Opinion
May Term, 1819.
From Wake.
A garnishee summoned upon an attachment stated that the debtor had executed to him certain deeds of trust for real and personal property, to secure three of his creditors; which property was sold at public sale upon a credit, the purchasers giving notes negotiable at the State Bank. That the sums secured by the deeds of trust had been discharged by a like amount out of the proceeds of the sale, leaving a surplus of $1,208 dollars 20 cents, for which A. B. had given two notes payable to C. D. who had indorsed them in blank. A. B. was also summoned as a garnishee, and declared his willingness to pay the money on the notes. The Plaintiffs in attachment are entitled to have judgment of a condemnation of this money; for,
If the garnishee had received the surplus in money, the purposes of the trust deeds being satisfied, it would have been money received to the use of the debtor, and might by him have been recovered in indebitatus assumpsit.
The law is the same, whether the surplus be in money or in notes, and, upon a refusal to deliver the latter, the debtor would be entitled to an action of trover.
The attachment law makes notes not yet due, whether given for money or specific articles, subject to that process. And it is no objection that the notes are given for the purchase of property in which the debtor had only an equitable interest.
Whether the property be liable to execution, is not the criterion to determine whether it be attachable, otherwise the attachment law could not operate upon bonds and simple contract debts, c.
As soon as the purposes of the trust deeds were satisfied, there was but one equity remaining, and that was in the debtor, whose right to the money, had it been received, could have been enforced at law.
The Plaintiffs were creditors of the Defendant by specialty to the amount of $363.87, and sued out an original attachment against his effects, which was levied upon sundry (257) articles, and Peter Browne, Esq., was summoned as garnishee. The subject of his garnishment, upon which the questions submitted to this Court arose, was, that prior to his being summoned as garnishee, Jones had executed to him certain deeds of trust, for real and personal property, to secure three of Jone's creditors; which property was sold at public sale upon a credit of three and six months, the purchasers giving notes negotiable at the State Bank. That the sums secured by the deeds of trust had been discharged, by a like amount out of the proceeds of the sale, leaving a surplus of $1,208.20, for which R. Cannon gave two notes payable to W. Rogers, who had indorsed the same in blank; that he had no beneficial claim upon the property of Jones, nor did he believe that the creditors, for whose benefit the deed had been taken, had. But he submitted to the Court, whether any process from a Court of Law could affect the equitable interest which Jones had in the personal property contained in the deed; and whether the two negotiable notes were liable to the Plaintiff's demand, although they were taken for the balance of the Defendant's equitable interest in certain real estates, inasmuch as that balance, in virtue of a prior equity, had been converted into personal property. The questions arising on Mr. Browne's garnishment, were referred to this Court.
If Mr. Browne had received the surplus in money, the purposes of the trust deeds having been executed and extinguished, it would have been so much money received to the use of Jones, and might have been recovered by him in indebitatus assumpsit; the law in such case, implying a promise to pay. For the quality of every such trust is, that what remains after paying the creditors, belongs to the assignor. And although the usual remedy against a trustee, for a misapplication of the trust fund, is by a bill in equity, yet at law, an action of assumpsit will lie. 5 (258) Term. 601, Willes 405. The law must be the same, whether the surplus be in money or in notes, and upon a refusal to deliver the latter, Jones would be entitled to an action of trover; Salk. 130, 282, for the garnishment proves that the notes belong to him. It seems to be a better criterion, whether property be liable to attachment, to ascertain what would be the rights of the Defendant in the attachment against the garnishee, than to enquire, whether the property would be liable to an execution against the Defendant. For the attachment law makes notes not yet due, whether given for money or specific articles, subject to that process; which things clearly cannot be taken in execution. But, if the property being liable to execution, were a test of its being attachable, it would hold good in this case, as to all the property in the garnishee's hands, which was not necessary to satisfy the creditors; and if a levy had been made by a creditor of Jones's upon the property, before the sale, the surplus, after paying the trust creditors, would have belonged to such judgment creditor. So that the first doubt suggested in the garnishment, seems to be answered by the act of 1812, ch. 14, making trust property, real and personal, liable to execution. The other suggestion admits of the same answer. The real property is converted into personal, in virtue of a prior equity, only so far as the trust creditors had a lien upon the property. To the extent of their debts the equity was prior; but when that object was accomplished, there was but one equity remaining, and that was in Jones, whose right to the money, had it been received, was of that kind, which, it has been shown, a Court of Law would have enforced.
Considering, then, the general scope and spirit of the attachment law, the property which it renders liable to the process, "estate and effects," and how easy it would be for an absconding debtor to evade its provisions, by suffering his property to be sold under a trust deed, for negotiable (259) securities, the Court are of opinion, that judgment should be rendered for the Plaintiffs on the garnishments of Mr. Browne and Mr. Cannon; more especially as all the parties concerned are before the Court, and the drawer of the notes declares, in his garnishment, his willingness to pay the money.
NOTE. — R. Cannon was also summoned as a garnishee in this case, and in his garnishment declared his willingness to pay the money on the notes.
This view of the case is taken from the garnishments alone; but from the parties concerned in this transaction, it is fair to presume, not only that the deed of trust was drawn in the usual, but in the best form. That form is, to insert a covenant upon the part of the trustee, to restore to the cestui que trust the surplus remaining after the payment of debts; in which case Jones would have had an indisputable legal remedy.
Cited: Gillis v. McKay, 15 N.C. 174; Coffield v. Collins, 26 N.C. 492; Gaither v. Ballew, 49 N.C. 490; Sexton v. Ins. Co., 132 N.C. 3.
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