustee responsible for the consequences of a breach of trust, whether he derives any benefit from it or not. (2 Madd. Ch., 113; Adams v. Shaw, Schoales & Lefroy, 272; 17 Ves., 489; 2 Story Eq,, secs. 1268, 1269, Ib., 1275, 1276.) A court of equity will also hold a trustee responsible for losses resulting from a willful default. (Osgood v. Franklin, 2 Johns. Ch., 27.) And where a trustee keeps a trust fund in his hands for a year, and omits to pay over the proceeds, the court will charge him with interest. (Gray v. Thompson, 1 Johns. Ch., 82.) A. D. Fraser, contra. 1. The deed was executed without the privity of any of the creditors; they are not parties thereto, nor ever assented to it, or until now claimed the benefit of it, and it was without any consideration. He may therefore revoke it. Where a person does, without the privity of any one, without receiving consideration, and, without notice to any creditor, himself make a disposition, as between himself and trustees, for the payment of his debts, he is merely directing the mode in which his own property shall be applied for his own benefit, and that the general creditors or those named in the schedule are merely persons named there for the purpose of showing how the trust property, under the voluntary deed, shall be applied for the benefit of the volunteers. {Garrard v. Lord Lauderdale, 3 Sim. Ch., 1; Walwyn v. Coutts, 3 Meriv., 707; S. C., 3 Simons, 14.) The deed in this case was a voluntary deed. Dequindre was dealing with his own property for his own personal benefit and accommodation in paying his creditors as he thought proper. (Page v. Broom, 4 Buss., 6.) The creditors never submitted or assented to take the benefit of the deed, or conformed to its terms, or abstained from suing him in consequence. (2 Sugden, 187.) If property be conveyed by a debtor in trust for the benefit of creditors who are neither parties nor privy to the deed, the deed merely operates as a power to the trustees to apply the property in payment of debts, and such power is revocable by the debtor. (Acton v. Woodgate, 2 Mylne & Keene, 492.) 2. If the creditors are entitled to any benefit under the deed of assignment, the remedy is at law, as there is a covenant on the part of Desnoyers to execute the alleged trust. If a trust is made, and no agreement to execute it, the trust is in equity, but if there is it is to be enforced at law. (Baldwin, 422.) 3. Even if complainants should be entitled to relief, and this should be the competent mode, yet it is insisted that this bill was prematurely filed—the bill being filed on the 9th of March, 1840, although the alleged trust did not expire till 24th April, 1840. A plaintiff must have the right he asks when he puts his bill upon the file. (4 Buss., 355.) 4. In any stage of the case the want of equity is fatal. (Baldwin, 416.) The Chancellor.—On the twenty-fourth day of October, 1836, Dequindre, one of the defendants in this cause, made an absolute assignment and conveyance of certain real and personal estate to the defendant, Desnoyers, for the purpose of paying his debts, as designated in schedules attached to the deed of assignment. The directions in the deed of assignment were that the trustee should sell at private sale, and that such portions of the property as should not have been sold at the end of eighteen months should be sold at public auction within two years thereafter. Among the creditors who were directed to be paid from the proceeds of such sale were the complainants in this cause. Desnoyers accepted the trust expressly, was a party to, and signed and sealed the deed of assignment at the time it was executed; but, as appears from the bill and the answers in the cause, has never either taken possession of the property or sold or disposed of any part of it, or, indeed, done anything toward carrying the objects of the trust into execution. The two years within which he was to have closed the trust, by sal.e at auction, of whatever should not have been sold at private sale, expired on the twenty-fourth of April, 1840. On the ninth of March, 1840, this bill was filed for the purpose of either coercing the application of this property to the purposes expressed in the deed of trust, or to have it set aside and vacated. A preliminary objection was made that this bill was prematurely filed; but I have no doubt that after so long a time had elapsed, and after the trustee had refused to proceed in the execution of the trust, the complainants could institute proceedings to set aside the deed or compel the execution of the trust. But this motion is resisted principally upon the ground that the deed of trust was voluntary, that the creditors were not parties to it, nor ever assented to it, and have not, until now, claimed the benefit of it; and, therefore, that Dequindre may revoke it. There is an apparent, and, perhaps, an actual conflict of the authorities on this subject. The