« ForrigeFortsett »
share was to be paid back to the debtor. It seems to have been assumed throughout that case, that such a provision would not affect the validity of the assignment. Whatever might have been the understanding in that case, such a conclusion is not well warranted by the language of many of the American cases, and a deed with such a reservation would, under them, be invalid. The debtor may depri»e the creditor, who refuses lo accede to his terms, of his preference, and postpone him to all other creditors; but then he will be entitled to be paid out of the residue of the property, if there should be any after all the other creditors who released and complied with the condition of the assignment are satisfied. If the condition of the assignment be, that the share which would otherwise belong to the creditor who should come in and accede to the terms and release, shall, on his refusal or default, be paid back to the debtor, or placed at his disposal by the trustees, it is deemed to be oppressive and fraudulent, and destroys the validity of the assignment, at least against the dissenting creditors.*
» M'Allister v. Marshall, 6 Binney's Rep. 338. Hyslop v. Clarke, 14 Johns. Rep. 458. Seaving v. Brinckerhoff, 5 Johns. Rep. 329. Austin v. Bell, 20 Johns. Rep. 442. Borden v. Sumner, 4 Pick. Rep. 265. lugraham v. Wheeler, 6 Conn. Rep. 277. Atkinson v. Jordan, 5 Hammond's Ohio Rep.294. Loutilhon v. Moffat, 1 Edv>. OA. Rep. 451. Ames v. Blunt, 5 Paige, 16. 18. Graves v. Roy, 13 Louisiana Rep. 457. The brig Watchman, in the district court of Maine, Ware's Rep. 232. In Brashear v. West, 7 Peter's U. S. Rep. 608, the supreme court of the United States were far from being satisfied, that a deed of assignment of all a debtor's property, and excluding from the benefit of its provisions those creditors who should not, within a given time, execute a release of their demands, ought to be sustained. At any rate, a court of chancery, after the preferred creditors were satisfied, would decree the surplus (if any* to those creditors who had not acceded to the deed. In Brown v. Knox, 6 Missouri Rep. 302, (1840,) the supreme court, after able review of the American authorities, considered the point not to be authoritatively settled ; and they decided, that an assignment, by a debtor. of all his property to trustees, for the benefit of such creditors as should, within a given tune, execute a release, was void. Bat in Andrews v. Ludlow, 5
Vol. II. 53
*Nor can the debtor in such an assignment, make a reservation, at the expense of his creditors, of any part of his property or income, for his own benefit. It has been supposed that such a reservation, if not made intentionally to delay, hinder and defraud creditors, would not affect the validity of the residue, or main purpose of the assignment; and that if the part of the estate assigned to the creditors should prove insufficient, they might resort to the fund so reserved by the aid of a court of equity. The case of Estwickv. Caillaud,* and the language of other cases, were in favour of this opinion.1" But later authorities have given to such reservations the more decided effect of rendering fraudulent and
Pick. Rep. 28, such a reservation was held not to render the assignment fraudulent, because it did not appear, in point of fact, to havo been inserted with an intention to make a provision for the debtor. And in Halsey v. Whitney, 4 Mason's Rep. 206, the learned judge, under the influence of some of the American authorities, gave effect to the condition annexed to the assignment requiring a release, though the assignment did not purport to convey all the debtor's property ; but his own judgment was not satisfied with the authorities under which he acted, and partial assignments with such a condition ought not to he tolerated. In the case of the Watchman, Ware's Rep. 232, the court carries out the general principle so forcibly illustrated in Halsey v. Whitney, and in opposition to what may be considered, after the decision in Borden v. Sumner, 5 Pick. 265, as quite a doubtful point, under the local usages of Massachusetts. In Johnson v. Whitfield, 7 Pick. Rep. 71, it was held, that if a debtor made a partial assignment to select creditors, even for a valuable consideration, it was fraudulent and void, if made with a view to prevent an attachment by other creditors. The case of Havens v. Richardson, 5 N H. Rep. 113, is on the lax side of the question; for where an insolvent assigned all his property to pay the debts of one or more specified creditors, neither the want of a schedule, or of an estimate of the value of the property assigned, nor a stipulation in the assignment for a release of the debts of those who became parties, nor a reservation of the surplus after payment of the debts of those who assent to the assignment, was considered to be conclusive evidence of fraud. The reservation would now generally, and it ought to be everywhere, fatal to the instrument. • 5 Term Rep. 420.
