Lambert v. Morgan
| Decision Date | 19 February 1909 |
| Parties | LAMBERT et al. v. MORGAN et al. |
| Court | Maryland Court of Appeals |
Appeal from Circuit Court of Baltimore City; Charles W. Henisler Judge.
In the matter of the distribution of the income of the trust estate of De Witt Clinton Winans, deceased, among the creditors of Ellen Barbara Williams, a life tenant. From an order of distribution between creditors, of whom J. Pierpont Morgan and others obtained a preference, Frederick Lambert and another, trading as Lambert & Cooper, and another, appeal. Affirmed.
Geo Stewart Brown and Stewart Brown, for appellants.
William Pepper Constable, George Weems Williams, Randolph Barton Jr., Aubrey Pearre, Jr., and Stuart S. Janney, for appellees.
The appeal in this case is taken from an order of the circuit court of Baltimore city passed on the 24th of September, 1908, overruling exceptions of the appellants to income account 5, filed in the case of Osmun Latrobe et al. v. Mathilde F. Winans et al., distributing the income of the trust estate of De Witt Clinton Winans, deceased, among the creditors of Ellen Barbara Williams, one of the life tenants. The exceptions of Thomas S. Bray, a judgment on mortgage creditor of the life tenant, were sustained. The court below, by the order appealed against, directed the account to be restated and the fund in the hands of the trustees to be distributed in payment of the claims of the appellees, as follows: (1) To J. Pierpont Morgan, the balance in full of his claim, as filed in the case, on December 21, 1901. (2) To Hotel Rennert Company, in full for claim filed in above case on June 22, 1905. (3) To Thomas Sprackman Bray, the balance in full of his claim as filed in the above case, on September 7, 1906. (4) To the Union Deposit Bank, Limited, of England, on account of claims filed in the above case on March 9, 1907. The appellants and appellees are mortgaged creditors of the life tenant, and there is no dispute as to the validity of these claims, but the questions involved relate to their rights and priorities of lien in the distribution of the fund held by the trustees. The fund in court for distribution amounts to the sum of $3,487.56, and is income of the trust estate of De Witt Clinton Winans, deceased, collected by the trustees and payable to Mrs. Ellen Barbara Williams, as life tenant, under the will. Mr. Winans died in 1892, leaving a last will and testament, wherein he directed his trustees after the death of his wife to pay the whole of the income of his residuary estate, held by the trustees, to Ellen Barbara Williams during her life, with remainders to third persons. On the 7th day of December, 1895, the circuit court of Baltimore city assumed jurisdiction of the administration of the trust estate. Mrs. Winans died shortly after the testator, and it is conceded that Mrs. Williams is the sole life tenant and is entitled to the payment of the income from the estate. There are six claimants to the fund or income now in court for distribution, and each claim is represented by a mortgage transferring and assigning the interest of the life tenant in the estate as security for loans made to her.
It is contended upon the part of the appellants that the execution and recording of their mortgages, being prior in date, gave them a prior lien, and no further notice by them or action on their part was necessary to perfect their lien. The appellees contend that the transfers were assignments of a fund, to wit, income accruing in the hands of trustees from the trust estate and payable to Mrs. Williams, and to render such assignments a complete transfer of her interest in the trust estate to effect a prior lien on the fund notice of these assignments to the trustees was necessary. The dates of execution, recordation, and filing of the various mortgage claims in controversy appear to be as follows:
------------------------------------------------------------------------------- ------------------------------------------------------------------------------- Names. Date of Execution. Date of Date of Filing. Recordation. ------------------------------------------------------------------------------- J. Pierpont Morgan.... May 3, 1901. May 22, 1901. Dec. 27, 1901. Hotel Rennert Company Nov. 5, 1904. Feb. 17, 1905. June 22, 1905. Thomas S. Bray ....... Oct. 15, 1896. Sept. 7, 1906. Judgment on Claim liquidated in 1906. Union Deposit Bank, Ltd., of London, England ............ Nov. 1, 1904. Nov. 28, 1904. Mar. 9, 1907. Lambert & Cooper ..... May 15, 1900. July 9, 1900. Dec. 11, 1907. Albert Dixon ......... Feb. 19, 1902. Mar. 7, 1902. Dec. 13, 1907. -------------------------------------------------------------------------------
The fund in court for distribution is the income of the trust estate from July 1, 1907, to January 1, 1908, derived from interest on railroad bonds, Baltimore city stock, and rents collected from real estate and payable to the life tenant under the will. The court below held by its order of September 24, 1908, in effect, that the claims here in controversy were mere assignments of a fund or choses in action, to wit, the income in a trust estate, enjoyed by the life tenant, and that they took effect as among the assignees from the date they were perfected by notice to the trustees, and that notice was given by filing the claims in the court proceeding and procuring proper orders thereon. The rule thus applied in the distribution of the fund or income in this case--that is, that the assignee who first gives notice to the debtor obtains priority--is approved and settled by numerous adjudications of the courts, both in this country and in England.
The cases of Dearle v. Hall, 3 Russ. 1, and Loveridge v. Cooper, 3 Russ. 30, are directly in point. The Lord Chancellor there said: The English rule has been approved and followed by the federal courts. Judson v. Corcoran, 17 How. 612, 15 L.Ed. 231; Spain v. Hamilton, 1 Wall. 604, 17 L.Ed. 619; Laclade Bank v. Schuler, 120 U.S. 511, 7 S.Ct. 644, 30 L.Ed. 704; Methven v. Staten Island, 66 F. 113, 13 C. C. A. 362; Third Nat. Bank v. City (C. C.) 126 F. 413. In 2 Story's Eq. § 1047, it is said, as the assignee is generally entitled to all the remedies of the assignor, so he is generally subject to all the equities between the assignor and his debtor. But, in order to perfect his title against the debtor, it is indispensable that the assignee should immediately give notice of the assignment to the debtor, for otherwise a priority of right may be obtained by a subsequent assignee or the debt may be discharged by a payment to the assignor before such notice. The same doctrine is also stated in 2 Pomeroy's Eq. Jurisprudence, §§ 695, 698. And in Robinson v. Marshall, 11 Md. 251, this court approved the doctrine laid down by these eminent text-writers, and held that the assignee of a claim or chose in action cannot recover from the original debtor, who had paid it to the assignor after, but without notice of, the assignment. While some of the state courts hold to the contrary, we think the doctrine sanctioned by the English courts, approved by the federal courts, and by many of our state courts is based upon sound reasoning and sustained by the weight of authority.
But it is earnestly contended that Mrs. Williams had at the time of the execution of the mortgages in question such an interest in the trust estate as she could mortgage, and their recordation gave constructive notice to every one as to the priority of the liens thereunder. It will be seen, however that the trust property in this case, "the income arising out of the residuary estate," was but a money interest, and could not be mortgaged as realty. The instruments, being mere assignments of the fund, were not within the provision of our registry act, and their recordation could give no greater effect than the law itself gave. In Glenn v. Davis, 35 Md. 208...
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