Munro v. President of Merchants' Bank

The bill in this case seems to have been framed and the argument in behalf of the plaintiff has proceeded on an entire misapprehension of the nature of the transaction between the plaintiff’s intestate and the Merchants’ Bank, in relation to the conveyance of the title of the former to a certain portion of the bark Clara Bell. It is obvious on the face of the transaction that it was not the intention of the parties that a mortgage interest or title should be created in the vendee under the bill of sale of the vessel. This, we think, is manifest on an inspection of the document, without resorting to paroi evidence. Not only is the conveyance absolute in form, but it is made to a third person. An essential feature of a mortgage or pledge of personal estate is, that the title or possession is vested in or held by the person to whom the debt is due which the property is intended to secure. If the intention of the parties had been to attach to the conveyance of the vessel the incidents of a mortgage, the bill of sale would have been made directly to the bank, the creditor of the intestate. The bank was competent to take a conveyance in mortgage as security for debts due from the intestate, and, as such a mode of transfer is among the common and ordinary transactions of business, the inference is very strong that the parties adopted another form of security e s industria.

What the real nature of the transaction was, is indicated in part by the bill of sale. It is made to Congdon, who at the time was cashier of the bank, in his individual capacity, as trustee.” This shows that the vendee held it on some trust or confidence, and not for his own use and benefit; but neither the *222nature of the trust nor the name of the person or corporation who were to be entitled to the beneficial interest in the property is set forth in the instrument. These appear, however, satisfactorily from the paroi evidence; especially from the testimony of Mr. Tucker, the president of the bank, which stands wholly uncontradicted. The substance of his statement is, that the plaintiff’s intestate made the bill of sale to Congdon in trust, to be held by him as security for any debts which might be due to the bank from the intestate, either as promisor or indorser, with power and authority, in case of any default in the payment of any debt which might become due to the bank from him, to sell the vessel without any delay. In this state of the evidence we are unable to see any plausible ground on which the plaintiff can assert or maintain the rights of a mortgagor or pledger in his intestate, as to the share of the vessel which was included in the bill of sale.

But it is urged in his behalf that, although he may not be entitled to redeem the vessel, he is nevertheless warranted in requiring an account from the defendants of the share or proportion of the outfits of the vessel which was conveyed and held in trust, and of the catchings of the voyage on which the vessel sailed, and in the pursuit of which she was engaged at the time of the death of his intestate. If this part of the plaintiff’s claims was to be determined entirely by the bill of sale executed by his intestate and the paroi agreement originally entered into by which the trust was created between him and the vendee, it would be open to serious question whether the outfits and catchings were comprehended within the terms of the trust. But there is other evidence in the case, which has an important and decisive bearing on the rights of the parties to this portion of the property in controversy. It appears from the evidence that, after the arrival of the bark from the voyage on which she was bound when the bill of sale was executed, the proportion or pari of the catchings of the voyage which belonged to the share o! the vessel which had been transferred to a trustee as security for the debts due from the intestate to the bank was set apart and marked by him as being also appropriated as additional security *223for the same debts, and that an account of the casks and of the guages thereof was delivered to the bank; that these catchings were afterwards sold with the assent of the bank and the trustee ; and that the proceeds of these sales, after being accounted for by the intestate to the bank, were by express agreement used to pay the proportionate part of the outfits for a new voyage of. that part of the bark which was held in trust. Taking this new agreement in connection with the previous transfer of the vessel, we think the inference is unavoidable that the parties intended that the intestate’s proportion of the catchings which replaced the original outfits should be held on the same trust as that which had been agreed upon in regard to his share of the vessel, and when these were subsequently reinvested by the assent of both parties in the outfits of a new voyage to be again replaced by catchings, they were still held subject to the trust, so that on the arrival of the vessel in the home port from the second voyage the catchings passed into the hands of the ship’s husband as agent for the trustee, and thence into the hands of the defendants, to be applied towards the payment of the debts due from the intestate to the bank.

The result of this view of the transactions between the parties is, that the plaintiff cannot maintain his bill for a redemption of the intestate’s share of the vessel, nor for an account of the proceeds of the catchings, on the ground that they did not vest in the trustee and had been wrongfully applied by him and the bank in payment of the debts due to the latter. The transfer of the vessel and the catchings was made on a trust in the nature of a mortgage. The transaction was analogous to that class of conveyances of real estate where deeds are made to secure debts, but, instead of being to the creditors, third persons are named as grantees, who take the estate on a trust, declared and set forth in the deed, and which, by accepting, they become bound to execute and fulfil. Such a conveyance, it has been held, does not vest a mortgage title or interest in the grantee, nor does it leave in the grantor an equity of redemption in the sense in which that phrase is understood as applied to mortgages. It has been determined that if a deed is made on a trust to pay a *224debt, to be executed by a third person and not the creditor, it is a conveyance on a pure trust. In regard to grants of this nature the tendency of courts is to hold that no title remains in the grantor which can be taken on execution, and that the trustee may pass an absolute title to a grantee on complying with the terms of the trust, without any right in the grantor to redeem the same. The nature of these conveyances and their legal incidents are well stated in 1 Washburn on Real Prop. 502, where the authorities- are fully collected. If this is the doctrine applicable to conveyances of real estate in trust to pay debts, a fortiori it is applicable to similar conveyances of personal property.

It appears in the case at bar that the vessel and catchings were disposed of by a sale, and the proceeds applied in strict conformity to the trust on which they were held, after due notice to the plaintiff. There is, therefore, no ground for maintaining his bill. The plaintiff has a complete and adequate remedy at law to recover the balance of money belonging to the estate of his intestate, which the bank, as agent of the trustee, has offered and has always been ready to pay to the plaintiff.

Bill dismissed.