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Opinion of the Court.
acquire no beneficial interest, and if the levy tended injuriously to affect the interest of the cestui que trust, the latter would be entitled to relief, by injunction or otherwise, in equity. Lewin on Trusts, 181, 186; 2 Spence Eq. Jur. 39.
But as courts of equity regarded the cestui que trust as the true and beneficial owner of the estate, to whose uses, according to the terms of the trust, the legal title was made subservient, so in its eyes, the estate of the cestui que trust came to be invested with the same incidents and qualities which in a court of law belonged to a legal estate, so far as consistent with the preservation and administration of the trust. This was by virtue of a principle of analogy, adopted because courts of equity were unwilling to interfere with the strict course of the law, except so far as was necessary to execute the just intentions of parties, and to prevent the forms of the law from being made the means and instruments of wrong, injustice and oppression.
Thus equitable estates were held to be assignable and could be conveyed or devised; were subject to the rules of descent applicable to legal estates; to the tenancy by courtesy, though not to dower, by an anomalous exception afterwards corrected by statute, 3 and 4 Will. IV., c. 105; and were ordinarily governed by the rules of law which measure the duration of the enjoyment or regulate the devolution or transmission of estates; so that, in general, whatever would be the rule of law, if it were a legal estate, was applied by the court of chancery by analogy to a trust estate. 1 Spence Eq. Jur. 502.
As judgment creditors, after the statute of Westminster, 13 Ed. I, c. 18, were entitled, by the writ of elegit, to be put in the possession of a moiety of the lands of the debtor, until satisfaction of the judgment; and as it would be contrary to equity to permit a debtor to withdraw his lands from liability to his judgment creditors, this analogy was at an early date extended, so as to give to judgment creditors similar benefits in respect to the equitable estate of their debtors; and as the remedies in favor of judgment creditors by way of execution upon the legal estate of their debtors have been enlarged, they have been imitated by a corresponding analogy as to equitable
Opinion of the Court.
estates by courts of equity. This is in pursuance of the principle stated in a pregnant sentence by Lord Northington, in Burgess v. Wheate, 1 Eden, 177–261, where he said ; "For my own part, I know no instance where this court ever permitted the creation of a trust to affect the right of a third party.” Ib. 151. It is embodied in the maxim, æquitas sequitur legem.
It was accordingly held by Lord Nottingham, in the anonymous case cited in Balch v. Wastall, 1 P. Wms. 445, " that one who had a judgment, and had lodged a fieri facias in the sheriff's hands, to which nulla bona was returned, might afterwards bring a bill against the defendant, or any other, to discover any of the goods or personal estate of the defendant, and by that means to effect the same;" and although Lord Keeper Bridgman, in Pratt v. Colt, Freeman's Cas. in Ch. by Hovenden, 139, refused to permit a trust estate, which had descended to the heir, to be extended upon an elegit on a judgment against his ancestor, the reporter adds, “but note that this hath not been taken to be a good demurrer by the old and best practisers, as little according with good reason, for the heir-at-law is as much chargeable with the ancestor's judgment as the executor with the testator's debts, and so equity ought to follow the law.” Three years subsequently to this decision, the Statute of Frauds, 29 Car. II., c. 3, was enacted, the 10th section of which made trust estates in fee simple assets for the payment of debts, and subject to an elegit upon judgment against the cestui que trust. But this statute did not extend to chattels real, to trusts under which the debtor had not the whole interest, to equities of redemption, or to any equitable interest which had been parted with before execution sued out. Forth v. Duke of Norfolk, 4 Mad. 503. The statute of 5 Geo. II. c. 7, which made lands within the English colonies chargeable with debts, and subject to the like process of execution as personal estate, was in force in Maryland; but as it did not interfere with the established distinction between law and equity, it did not permit an equitable interest to be seized under a fieri facias. Lessee of Smith v. McCann, 24 How. 398. But as the effect of these statutes was to enlarge the operation of executions upon legal estates, so the
Opinion of the Court.
corresponding equitable remedy as to equitable estates was also enlarged, and as to them equitable executions were enforced to the same extent to which executions at law were enforceable upon estates subject to seizure under them.
This mere equity, consisting in the right to obtain the aid of the court in subjecting the equitable interest of the debtor, not being a lien at law or a specific charge in equity, nevertheless constitutes such an interest, and creates such a privity, as entitles the judgment creditors to redeem a prior mortgage, and succeeding thus to the rights of the mortgagee in England, where the doctrine of tacking prevailed, he was permitted to hold the whole estate as security for his judgment also, even when, by virtue of an elegit at law, he would be entitled only to a moiety of the debtor's land. And he could file his bill to redeem without previously issuing an execution.
