W.U. Tel. Co. v. Caldwell
| Decision Date | 06 May 1886 |
| Citation | 141 Mass. 489,6 N.E. 737 |
| Parties | WESTERN UNION TEL. CO. v. CALDWELL and others. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Hale & Wolcott, for plaintiff.
Hutchins & Wheeler and Russell & Putnam, for defendant.
This is a bill in equity brought against Josiah Caldwell and Anita his wife, William R. Clark, Henry B. Hammond, executor of Benjamin E. Bates, and the Continental National Bank. The bill was brought April 28, 1883, and is before us on demurrer. The material allegations are as follows: April 3 1883, the plaintiff recovered a judgment against Josiah Caldwell. In that suit it had attached land standing in the name of Mrs. Caldwell, on the ground that it was conveyed to her by her husband, the defendant Josiah Caldwell, in fraud of his creditors. At the time of the attachment the land was subject to a mortgage made by Mrs. Caldwell, and held by the defendant Clark. After the attachment, but before the judgment, a second mortgage was made to Benjamin E. Bates. Later still Clark sold under the usual power of sale, for breach of condition, satisfied his debt, and paid over the surplus in part to the said Continental National Bank, an attaching creditor prior to the plaintiff, and the rest to said Bates. The only allegation against the bank is that it received a larger portion than it was entitled to, and, as the claim against it is not pressed we shall dismiss it without further consideration. But we are to take it that Clark and Bates knew of the plaintiff's action and attachment, although the plaintiff gave neither of them notice that it made a claim upon the proceeds of Clark's sale, and the plaintiff seeks to charge Clark and Bates' executor for the amount paid over to and received by Bates.
If the attachment had been an ordinary attachment, in a suit against Josiah Caldwell, of lands standing in his name, subject to a mortgage made by him, and if the surplus had remained in the hands of Clark at the time this bill was brought, it is settled that the plaintiff would have been preferred to a subsequent mortgagee. Wiggin v. Heywood, 118 Mass. 514. And it would seem to follow from that decision that, if there is no other important distinction between this case and that, the payment of the surplus by Clark to Bates, the subsequent mortgagee, would not of itself be sufficient to deprive the plaintiff of his priority; Bates having knowledge of the attachment at the time he received the fund. In Wiggin v. Heywood, the court cannot have regarded the plaintiff's rights as founded on the bill; for, if so, the fact that the surplus had not been paid over would have afforded no ground for preferring the plaintiff's creditors' claim to a lien existing when the bill was filed. In a case like Wiggin v. Heywood the plaintiff's rights are founded on the lien originally acquired by his attachment, and they date from that. It is true that, as the lien is gone at law by the sale of the res, the substituted claim upon the proceeds has the characteristic infirmities of merely equitable rights. It may be, as used to be said of a trust, that it is not a jus in rem, and therefore may be lost if the property is transferred for value and without notice. But it is attached to a specific fund in the mortgagee's hands. See Cook v. Basley, 123 Mass. 396; Varnum v. Meserve, 8 Allen, 158, 160; Brown v. New Bedford Inst. for Savings, 137 Mass. 262, 266; Talbot v. Frere, 9 Ch.Div. 568, 573. And it may be asserted against privies taking the fund with notice, as well as against the parties themselves. Y.B. 14 Hen. VIII. 6 pl. 5; Dalamere v. Barnard, Plowd. 346, 352b; Chudleigh's Case, 1 Rep. 120a, 122b; Co. Litt. 272b; Bac.St. Uses, "Works," (Ed. Spedding,) VII. 398, 405; Lewin, Trusts, Introd. and c. 1; c. 29, § 1.
The notice which is sufficient to charge a privy with a trust is knowledge of it, actual or constructive. It is not necessary that the cestui que trust should give that notice, or inform the assignee that he intends to insist upon his rights,--Lewin, Trusts, (7th Ed.) c. 29, § 1, 728, et seq.; Boursot v. Savage, L.R. 2 Eq. 134,--and we see no reason why more should be required as between an attaching creditor and a recipient of the fund on which he has an equitable lien, or why, if the recipient knows of the paramount attachment, and with that knowledge chooses to accept the fund, he should stand better than a purchaser from a trustee. Mead v. Lord Orrery, 3 Atk. 235, 238. See George v. Wood, 9 Allen, 80, 83. More especially as an attachment is a fact of such a nature as necessarily to inform those who know of it of the creditor's intention to insist upon his rights under it. Of course, we are not now speaking of the possible effect of laches.
Assuming that the plaintiff's equitable lien, if it ever had one was not destroyed by the payment of the surplus to Bates, with notice, it does not follow that the plaintiff is in a position to make Clark answerable for paying it over. Clark's rights, as holder for value, and without notice, of a mortgage made by Mrs. Caldwell while she held the legal title, are paramount to the plaintiff's; and, on the other hand, the plaintiff's claim is not in privity with, but paramount to, the title of Mrs. Caldwell, Clark's mortgagor. We are far from denying that Clark could have been made answerable for the surplus by a demand upon him...
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