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Money so received by the administrator is trust estate and can be followed in
his hands or those of his representatives only by a bill in equity or perhaps here
by an action for money had and received.

THE facts of this case are stated in the former report of it in
5 Watts 6f Serg. 9. In the Orphans' Court an auditor had been
appointed upon the accounts of the administrators of Samuel
Merrick, deceased, to make distribution among the creditors, who
reported on the 13th March 1841 the sum of $7209.24 principal
and interest as payable by John Vaughan, administrator of said
estate, to the assignees of William Walker. This report the Or-
phans' Court confirmed. On appeal to this court the fund was
decided to be payable to the assignee of William Roberts, Jun.
On the 4th January 1845, on motion of Mr Miles, this court per-
mitted the name of George Young, assignee of William Roberts,



March 1845.] OF PENNSYLVANIA. 403

[Merrick's Estate.]

Jan., to be appended to the record as a party claiming the fund,
and granted two rules, one on all parties interested to show cause
why Jacob Snyder, Jun., executor of John Vaughan deceased, who
was the administrator of Samuel Merrick deceased, should not
pay the amount awarded by the Orphans' Court to the said George
Young. 2. To show cause why John B. Newman, Samuel H.
Thomas and Josiah Randall, executors of B. Dahlgren, who was
the assignee of John Vaughan, who was the administrator of
Samuel Merrick deceased, should not pay the said sum to the said
George Young. Answers were put in by the parties respectively,
but the question which the court decided was whether the fund,
which was in the hands of the executors of B. Dahlgren, could
be reached by this mode of proceeding.

Miles, for the assignee, contended it could, assuming that the
money was in their hands, but there was some dispute amongst
themselves. They were assets of Merrick's estate, and so consi-
dered and adjudged below ; not ordinary assets, but such as might
be termed special assets, distinguishable from the estate of Mer-
rick, and appropriated by law as well as by the acts of Mr
Vaughan, to the payment of this claim. The powers of the Or-
phans' Court have been much extended by the Act of 29th March
1832, section 4, Purd. (1841) 808. They have jurisdiction in the
distribution of assets among creditors or others interested. It was
a devastavit for Vaughan to pass them away ; and moreover, these
defendants have made themselves parties. The Orphans' Court is
a court of equity, and having the fund under its control, will act
in respect to it for all purposes that justice and equity require.
Guier v. Kelly, (2 Binn. 299) ; M'Coy v. Porter, (17 Serg. $ Rawle
60). By the Acts of 14th April 1835,' and 16th June 1836, the
Supreme Court on appeal are to decide according to right and
equity. MyUn's Estate, (7 Watts 64) ; Aycinena v. Peries, (6
Watts $ Serg. 243).

Randall, contra. The fund came into Vaughan's hands after
Merrick's death, and could not be assets of Merrick's estate. It
was trust property, and not embraced in the settlement of Mer-
rick's estate. The case of Aycinena v. Peries decides the point
in our favour, that the Orphans' Court had no jurisdiction, nor
could the court get it by the application or consent of parties.
The Orphans' Court is a court of limited jurisdiction. 1 Law
Journ. 321; Grider v. M'Clay, (11 Serg. fy Rawle 231) ; Pur-
viance v. Commonwealth, (17 Ibid. 37) ; Metis's Appeal, (1 Wliart.
7) ; Hassler's Appeal, (5 Watts 176) ; Gossner's Estate, (6 Whart.
403) ; Olwine's Appeal, (4 Watts $ Serg. 492) ; Merrick's Estate,
(5 Ibid. 20) ; Warner's Estate, (2 Whart. 295). The Orphans'
Court had no jurisdiction over the claim of adversary creditors,
and as to them their decree is void.



404 SUPREME COURT [Philadelphia

[Mcrrick's Estate.]