Neate v. Duke of Marlborough, 3 Myl. & Cr. 407. The reason for this, assigned by Lord Cottenham in the case just cited, is, that inasmuch as the court finds the creditor in a condition to acquire a power over the estate by suing out the writ, it does what it does in all similar cases ; it gives to the party the right to come in and redeem other encumbrances upon the property.
But in other cases, when the object of the bill is to obtain satisfaction of the judgment, by a sale of the equitable estate, it must be alleged that execution has been issued. This is not supposed to be necessary wholly on the ground of showing that the judgment creditor has exhausted his remedy at law; for, if so, it would be necessary to show a return of the execution, unsatisfied, which, however, is not essential. Lewin on Trusts, 513. But the execution must be sued out; for if the estate sought to be subjected is a legal estate and subject to be taken in execution, the ground of the jurisdiction in equity is merely to aid the legal right by removing obstacles in the way of its enforcement at law. Jones v. Green, 1 Wall. 330; and if the estate is equitable merely, and therefore not subject to be levied on by an execution at law, the judgment creditor is bound nevertheless to put himself in the same position as if the estate were legal, because the action of the court converts the estate, so as to make it subject to an execution, as if it were
Opinion of the Court.
legal. The ground of the jurisdiction therefore is, not that of a lien or charge arising by virtue of the judgment itself, but of an equity to enforce satisfaction of the judgment by means of an equitable execution. And this it effects by a sale of the debtor's interest subject to prior encumbrances, or according to circumstances, of the whole estate, for distribution of the proceeds of sale among all the encumbrancers according to the order in which they may be entitled to participate. Sharpe v. Earl of Scarborough, 4 Ves. 538.
It is to be noted, therefore, that the proceeding is one instituted by the judgment creditor for his own interest alone, unless he elects to file the bill also for others in a like situation, with whom he chooses to make common cause; and as no specific lien arises by virtue of the judgment and execution alone, the right to obtain satisfaction out of the specific property sought to be subjected to sale for that purpose, dates from the filing of the bill. “ The creditor," says Chancellor Walworth, in Edmeston v. Lyde, 1 Paige Ch. 637–640, “whose legal diligence has pursued the property into this court, is entitled to a preference as the reward of his vigilance ;” and it would
seem unjust that the creditor who has sustained all the risk and expense of bringing his suit to a successful termination, should in the end be obliged to divide the avails thereof with those who have slept upon their rights, or who have intentionally kept back that they might profit by his exertions when there could no longer be any risk in becoming parties to the suit.” As his lien begins with the filing of the bill, it is subject to all existing encumbrances, but is superior to all of subsequent date. As was said by this court in Day v. Washburn, 24 How. 352:
“ It is only when he has obtained a judgment and execution in seeking to subject the property of his debtor in the hands of third persons, or to reach property not accessible to an execution, that a legal preference is acquired which a court of chancery will enforce.”
This is in strict accordance with the analogy of the law, as it was recognized that the judgment creditor who first extends
Opinion of the Court.
the land by elegit is thereby entitled to be first satisfied out of it. It is the execution first begun to be executed, unless otherwise regulated by statute, which is entitled to priority. Rockhill v. Hanna, 15 How. 189, 195; Payne v. Drew, 4 East. 523. The filing of the bill, in cases of equitable execution, is the beginning of executing it.
The passage cited from the opinion in Day v. Washburn, supra, speaks of the preference thus acquired by the execution creditor as a legal preference. It was distinctly held so to be by Chancellor Kent in McDermott v. Strong, 4 Johns. Ch. 687. He there said: “But this case stands on stronger ground than if it rested merely on the general jurisdiction of this court, upon residuary trust interests in chattels, for the plaintiffs come in the character of execution creditors, and have thereby acquired, by means of their executions at law, what this court regards as a legal preference, or lien on the property so placed in trust;” and “admitting that the plaintiffs had acquired, by their executions at law, a legal preference to the assistance of this court (and none but execution creditors at law are entitled to that assistance), that preference ought not, in justice, to be taken away. Though it be the favorite policy of this court to distribute assets equally among creditors, pari passu, yet whenever a judicial preference has been established, by the superior legal diligence of any creditor, that preference is always preserved in the distribution of assets by this court.” The decision in that case was made, giving the priority to the execution creditors who filed the bill, when, otherwise, by virtue of an assignment by the debtor who was insolvent, the proceeds of the equitable interest sought to be subjected would have been distributed ratably among all creditors.
This case, often cited and never questioned, shows that the doctrine of equitable assets, to which we are referred by the appellant as the ground of his claim, has no application to the case. Ordinarily and strictly, the term, equitable assets, applies only to property and funds belonging to the estate of a decedent, which by law are not subject to the payment of debts, in the course of administration by the personal representatives, but which the testator has voluntarily charged with the pay