Woddrop v. Weed

Citations

• 154 Pa. 307
• 32 W.N.C. 189
• 26 A. 375
• 1893 Pa. LEXIS 884

Syllabus

<p>Trusts and trustees — Trust to carry on business.</p> <p>Trust property which has been embarked in business is primarily liable to creditors for debt, and will be applied as far as it will go to the liabilities.</p> <p>Confession of judgment by the trustee — Preferences—Insolvency.</p> <p>A trustee, appointed under a will to carry on the business of the testator, cannot, after both the trust estate and the trustee have become insolvent, confess judgment to a creditor of the trust estate, so as to give such creditor a preference over other creditors in the distribution of the trust property.</p> <p>Testator devised all of his property to a trustee, in trust for beneficiaries named, with power to “possess, hold and manage the same, and conduct and carry on business, and trade, barter, buy and sell in and for all things that pertain to the said estate and its business or its products, and make such investments and purchases of other pi'operty real or personal as he may deem best for the interests of the trust hereby created.” The trustee was authorized to sell any part or parts of the estate, and with the proceeds to make such investments, and to do such things and such acts incident to the carrying on of the business as he might deem judicious. The trustee accepted the trust and carried on the business of the testator until both he himself and the trust estate became insolvent. He then confessed judgment to certain of the creditors of the trust estate for the purpose of giving them preference, and the judgments were accepted by the creditors with knowledge that they were for that purpose. Held, that the trustee was without power under the circumstances to prefer creditors, and that the judgments were void.</p> <p>Equity — Standing of creditors to contest judgment.</p> <p>In such a ease the other -creditors have a standing in equhy to compel the trustee and the preferred creditors to account.</p> <p>Testamentary trust — Delegation of power by trustee — Assignment fo