The opinion of the Court was delivered by

GIBSON, C. J. It is a decisive answer to the rule in this case,
grafted as it is on the report of an auditor to make distribution
among the creditors of an insolvent intestate, that the money in
question is no part of the assets. Mr Merrick, the intestate, was
the factor of Walker and Coggill, an English house, to whose title
the present claimants have succeeded ; and the money in contest
is the price of goods sold by him as the property of the house, but
received by Mr Vaughan, one of his administrators ; and conse-
quently not as the intestate's property, whatever Mr Vaughan
himself may have supposed ; but, in contemplation of law, as a
portion of the partnership effects. Had it been part of the intes-
tate's assets, it must have gone in a course of administration to
pay the general creditors, the English house coming in pro rata
as a creditor on its own property ; but that the money was not so
considered by Mr Vaughan himself, is manifest from the fact that
he set it apart for the house in the hands of a trustee, as what has
been called in the course of the argument, special assets the
meaning of which I am unable to conjecture. Assets are said to
be real or personal, legal or equitable ; but a distinction between
general and special,. I believe, has been taken only in the present
proceeding. It was this unlucky phrase which, seeming to solve
all difficulties at the outset, drew the attention of all concerned
from an inquiry into the nature of the title, and made the record
of this proceeding a budget of blunders in which this court parti-
cipated. It would also have been found that a factor, though
competent to sell and to sue in his own name, is not the owner
either of the property or of its price, but barely an agent to con-
tract for his principal ; and that his commission, except in very
special cases, is revoked by his death. This familiar principle was
directly decided in Burdett v. Willet, (2 Fern. 638), where it was
held that the price of goods sold by a factor is payable not to his
administrator, but to the merchant who consigned them to him ;
and it was held also in Whitecombe v. Jacob, (Salk. 160), as well
as in many other cases collected in a note to it. The mispay-
ment to Mr Vaughan consequently operated no discharge of the
purchaser. The price might have been recovered on the contract
of sale, at any time before the confirmation of the transaction by
participating in the present proceeding; and it is plain, therefore,
that it ought not to have been involved in the factor's estate.
Whether the court would summarily order a stranger to the pro-
ceeding to bring it in, even if it were assets, it is at present unne-
cessary to say. The question, when it arises, will be whether a
creditor can recover a claim immediately from a debtor to the
estate, and not from the administrator or by his agency, but by
the instrumentality of an order paramount to him, the court taking
the administration of the assets into its own hands. It is enough
for the present, however, that this proceeding is irregular and



March 1845.] OF PENNSYLVANIA. 405

[Merrick's Estate.]

must stop. This trust estate can be followed into the hands of Mr
Dahlgren's executors who represent him in the management of
the fund, only by a bill in equity or perhaps by an action for mo-
ney had and received. The rule must, therefore, be discharged,
the money struck out of the auditor's report, and the decree affirm-
ed for the residue.

Decreed accordingly.



Vandever's Appeal.

In matters of discretion, in contradistinction to ministerial acts, co-trustees
cannot act separately in discharging their trust ; their receipts and their signing
certificates of bankruptcy must be joint.

A case of urgent necessity might be an exception to the rule ; but if the other
trustee might be consulted, such necessity does not exist.

Nor does it exist where the acting trustee might have secured an equal benefit
to the estate by due vigilance, which he omits to exercise.

THIS was an appeal from the decree of the Common Pleas of
Chester county, awarding to the estate of Elisha Phipps $500 for
one year's rent, out of the balance in the hands of Alexander
Mode and Ellis Phipps, assignees of William Steadman, deceased,
on a settlement of the account of their trust, by Thomas Vandever,
one of the preferred creditors under the assignment. It appeared
that Steadman, on the 28th March 1843, being in the personal
occupancy of certain premises demised to him by Elisha Phipps
at a yearly rent of $500, assigned all his goods and chattels to
Mode and Ellis Phipps, in trust for the benefit of creditors. The
property assigned remained on the premises till the 1st May fol-
lowing, when part of it was exposed to public sale and sold by
the assignees. On the 20th April of the same year, Elisha Phipps
requested his son Joseph (a witness for the appellees, and objected
to by the appellants on the ground of interest,) to take out a
landlord's warrant for him, and levy on the goods in the hands of
the assignees for a year's rent, which had been due since the 1st
of the month. While the father was giving these directions, Ellis
Phipps, another son and one of the assignees, came in, and learn-
ing his father's intentions, requested him not to distrain, and
promised that as soon as he could make sale of the property and
collect the money, he would pay him the one year's rent. Mode,
the other assignee, was not present on this occasion. Joseph did
not take out any warrant or make any distress. Elisha died in
June 1843, leaving a will, of which he appointed his son Ellis
executor, and one of the residuary legatees.