case of Walwyn v. Coutts, 8 Meriv., 707, seems to be the case referred to in subsequent decisions as the basis of this doctrine. In that case the dedd of trust was voluntary and without the knowledge of the creditors, and, before assent had been expressed or any rights acquired, new deeds had been made, materially varying the trust, and, in fact, in substance revoking the first deed. The case of Garrard v. Lord Lauderdale, 8 Simons, 1, may be distinguished, from the case under consideration. It was an indenture of three parts, the grantor, the trustees, and the creditors. The creditors had not executed the deed, and, before the bill in that case was filed or any assent expressed, a different disposition had been made of the property, and the assignment in fact revoked. Some other cases have been referred to to sustain this proposition. On the other hand, the cases are numerous affirming a contrary doctrine, or, if not directly adverse, at least difficult to be reconciled with the cases before referred to. In Cumberland v. Codrington, 8 Johns. Chn 261, it is said that where a trust was created for the benefit of a third person, he may affirm the trust and enforce its execution. It has also been held that when the deed of trust is absolute in its terms, the assent of the creditors is not required, that the relation of trustee and cestui que trust was at once constituted so that the assignor could not recall the deed. (Ellison v. Ellison, 6 Vesey, 656.) Many other cases may be referred to sustaining this ground. Without undertaking to reconcile the cases of Walwyn v., Coutts and Garrard v. Lord Lauderdale with the cases last above referred to (and it seems to me it would be difficult entirely to do so), it is sufficient to say that those cases differed in many essential particulars from the other class of cases, and also from the one under consideration. The deed in this case is absolute in its terms; no assent of the creditors is required. Desnoyers, the assignee, positively and expressly accepted the trust. The property is, in fact, dedicated to the payment of the debts of these, among other creditors. Before filing the bill a portion of the creditors require the trustee to proceed in the execution of the trust, which he declines to do. The deed of trust is not revoked. No step of that kind is taken or intimated. The creditors find themselves estopped by this deed from collecting their debts by the ordinary course of proceedings at law, and the property remains sheltered and locked up in the hands of the assignee. Under this state of things there can be no doubt that it is the duty of the court to enforce the execution of the trust or to set aside the assignment as intended to hinder and delay the creditors. The provisions of the assignment are fair and equitable, and such as there can be no objection to carrying into effect. I am disposed to take the ground that where the conveyance is absolute, vesting the property in the assignee, as in this case, no express assent of the cestuis que trust is required—and, while the property remains unchanged, the cestuis que trust, although the instrument was made without their concurrence, may require and coerce the execution of the trust. I am inclined to the opinion that the relation of trustee and cestuis que trust was constituted at once on the execution of the deed, and that it could not afterwards have been revoked or varied except upon the expressed dissent of the cestuis que trust. As to whether the trustee shall be required to proceed and execute the trust, or a receiver be appointed, I have had some hesitation, but, as it seems that the trustee, on being required, refused to proceed in the execution of the trust, and states that he accepted the trust only on condition that he should not be required to devote his personal attention to this business, it will be necessary that a receiver should be appointed, over whom the court can exercise a direct control. I shall at present limit the order to the appointment of a receiver to receive the rents and profits of the assigned property, and, as the amount of debt has not been precisely ascertained, it will be necessary that a reference should be made to ascertain the amount still unpaid. And, as it cannot now be ascertained how much of this property it will be necessary to sell, the directions as to the amount to be sold, and the manner in which it shall be sold, will be reserved until the coming in of the report. Order accordingly. --------------------- (a.) Only those whose interests would be affected by the decree need be made parties. Norris v, Hurd, Wal. Ch., 102. 320 Additional Comments: CASES DETERMINED IN THE COURT OF CHANCERY FOR THE STATE OF MICHIGAN BY ELON FARNSWORTH, Chancellor File at: http://files.usgwarchives.net/mi/unknown/court/suydam69gwl.txt This file has been created by a form at http://www.genrecords.org/mifiles/ File size: 17.9 Kb