Pennington v. Smith

• Decision Date: 11 June 1895
• Citation: 69 F. 188
• Parties: PENNINGTON v. SMITH et al.
• Court: U.S. District Court — Southern District of New York

69 F. 188

PENNINGTON v. SMITH et al.

United States Circuit Court, S.D. New York.

June 11, 1895

There is, practically, no dispute regarding the facts. George Condit Smith was the trustee of a fund of $13,356.87, the beneficiaries being his two infant daughters. This fund was created by the will of his first wife, Sallie L. B. Smith who died in July, 1890. By the terms of the will the testatrix, after making certain specific bequests, gave one equal undivided half part of the remaining property to her husband and the other half to her children. The children's share, during their minority, was to be held by their father in trust. At the time of her death Mrs. Smith was a resident of New Jersey. Her will was proved before the surrogate of Essex county in that state and letters testamentary were issued to the said George Condit Smith, her husband. In July, 1892, Mr. Smith married the defendant Emma Condit Smith. In January, 1893, the resident at East Orange N.J., which was the property of the first Mrs. Smith, was duly sold to Thomas B. Crossley, who executed a purchase-money mortgage thereon for $17,500 to 'George Condit Smith, personally, and as special guardian of Louise Condit Smith and Sallie Barnes Smith, infants. ' The infants' share in said mortgage was the said sum of $13,356.87 which the trustee duly acknowledged to be a prior lien to the balance of $4,143.13 due to him as an individual. On the 20th of March, 1894, Crossley paid $5,000 on the mortgage by check payable to the order of Smith individually and received a receipt signed by Smith 'personally and as guardian.' This check was sufficient to pay Smith's interest in the mortgage in full and $856.68 of the infants' interest. George Condit Smith indorsed this check to the order of the defendant, Emma Condit Smith, and it was by her deposited in the Fifth Avenue Bank and collected. On the 25th of September, 12 days before the death of Mr. Smith, Crossley made another payment of $5,000, the check being made payable to 'Geo. Condit Smith Guardian.' The check was indorsed by Mr. Smith as guardian to the order of the defendant Emma Condit Smith and was by her deposited, as before, in the Fifth Avenue Bank. Crossley also paid the interest on the mortgage by checks which were indorsed by Smith as guardian and were in like manner deposited by Mrs. Smith in the defendant bank. On the 7th of October, 1894, George Condit Smith died leaving a last will and testament by which he gave all his property to his widow, the defendant Emma Condit Smith, and appointed her guardian of his children and executrix of his will. On the 16th of the same month the complainant was appointed by the chancellor of New Jersey 'trustee for Louise Condit Smith and Sallie Barnes Smith, severally, in the room and stead of George Condit Smith, deceased, late of East Orange, in the state of New Jersey, with all the rights, powers, duties and privileges incident to the appointment. ' Before entering upon his duties he was required to give bond to the chancellor in the sum of $60,000 as trustee for each of said infants. By an order, dated October 16, 1894, the complainant was also appointed 'special guardian in the place and stead of George Condit Smith, special guardian, deceased, for Louise Condit Smith and Sallie Barnes Smith, severally, with all the rights, powers, duties and privileges incident to the appointment. ' He was required to give a bond of $15,000 as guardian of each infant. George Condit Smith died insolvent. At the time the defendant, Mrs. Smith, received the checks in question she knew of the interest of the infants in the New Jersey property. By stipulation made at the argument the bill was amended by inserting an allegation that the parties are citizens of different states and also that the complainant was on October 16, 1894, appointed special guardian of the said infants. The bank has not answered, but there is a stipulation that it will hold the moneys, mentioned in the bill, subject to the decree of the court.

John Brooks Leavitt, for complainant.

Alexander Thain and Thomas M. Tyng, for defendant Smith.

COXE District Judge.

This action is brought by the complainant, a citizen of New Jersey, as trustee and special guardian appointed by the court of chancery of that state, against the defendants, who are citizens of New York, to impress the trust upon certain funds in their possession and compel the delivery thereof to him. Stated more briefly it is a suit by a trustee to compel a return of property belonging to the trust fund which the defendants improperly withhold therefrom. The right of a trustee appointed by the courts of one state to maintain such an action in the courts of another seems to be established by the decision in Toronto General Trust Co. v. Chicago, B. & Q.R. Co., 123 N.Y. 37, 25 N.E. 198. At page 46, 123 N.Y., and page 198, 25 N.E., the court says:

'Having thus been clothed with the title to the trust estate in Canada by proceedings in the Canadian action, can it, standing upon that title, maintain an action here as trustee? We think this question was erroneously answered in the negative in the court below. It is the general rule that he who is the legal owner of property may maintain an action wherever it may be for its recovery, or for damages for its conversion. Generally, his capacity to sue in such cases grows out of his legal ownership. It is believed that there is no exception to the rule where the legal owner sues in his own right and not in a representative capacity. * * * Its (the trustee's) position is not like that of an executor or administrator, who is simply a representative of a dead person, gathering in and administering upon property for the benefit of others. But it is more like that of the legal owner of property who pursues it or brings suit about it for his own benefit.'

Was the complainant properly appointed? Unless some reason not now suggested is brought to its attention the court does not feel justified in declaring...