406 SUPREME COURT [Philadelphia

[Vandever's Appeal.]

There were three classes of preferred creditors under the
assignment. Elisha Phipps was not one of them. The assignees
settled an account of their trust, showing a balance in their hands,
which was insufficient for the payment of all the preferred cred-
itors. The court below decreed to the estate of Elisha Phipps out
of the balance, $500 for one year's rent. From this decree Van-
dever, one of the preferred creditors, appealed.

The following opinion was delivered by BELL, President :
The first question made under this state of facts is whether the
promise made to Elisha Phipps by Ellis alone, he being but one
of two parties, is binding on the fund. That such a promise,
made by all the assignees upon the consideration stated, is so
binding, and will entitle the landlord to a preference of payment
over the other creditors of the assignor, is fully established by
Stevenson v. Wood, (5 Esp. 200); Osborne's Estate, (5 Whart.
267). But it is said that, unlike the case of executors and admin-
istrators, where there are several trustees all have equal power,
interest and authority, which is in its nature joint, and all must
join in the execution of the trust, and so one cannot sell without
the other, or desire to receive more of the creditor's money, or to
be more of a trustee than his partner ; it is indeed regularly true
that when the execution of a private power or trust is committed
to more than one, all must join in the acts necessary to carry the
trust or power into execution, Beltzhoover v. Darragh, (16 Serg.
6f Rawle 337) ; and the act of less than the whole number is in-
valid at law. But the act of the assignee in this instance was not
so much in furtherance of the trust as to prevent its utter frustra-
tion by a sacrifice of the property, the subject of the trust. The
exercise of such a power, I take it, is inherent in each of the trus-
tees from necessity, and being for the advantage of the cestui que
trust, the assent of the co-trustee would if necessary be presumed,
in order to sustain a procedure essential to the continued exist-
ence of the trust, at least in. the absence of an express negative ;
on the ground that it is the duty of each of the trustees to do
everything proper and necessary to the promotion of the interest
of the cestuis que trust ; and equity, in the absence of proof to the
contrary, will take it for granted he has so done.

If instead of a promise to pay there had here been a payment
of the rent by one of the assignees in avoidance of the distress, it
is scarcely to be questioned he would have been entitled to a credit
in his account for the amount thus paid, and yet there is no differ-
ence in principle between the payment and the promise as shown
by Osborne's Estate already cited. But again : it is a rule in equity
that what is compellable by suit is equally valid if done by the
trustees without suit. Lewin on Trusts 413. Here payment of
the rent out of the fund assigned might have been enforced by the
landlord without the assent of the trustees. Surely then the agree-



March 1845.] OF PENNSYLVANIA. 407

[Vandever's Appeal.]

ment of one of them to do what in truth could not be refused, by
which the costs and sacrifice of a forced sale were avoided, is
effective as against those whose interests were thus subserved.

The creditors too have had the benefit of the consideration upon
which the promise of their trustee was based, and it is ungracious
in them now to attempt its defeat upon a mere technical objection.
This would be in fact to perpetuate a fraud on the estate of Elisha
Phipps by those who have been benefited by an arrangement by
which alone he was induced to forego his hold on the goods as-
signed ; and to this, I think, equity could never be induced to lend
itself. The arrangement between Ellis and his father was then
binding upon the funds in the hands of the assignees at the time it
was made.

But it is urged that its efficacy is destroyed by Ellis's subse-
quently becoming executor of the will and one of the residuary
legatees of the estate of his father. In support of this position the
argument is that a man cannot take advantage of his own promise,
to put money in his own pocket, as it is said is the attempt here.
But it must be remembered that Ellis is here in two capacities as
distinct and separate as if they were represented by two different
men. In both he acts in a mere representative character, bound
to take care of both the trusts which are confided to him, but with-
out possessing any quality destructive of the right of either. If
another than he had become executor, there would have been no
shadow of reason for saying that a claim perfectly good in the
hands of Elisha in his lifetime was destroyed by his death ; and I
am at a loss to comprehend how the fact of the representative of
the debtor estate becoming as here the representative of the cre-
ditor estate, can make such a result.

