Thomson v. Albert

• Decision Date: 16 March 1860
• Parties: APPEAL OF LAURENCE THOMSON, and others, in the case of WINN & Ross v. ALBERT & WIFE, and others.
• Court: Maryland Court of Appeals

15 Md. 268

APPEAL OF LAURENCE THOMSON, and others, in the case of WINN & Ross v. ALBERT & WIFE, and others.

Court of Appeals of Maryland.

March 16, 1860

Where the Court of Appeals has declared a deed of trust for the benefit of creditors " to be void, that decision is the law of the case, and must govern in all further proceedings in the same cause, notwithstanding a different decision upon a similar deed, may have been subsequently made by the court in another case.

Proof of a usage among merchants in Baltimore sanctioning preferences for claims for money lent for short periods without security or interest, in cases of conventional arrangements between a merchant in embarrassed circumstances and his creditors, does not establish a general usage, which, per se, creates such a lien on the estate of an insolvent, as should be enforced by the court against the consent of his other creditors, and in opposition to the principles of the insolvent system.

The design of the 2nd sec. of the Act of 1825, ch. 117, in reference to appeals from decrees in equity where accounts have been stated and exceptions filed thereto, was, that the record should present to the appellate court, the same question on which the court below had decided.

Where exceptants appeal from an order overruling their exceptions to an account, because it did not allow a preference to their claims and ratifying the account, the onus is on them to show error in such order, and they can, in the appellate court, insist upon their own exceptions only, and the order cannot be reversed, unless there was error in overruling such exceptions.

APPEAL from the Circuit Court for Baltimore city.

This appeal was taken on the 2nd of December 1857, by the appellants, from an order of the court below, passed on the 7th of November 1857, ratifying the auditor's account J in the case of Winn & Ross vs. Albert & wife, et al., and directing the proceeds to be distributed according to that account, and overruling all exceptions in the cause, and all other other accounts of the auditor inconsistent with this order.

The prior proceedings and decisions in the case of Winn &amp Ross vs. Albert & wife, et al., will be found in the reports of the various appeals in 2 Md. Ch. Dec., 42; 7 Gill, 446; 2 Md. Ch. Dec., 169; and 5 Md. Rep., 66. The appellants are the creditors named in the schedule annexed to the deed of trust for the benefit of creditors, executed by Samuel Jones, Jr., to Wm. Winn and Jas. Ross, on the 26th of October 1846, and, by the terms of that deed, their claims amounting in the aggregate to the sum of $4801.33, were to be paid in full by the trustees, out of the proceeds of sale of the property thereby conveyed, as a first preference. This preference was claimed by the appellants, both under the deed and upon other grounds, and was denied by the order appealed from.

The facts of the case and the grounds upon which the appellants assert their preference, are sufficiently stated in the reports of the cases before referred to, in the opinion of this court, and in the following opinion of the court below (KREBS, J.) delivered upon passing the order appealed from:

