Briggs, et al. Admr'S, v. Walker & Trustee, 21 N.H. 72 (1850) - Opinion

It appears, from the disclosure of the trustee, that, at the time of the service of the trustee process upon him, he had in his possession a large amount of personal property of the principal defendant, which had been conveyed to him in mortgage, to secure and indemnify the trustee against sundry liabilities incurred on behalf, and for the benefit of the principal defendant; and he further discloses, that a portion of said liabilities were still subsisting, and that a portion only of the property had been sold or otherwise disposed of, at the date of the disclosure, and that the residue still remained in his possession. It does not appear, from the disclosure, that the value of the property unsold at the date of the disclosure, or the price at which it might be sold, would not exceed the amount of the balance still remaining of the liabilities of the trustee for his principal at that time, over and above the amount then already realized by him from the previous sales, and from the rents and income of the farms, bank stock, and other sources mentioned in the disclosure.

The provision of the statute upon which the motion for the appointment of a receiver can be sustained, if at all, is as follows, namely: “ If it shall ap; ear, as aforesaid, that the person summoned as trustee, had in his possession, at the time of the service of such process or afterwards, any personal property of the principal defendant, and that the same is subject to any pledge, lien, or mortgage, and at the time of said disclosure had not been sold by the trustee, the court may appoint a receiver, whose duty it shall be, under the direction of the court, to dispose of the same, if a greater amount than the sum due can be obtained therefor, and after paying the amount of such pledge, lien, or mortgage, to apply the balance as aforesaid.” Rev. Stat. ch. 208, § 16.

The power of the court to appoint a receiver, and the propriety of its exercise, if possessed, under the facts and circumstances disclosed by the trustee, are the questions presented by the case, and proper for the consideration of this court.

And we think this is a case most clearly falling within the provision of the statute referred to. At the time of making the disclosure, there was personal property, mortgaged to the trustee by the principal defendant, and then in his possession, unsold. The value of the property thus unsold, as compared with the sum to which the trustee was entitled by way of indemnity, or the price which it would command on sale, or other disposition of it, did not appear by the disclosure; and could not well be made to appear upon any disclosure of the trustee. And we are not aware that any duty rested upon the trustee, or that he was in any way required to sell or dispose of the property mortgaged. To be sure, he might at any time, after thirty days from the time of condition broken, have sold the property at auction, upon due notice given, as provided and required by the statute. Rev. Stat. ch. 132, §§ 14,15. If he had so done, the mortgagor, at least, could not complain. That statute, however, imposes no duty, but only confers the power, to be exorcised or not, at the'election of the mortgagee;

*77• Prior to the passage of the “ act relating to mortgages and pledges of personal property, and property subject. to any lien, created by law,” approved December, 12, 1832, the pledgee of goods could not be holden as the trustee of the pledgor. Hudson v. Hunt, 5 N. H. Rep. 538.

A similar doctrine was holden in Massachusetts, under statu-, tory provisions like those in force in this State prior to 1832. Badlam v. Tucker, 1 Pick. 389.

Mr. Justice Story very properly remarks, in delivering the judgment of the court in Picquet v. Swan, 4 Mason, 464, that, “ the pledgee has a special property in the pledge, and is not bound to deliver it up until his incumbrance is discharged. And a creditor cannot, in this respect, have greater rights than the pledgor himself. The case of a lien is the same.”

And it cannot be doubted, that in this State personal property, mortgaged, could not be attached by the trustee process, in the hands of the mortgagee, prior to the statute of December 12, 1832.

The act of December 12, 1832, already refered to, made it the duty of the court, in case a mortgagee, pledgee, or other person having a lien on the property of a debtor, should be summoned into court while the general owner had still a subsisting right, at law or in equity, to redeem such property, to make an order, that upon the payment or tender of the debt, or the performance of the contract or condition for which it was holden, the person so summoned should deliver over the property to the officer who served the process, to be by him holden, in the same manner as if it had been attached on mesne process. It will readily be seen, that in such a case, the payment or tender was necessarily made at the hazard of loss, in case the property proved to be of less value than the amount paid to discharge the lien.

Farther provision was made, by the same statute of December 12, 1832, for attaching property under mortgage, pledge, or other lien, upon first tendering to the mortgagee, pledgee, &c., the amount for which the property was so holden. This proceeding was also attended with the like risk of loss, upon the sale or other disposition of it, or in the event of its destruction by accident or otherwise.