Even admitting the assignees to be beneficially interested as
legatees in the fund to be recovered from the hands of the assignees,
it cannot operate to destroy the virtue of an arrangement made
upon a valuable consideration between parties competent to make
it, and which being in fact executed, it would be iniquitous to re-
scind. I am aware of the rule that generally a trustee shall not
be permitted to derive a benefit to himself by an act of his own
on a subject connected with the trust, during the subsistence of the
trust. This rule would perhaps have been applicable had Ellis
been the owner of the rent at the time of his promise ; though even
this is doubtful. But he was not such owner, nor had he in fact
or in law any connection with the claim, through which he might
enjoy a benefit flowing from his arrangement. That he subse-
quently became beneficially interested in the promise without any
act of his own surely cannot have the effect by retroaction to de-
stroy that which before was binding and operative. The law
allows a trustee to purchase at his own sale ; but suppose in this
instance Elisha had become the purchaser of the chattels assigned
for a less price than their value and then died, when the goods



408 SUPREME COURT [Philadelphia

[Vandever's Appeal.]

passed to Ellis as residuary legatee, would the sale be invalid as
against the creditors in the absence of actual fraud ? Surely not.
Many other similar illustrations might be put, but this may suffice.
As then there is no suggestion of collusion or fraudulent pretences
between the father and son, there is nothing in morals to forbid
Ellis, as executor, or even as legatee, asking that the contract
shall be wholly completed ; and I see nothing in law which pro-
hibits it. It is not analagous to the case, to which at the bar it
lias been likened, of the deposition of a witness, who, before it is
used, becomes interested, and which courts of law under a rule
of evidence founded in supposed policy, exclude, though Chancery
constantly hears such depositions. This is a question of abstract
justice that must be settled according to the more enlarged and
comprehensive principles which govern rights and remedies.

But it is said that here the legal remedy is gone; that no action
can be maintained to enforce this agreement, because no action at
law could in the present position of the parties be brought to en-
force this contract; but the consequence by no means follows.
Where a creditor makes his debtor his executor, the legal remedy
for the recovery of the debt is gone, and therefore at law the debt
itself is said to be extinguished ; but in equity it is held to be no
more than a parting with the action; the duty still remains, and
the executor must bring the debt into his account in favour of
creditors, legatees, and even next of kin. Pusey v. Clemson, (9
Serg. 4- Rawle 208). So here, though the legal action be parted
with, the obligation resting upon the assignees as representatives
of the trust fund, to pay the rent, still remains and may be ren-
dered available through the medium of a decree of distribution.

This case was argued at December Term 1844, and now re-ar-
gued by

Darlington, for the appellant, who contended that one of two
trustees could not make a promise or contract to bind the trust
fund. Lewin on Trusts 265; Willis on Trusts 136; 2 Moore 583;
Ex parte Rigby, (19 Vez. 463) ; Beltzhoover v. Darragh, (16 Serg.
4* Rawle 337). They form one collective trustee, and are bound
to join in all acts connected with the trust. The act of the assignee
here, moreover, was in defeat of the trust.

/. Lewis, contra. If the contract had been made by both the
assignees, it would have bound the fund. Osborne's Estate, (5
Whart. 267). This was a case of necessity to prevent a sacrifice
of the trust property. Forbearance is a sufficient consideration,
and the forbearance here was for the benefit of the trust and for
the protection of the fund. This was sufficient to authorize the
assignee to make the promise in question. Unangst v. Shortz, (5
Whart. 506). Chancery would have compelled trustees to make
this contract.



March 1845.] OF PENNSYLVANIA. 409

[Vandever's Appeal.]