b Riggs v. Murray, 2 Johns. Ch. Rep. 580. S. C. Murray v. Riggs, 15 Joins. Rep. 571. Austin v. Bell, 20 Johns. Rep. 442. Sutherland, J. and Woodworth, J., 5 Cowen's Rep. 547.
void the whole assignment; and no favoured creditor or grantee can be permitted to avail himself of any advantage over other creditors, under an assignment which, by means of such a reservation, is fraudulent on its face.» These latter decisions contain a just and salutary check of the abuse of the debtor's power of assignment and distribution; for, as was observed in the case of Riggs v. Murray,b "if an insovent debtor may make sweeping dispositions of his property to select and favourite creditors, yet loaded *with durable and ben- 536* eficial provisions for the debtor himself, and encumbered with onerous and arbitrary conditions and penalties, it would be impossible for courts of justice to uphold credit, or to exact the punctual performance of contracts."0
• Mackio v. Cairns, 1 Hopkins Rep. 373. 5 Cowen's Rep. 547. Harris v. Sumner, 2 Pick. Rep. 129. Chatrca v. Cairns, decided in Louisiana, 1825, aud cited in 5 Cowen's Rep. 578. n. Passmore v. Eldridge, 12 Scr?. «J- Ramle, 198. Gall S. Dibrell, 10 Yerger, 146. The act of Pennsylvania, of 1818, requires voluntary assignments for the benefit of creditors, to be recorded within thirty days.
b 2 Johns. Ch. Rep. 582.
< In the case of Murray v. Riggs, 15 Johns. Rep. 571, the New-York court of errors held a debtor's assignment to be valid, though it in the first place resereed to the use of the grantors, until one year after they should be discharged by law from their debts, two thousand dollars a year, and then gave preferences, and a power in the assignees to settle with the creditors on certain terms, and that the creditors who did not accept the conditions in one year, or should knowingly embarrass the objects of the deed, should be forever debarred from any share under the assignment. Such a deed was held good, and the decree in chancery setting it aside was reversed! The court of chancery afterwards, in Mackio v. Cairns, 1 Hopkins' Rep. 373, very properly held a deed much less obuoxious than that in Murray v. Riggs, absolutely and in toto fraudulent and void. The last decision appears to have been guided by sound policy and enlightened justice. 5 Cowen, 584, S. C. See also Mead v. Phillips, 1 Sandfurd's Ch. Rep. 83, a reservation in a voluntary assignment giving preferences, and providing previously for the payment of all costs and expenses necessarily incurred by him in defending suits, was held to be fraudulent. The decision of the court of errors in Murray v. Riggs, may be considered as justly exploded.