A statute was passed, June, 30,1841, containing, in the second section thereof, a provision substantially the same as that under consideration in the present case, and of which this statute is substantially a reenactment.

It will be seen, then, that, prior to the act of December 12, 1834, a mortgagee or pledgee, who held the property under a valid mortgage or pledge, could not be rendered liable, in any manner, as the trustee of the mortgagor or pledgor, whatever might be the amount or value of the property mortgaged or pledged.

And prior to the act of June 30, 1841, property so situated could not be attached and holden, ether upon a writ of attachment,'or upon the trustee process, without first paying or tendering the amount due and secured by the pledge or mortgage. And it was just and proper, that the property, fairly mortgaged or pledged, should not be wrested from the possession of the mortgagee or pledgee, until his full debt should be paid. Until that time, he should have the benefit of his own skill and judgment, in its management and disposition. It should not be wrested from him, and intrusted to another person, having no interest in its disposition; and, consequently, likely to be less vigilant in his endeavors to make the most of it. Such a course would be likely to result in loss and injury to him. But, still, it was proper and fitting, if it could be done without loss or detriment to the mortgagee or pledgee, that the value of the property pledged or mortgaged should be tested and ascertained, without risk or hazard to the creditor in the process; that some way, if it were possible, should be provided, whereby the creditor might obtain and apply, to the payment of such debt as he should establish against the principal creditor, any balance of property that might remain, after full satisfaction of all such debts and liabilities as it should stand pledged or mortgaged to secure the payment of, and the just and reasonable expenses attending the care and possession of it. A provision of law, fully calculated to accomplish the objects in view, has been enacted, and is now in force, in the 2d sec. of chap. 208,- Rev. Stat. before cited. It authorizes the appointment of a receiver by the court, in all cases where a mortgagee, pledgee, or other person having a lien upon personal property, is summoned into court, as the trustee of.the mortgagor or pledgor, and it appears upon his disclosure, that, at the time of making it, there was personal property in the hands of the trustee, not sold, but still holden by him, subject to the mortgage, pledge, or other lien.' And it is made the duty of such receiver, under the direction and instruction of the court, to dispose of such property, if it can be done for a greater amount than is sufficient to satisfy such sums, or to indemnify against such liabilities, as it is mortgaged, pledged or otherwise holden to pay, or to indemnify against. If a less sum, or even if the amount of the lien upon it, can be realized, it is of no avail to the creditor that it should be sold or disposed of; and in such case it is not to be done. The receiver, acting under instructions from the court, will test the question whether a greater amount can be realized than the liens resting upon j^ie property, and if it can, it will be disposed of; and, if not, it will still remain at the disposal of the person holding the lien. Such is the intention of the statute. In this way, without hazard, loss, or injury, either to the creditor or the person holding the lien, the value of the property can be ascertained, and the just rights of all parties fairly determined. The person holding the lien, will have no reason to complain, if the full amount of the lien be satisfied, or the property in kind be restored to him without injury; while, on the other hand, the creditor will, in this way, be secured in his just rights, without being subject to the hazard of loss or injury beyond the expenses of testing the value of the property. A provision of law so highly just and beneficial, and in nowise likely to be injurious in its operation, should be liberally construed and applied, in the cases for which it was intended, in order that the full and just purposes of the statute may be accomplished. And we are of the opinion, that in cases in which it is not made to appear by the disclosure, or in some other legal manner, that the value or the sum that may be realized for the property so mortgaged or pledged, upon a sale or other lawful disposition of it, will not exceed the amount of the lien resting upon it, it will ordinarily be the duty of the court, upon the application of the creditor, to appoint a receiver to test the value of the property found in the hands of the trustee, and to dispose of the same, under the directions of the court. Upon the disclosure, in the present case, the Court of Common Pleas were authorized to appoint a receiver. It appeared that, at the time of the disclosure, a large amount of personal property was still in his possession, and not disposed of; and the value thereof, as compared with the liabilities incurred by the trustee for the principal defendant, in nowise appeared.

We are of opinion, therefore, that a receiver should be appointed in the present case, according to the motion of the creditor; and the judgment of the Court is, that an order be sent down to the Court of Common Pleas, directing that a receiver be appointed. -