The opinion of the Court was delivered by

ROGERS, J. When the administration of a trust is vested in
co-trustees, they all form but one collective trustee. They must,
therefore, execute the duties of the office in their joint capacity.
Thus a receipt for money or a certificate of bankruptcy, &c. must
receive the joint signature of the whole body ; for the power, in-
terest and authority of co-trustees in the subject-matter of the
trust being equal and undivided, they cannot like executors act
separately, but all must join. Lewin on Trusts 265, (24 Law Lib.) ;
Willis on Trusts 136, (10 Law Lib.) ; Ex parte Rigby, (19 Vez.
463). And this principle enters into all cases depending on the
discretion and judgment of the trustees in contradistinction to acts
of a mere ministerial nature. The former requires the concurrence
of all the trustees ; the latter may be performed by one. The con-
tract in question is without doubt one of the former description,
and consequently comes within the general principle. And the
only doubt is whether there are circumstances in the case which
make it an exception. It may be admitted on the authority of
Osborne's Case, (5 Whart. 267), that if the contract had been made
by both the assignees, it would have bound the fund ; but the ques-
tion is whether one of the trustees without any authority from his
co-trustee, can bind the estate. And that this cannot be appears
from the principles above stated, unless there are some circum-
stances attending the case which make it an exception from the
general rule. The validity of the contract is put on the ground
of necessitv and the benefit which the fund derived from the agree-
ment. It is said that the act of the assignee in this instance was
not so much in furtherance of the trust as to prevent its utter
frustration by a sacrifice of the property. The exercise of such a
power is inherent in each of the trustees from necessity, and being
for the advantage of the cestui que trust, the assent of the co-trustee
would, if necessary, be presumed, in order to sustain a procedure
essential to the continued existence of the trust, at least in the ab-
sence of an express negative, on the ground that it is the duty of
each of the trustees to do everything proper and necessary to the
promotion of the interest of the cestui que trust, and equity in the
absence of proof to the contrary will take it for granted he has so
done.

It is not my intention to deny the justice of the abstract princi-
ples asserted by the court, but it seems to me they do not apply,
because there is no room for the presumption of any acquiescence
or consent to the contract ; for the proof is that the co-trustee was
not present when the agreement was made, nor has any consent,
either previous or subsequent, been shown, nor is any pretended
to have existed. It is the naked case of one of two trustees making
an important contract without any authority whatever from the
other to act for him. Nor do we perceive any necessity whatever
for the agreement. The co-trustee was in the immediate vicinity
viii. 52 2x



410 SUPREME COURT [Philadelphia

[Vandever'a Appeal.]

and could have been consulted without any detriment whatever
to the interests of the trust. It is therefore unlike the case to
which it has been assimilated in the argument, of a fire where one
of two trustees makes a contract in the absence of his co-trustee,
to preserve property of the trust from destruction. The urgent
necessity of the case would constitute an exception to the general
rule, and on that account alone the contract would bind the estate.
The argument also assumes the contract to be for the advantage
of the estate. Now whether this be so it is impossible to say, as
that may depend on a variety of considerations. But the conclu-
sive answer to this suggestion is, that it is a matter in the first
instance solely for the discretion and judgment of all the trustees.
It is a question which one alone cannot decide. To say that the
validity of the contract depends on its being afterwards deemed
advantageous to the trust would in fact abrogate the rule, and
would lead to perplexing inquiries and to questions which in many
cases it would be difficult to settle. It is a rule in* equity, as is
said, that what is compellable by suit is equally valid if done by
the trustees without suit. And this is true ; but to give force and
application to the suggestion it must be shown that a Court of
Equity would compel the trustee to enter into this contract. But
as no Court of Equity would interfere in such a case, the applica-
tion of this principle is not very obvious. It is urged that if instead
of a promise to pay there had been a payment of the rent by one
of the assignees in avoidance of the distress, it would scarcely be
questioned he would be entitled to a credit for the amount thus
paid. Without expressing any positive opinion on this point, I
would barely observe that it seems to me to be stating the same
question in a different form, and that it would be more prudent at
least to refrain from doing so without the assent of the other trus-
tees. It is strongly urged that the creditors have the benefit of
the consideration on which the promise of the trustee was based,
and that it is ungracious in them now to dispute it. This argu-
ment addresses itself rather to the generosity of the creditors than
any legal right arising from the contract ; but the latter is the
question now under consideration. Besides, it assumes a matter
admitting of some doubt, and which the trustees must determine
for themselves, viz., whether the contract may not have been a
detriment rather than a benefit to the fund. Hardship cannot with
truth be alleged; for the contracting parties were aware, oral
least ought to have been, of the rule which prevents one of two or
more trustees from making a contract binding the fund. If any



Online LibraryPennsylvania. Supreme CourtReports of cases adjudged in the Supreme court of Pennsylvania [May term 1841 - May term 1845] (Volume 8) → online text (page 46 of 56)