X. Of sales at auction.
An auctioneer has not only possession of the goods which he is employed to sell, but he has an interest cou
But the case of Grover v. Wakeman, (II Wendell's Rep. 187. 4 Paige 23. S. C.) on appeal from chancery, goes still further. The case was ably and elaborately discussed in the New-York court of errors, and it was held, in affirmance of the decree in chancery, that a debtor in failing circumstances might, by assignment of his property in trust, prefer one creditor or set of creditors to another, proeided he devote the whole of his property assigned to the payment of his just debts, and the assignment be absolute and unconditional, without any reservation or condition for his benefit, and without extorting from the fears or apprehension of his creditors, or any of them, an absolute discharge, as a consideration for a partial dividend, or making the preferences, or any of them, to depend upon the execution of a release, by such preferred creditors, to him of all claims against him. An assignment giving preferences upon such a condition is void; and the assignment being void in part as against creditors and the provision of the statute, is void in toto, though there be no fraud in fact intended. This appears to be the most stern decision that exists, either in England or this country, on this subject. See Ames v. Blunt, 5 Paige, 22, and Goodrich v. Downs, 6 Hill's N. Y. Rep. 438, to S. P. The weight of general authority, both English and American, is, that an assignment by a debtor of all his property for the payment of his debts, and at the same time giving preferences, and requiring an absolute release from each creditor who accedes, is not per se fraudulent and void. The circumstances of the debtor assigning over to trustees all his property, without any reservation to himself, and giving the surplus, if any, to those creditors, if any, who do not come in and agree to release, on taking their preferred share, is deemed to disarm the transaction of all illegality and unfairness. See the cases collected io Mr. Angell's Laws of Assignments in Trust for Creditors, Boston, 1835, p. 96—108, which is a neat and valuable little manual of the law of voluntary assignments by insolvent debtors. A provision in the assignment that the surplus, after all debts are paid, should revert to the debtor, is not improper, for such a resulting trust would follow of course without any stipulation. In Pennsylvania, the judicial decisions were for a time quite lax in favour of voluntary assignments, but their influence was counteracted by statute provisions requiring the assignee to give security, and giving to the court power to remove him, and substitute another, and requiring him to file an inventory. The debtor may still give preferences, and require the creditors who accede to execute a general release. The commissioners, in their Report on the Cieil Code of Pennsyleania, in January, 1835, suggest that this stipulation for a release be placed under some restrictions. Report, p. 50—52. But since that report, and in June, 1836, the legislature of Pennsylvania regulated the voluntary assignments by pled with that possession. Ho has a special property in the goods and a lien upon them for the charges of the sale, and his commission, and the auction duty. He may sue the buyer for the purchase money, and if he gives credit to the vendee, and makes delivery without payment, it is at his own risk.* If the auctioneer has notice that the property he is about to sell does not belong to his principal and he sells notwithstanding the notice, he will be held responsible to the owner for the amount of the sale.h So if the auctioneer does not disclose the name of his principal at the time of the sale, the purchaser is entitled to look to him personally for the completion of the contract, and for damages on its non-performance.c
debtors of their estates real or personal, or of any part thereof, in trust for their creditors, or some of them, and so far have given those assignments sanction. Pardon's Digest, 74. In the case of Thomas v. Jenks, decided in the supreme court of Pennsylvania, in March, 1835, the court held the whole assignment fraudulent and void, it being an assignment by a partnership firm of a part of their property for the benefit of their creditors, with a stipulation for a release as an equivalent for the assignment. It was such an exercise of the right of preference, as to impose upon the creditors, indirectly, the necessity of resorting to a part of the debtor's property in exclusion of the rest . So, in M'Culloch v. Hutchinson, 7 Watts, 434, a voluntary assignment by an insolvent debtor, absolute on its face, to a particular creditor, to pay him and return the surplus to the debtor, was held to be fraudulent and void. The trust was secret and the deed deceptive. The judicial decisions on this subject seem at last to have taken a firm and vigorous stand in favour of the rights of creditors and the claims of justice. The case of Van Nest v. Yoe, before the assistant V. Ch. in New-York, (I Sand ford's Ch. Rep. 1.) contains a stringent and sound application of principles against the delay of creditors, by a voluntary assignment of his property by a debtor to retain and hinder the operation of executions at law. Though tho law allows of voluntary assignments, and permits the insolvent debtor to select his own assignees, yet where he selected his own relatives of very apparent incapacity for the trust, it was held to be evidence of fraud, and the assignment was set aside. Cram v. Mitchell, 1 Sandforcfs Ch. Rep. 251. S. P.
• Williams v. Millington, 1 H. Black's Rcp.81.
b Hardacre v. Stewart, 5 Esp. N. P. Rep. 103.
< Hanson v. Roberdean, Peak's Rep. 120.