" These claimants, who are creditors of Samuel Jones insist that they are entitled to be paid in full, and in preference to all other creditors of the said Jones, the amount of their respective claims, out of the insolvent estate of the said Jones, in the hands of the permanent trustees, for the benefit of his creditors, which was brought by them into the late court of Chancery, under the order of that court passed in the above cause, and which it undertook to distribute. They found their claim upon the provisions of the deed of trust, from the said Jones to the said Winn & Ross, a copy of which is filed in this cause, in which he conveys to them all his property, excepting a certain parcel, and directs them, after the payment of costs and charges attending the execution of the trust, & c., next to pay these creditors the amounts of their respective claims. I find, upon an examination of the proceedings that had taken place in this cause before it came into this court that this deed has been declared void by the highest judicial tribunal of this State, upon an appeal from an order of Chancellor Johnson, continuing the injunction which he had granted, which order was affirmed by the appellate court. Winn & Ross, who were the trustees named in this deed thus declared void, being, as the proceedings show, in court also in the character of permanent trustees, for the benefit of the creditors of the said Jones, and submitting to administer the insolvent estate in their hands, under its jurisdiction, the chancellor proceeded to direct them to account, & c., which they have done. This action of the court in this very case before it on appeal, appears to me to present an insuperable bar to the allowance of the claims of these claimants, as preferred debts, under the terms of this deed. To do so, this court, in the further proceedings in this cause, in reference to the distribution of this fund, which these claimants have instituted, must regard this deed as valid, and still subsisting, whereas it has, in this same case, been declared void. Now these claimants are undoubtedly bound by this decision. It has been made in a cause in which the trustees to whom the deed for the payment of their debts was made, were parties complainants, and themselves claimants parties defendants. They were so made defendants by the supplemental bill filed by the said Winn & Ross, as permanent trustees of the said Jones, which was filed, as their petition for leave to file the same shows, because if the deed of trust should ‘ be inoperative for any cause, the property thereby intended to be passed, had vested in them as permanent trustees; ’ and it was therefore proper that they should be before the court in that capacity, and because they were ‘ advised that certain creditors of the said Jones, ought likewise to be made parties to this suit, in order that the matters in issue therein may be properly litigated.’ The creditors referred to were those who had been preferred in this deed, viz: these very claimants; and amongst these matters in issue, was the question as to the validity of this deed. These defendants in their answer to the said supplemental bill, insist upon the validity of said deed, and pray a decree for the payment of their respective claims, ‘ according to the priorities stipulated for them by its terms.’ After all these proceedings, the motion to dissolve the injunction was heard, and it was upon the appeal from the chancellor's order thereon that the question, in regard to the validity of this deed of trust, was examined by the Court of Appeals, and the deed declared void. I cannot avoid the conclusive force of the point, that the other creditors of Jones, interested in resisting the preference claimed by these claimants, may make, viz: that the law of this case in regard to deeds of trust of this character has been settled by the Court of Appeals; and that this deed having been declared void by that court, these claimants can set up no right under it.

But assuming that the question in regard to the validity of this deed is yet open, and that these claimants have still the right to insist that it is valid, the next inquiry is, can they successfully maintain their position against the objection made by the exceptants, that it is void under the provisions of our insolvent laws? The questions presented upon this objection, arise under the 1st section of the Act of 1834, ch. 293, and are 1st, had Jones at the time of the execution of this deed ‘ no reasonable expectation of being exempted from liability, or execution for, or on account of his debts, without applying for the benefit of the insolvent laws?’ and secondly, if so, had these creditors, presenting these preferred claims, ‘ notice of the condition of the insolvency as aforesaid of the said debtor?’ In the late case in the Court of Appeals of this State, of Brooks, Trustee, & c., vs. Thomas & Jerome, 8 Md. Rep., 367, the court says: ‘ A knowledge that a party is negotiating or compromising with his creditors, accompanied with the actual information that he was generally considered insolvent in his neighborhood, is, in contemplation of the Act of 1834, notice of the condition of insolvency of the debtor,’ to be regarded ‘ as an actual notice. ’ It is to be observed that this deed, by which this preference to these creditors is created, is executed not immediately to them, but to trustees, for their benefit. Now, if the notice to these trustees of the condition of insolvency of Jones is sufficient to gratify the requirements of the Act of 1834, in regard to such notice, the proof that the said Winn & Ross had notice of his condition of insolvency, is furnished by the express statements to that effect, in the several bills of complaint filed in this case, to which they are parties, both in the character of trustees under the said deed, and permanent trustees for the benefit of his creditors. If, however, it be not sufficient that this condition of insolvency was known to Winn & Ross, the trustees, but if it be indispensable that these creditors who were to have been beneficially interested under the deed, should have had notice of it, I am of opinion that there is abundant proof in the pleadings and proceedings in this case to show, that they had full knowledge of his condition of insolvency before, and at the time when, the deed was executed. This was not done until after the meeting of his creditors, referred to in the proceedings. These creditors, in their answer to the supplemental bill of Winn, Ross and others, speak of this meeting of creditors, of ‘ its...