Field v. Flanders
| Decision Date | 30 April 1866 |
| Citation | 1866 WL 4516,40 Ill. 470 |
| Parties | BENJAMIN M. FIELD et al.v.GEORGE W. FLANDERS |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
APPEAL from the Superior Court of Chicago.
This was a bill in equity filed by Benjamin Field, Amzi Benedict and Peter W. Field, in the Superior Court of Chicago, against George W. Flanders, Nelson R. Norton, Pliney M. Perkins, Clark R. Norton, Orson Sheldon, for an account by the assignees of Sheldon, and for an account by Flanders for funds he had received by sale of the property assigned by Sheldon under execution.
Answers and replications were filed, and the case was heard and a decree rendered dismissing the bill, to reverse which, the case is brought to this court.
Messrs. HELM, TAYLOR & PENCE, for the appellants.
Messrs. MCALLISTER, JEWETT & JACKSON, and Mr. E. S. SMITH, for the appellee. Mr. CHIEF JUSTICE WALKER delivered the opinion of the Court:
This was a creditor's bill exhibited by appellants, against appellee and others, for an account by the assignees of Sheldon, of trust property, assigned to them by him for the benefit of creditors. Also, to compel Flanders to account for a portion of the trust fund which had come to his hands. The bill alleges, that Sheldon made a valid and legal assignment of his property for the benefit of his creditors, and appointed the two Nortons and Benedict trustees of the fund. That complainants at the time were, and still are, creditors of Sheldon. That Flanders, and Nelson R. Norton, one of the assignees, by fraud and collusion, procured a judgment in favor of the deputy United States marshal, and against the assignees, by which it was held, that the assignment was fraudulent and void, thereby ratifying his illegal act in having levied upon and sold a portion of the trust property for the satisfaction of a debt due to him and his partners. The bill prays that Flanders be required to pay the money received by him on his execution, for the benefit of the creditors of Sheldon, and that so much of the same as complainants may be entitled to receive on their debt against Sheldon be paid to them, and that the assignees be required to render an account. The bill makes Flanders, Sheldon and the assignees defendants, and waives their answers under oath. Flanders was alone served with process, but the other defendants were served by publication.
Flanders answered the bill, and alleges that the assignment was fraudulent and void, and denies all fraud or collusion in procuring the judgment against the assignees in the suit against the deputy United States marshal for attaching the goods. The bill was taken as confessed against the other defendants.
A hearing was had in the court below, on the bill, answer, pro confesso orders, exhibits and proofs, and the court refused the relief and rendered a decree dismissing the bill, and against complainants for costs. The cause is brought to this court to reverse that decree.
It appears from the evidence in this case, that Orson Sheldon, on the 26th day of October, 1857, made an assignment of all of his property, to Nelson R. Norton, Pliney M. Perkins and Clark R. Norton, for the benefit of his creditors. His indebtedness at the time was upward of $34,000. None of his creditors were named, or preferred in the deed of assignment. The property transferred consisted of merchandise, notes and book accounts, together with some real estate; but no schedule of the personal effects was annexed to, nor were they particularly described in, the deed. Soon after the assignment was made, George W. Flanders, etc., merchants in Chicago, attached a portion of the goods thus assigned, claiming that the assignment was fraudulent, and intended to hinder and delay creditors. The writ was sued out of the United States Circuit Court for the State of Wisconsin. They afterward, in January, 1858, recovered a judgment against Sheldon in that proceeding, for the sum of $2061.31 damages and costs. An execution was issued on the judgment, and the goods thus attached were sold for the sum of $1239.94, of which sum plaintiffs in execution received on their judgment $1172.39, the amount remaining after paying the costs.
There is no dispute that Field & Co. and Flanders & Co. were creditors when the assignment was made by Sheldon, and, if it was valid, both had a right to participate pro rata in the fund. But, if it was fraudulent and void, then it was not binding on the creditors, and whoever procured prior liens on the property must be preferred in the payment of their debts. Or, even if the assignment was bona fide and valid, if defendant in error levied on and sold the property, and a court of competent jurisdiction, having the requisite parties before it, held the assignment void, and the levy and sale under Flanders' attachment legal and binding, then he must be protected in the advantage he has acquired, unless that judgment was obtained by his fraud and collusion.
When the assignment was made and the trust accepted by the trustees, all of Sheldon's creditors became in equity vested with a right to participate in the trust fund in pro rata proportions. This interest, although only equitable, was vested, and they could not be divested of that right by the fraudulent acts of the trustees and their grantor. Their rights could only be extinguished by their own acts, the legal acts of the trustees, or by the adjudication of a court of competent jurisdiction. If the trustees, after accepting and entering upon the performance of the trust, should waste or misapply the fund, they would become liable to account to the beneficiaries in the same manner as other trustees. Like other persons acting in a fiduciary capacity, their acts are under the control of a court of equity. The fund in their hand, being a trust, is under the control of the law, and they are liable to account in equity.
But all of their acts within the scope of the authority conferred by the deed of trust, and within the duties imposed by the law, are binding upon the creditors, upon the person creating the trust, and upon themselves. But unauthorized acts do not bind the creditors or the person creating the trust. And either may require the trustees, by bill in equity, to account for a misapplication of the funds or other injurious...
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