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JULY 1829.

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Smith.

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avoided giving any account of it, and as none can clain

under the deed, except such as have joined in the execution Robinson

of it, and thereby released their claims on the firm, no Rapelye and others can be affected by it. It is admitted that this plain

tiff, and many other creditors, have refused to execute the deed; the consequence of which must be, that if this deed is held operative against them, their claims are entirely defeated.

2. It remains to be considered whether the deed, according to the terms it purports, is legal and valid; or by legal construction is it fraudulent and void?

The late decision of the Supreme Court of the United a 11 Wheat. States, in the case of Brooks v. Marbury,a before alluded

to, and which is urged on both sides of the question, does not fully embrace the doctrine, but as far as it goes, is against the validity of this deed. It admits the principle which has been often sustained, that a debtor in failing circumstances or otherwise, may lawfully prefer one creditor or any number of creditors to others, either by the direct sale of property to them, or by an assignment in trust for their use, provided, it be done in good faith, and the preferred creditors "give their assent at the time of the execution, or if they subsequently assent in terms, or by actually receiving the benefit of it. In that case, the assignment was made to secure payment of debts created by the forgeries of the assignor, the real existence of the debts was fully shewn, the property was described with reasonable certainty, the preferred creditors were to be fully paid, after which the residue of the estate was absolutely appropriated for the benefit of the other creditors generally, without the condition of a release. It was understood, however, there would be no residue, and if the deed was valid, the debts due the favorite creditors would be paid, to the exclusion of all others; is invalid, the whole proceeds must go to the attaching creditors, in the order in which they stood, to the exclusion of those for whose benefit the deed was made, and others. Under these circumstances, Chief Justice Marshall, said, “it was a mere question of legal preference, unmixed with any equitable considerations whatever." He also said, "deeds of trust may and have often been made for the benefit of persons who are absent, or even for persons who are not in existence, and that the assent of the persons for whose benefit they are made, has never been required as preliminary to the vesting the legal estate in the trustees. He adds, however, that if the pre

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ferred creditors had refused their assent, the assignment JULY 1829. would thereby have been avoided; but that "real creditors, are rarely unwilling to receive their debts from any hands

Robinson which will pay them; and no such unwillingness can be Rapelye and gratuitously ascribed to the holders of forged notes."

Smith. In reference to the expressions of the Chief Justice, as to the necessity of the assent of the cestui que trust, the same remark applies, that was used by him in the same case in allusion to certain remarks of Chancellor Kent, “that they must undoubtedly be understood in reference to the case in which they were used.” His language entirely excludes the idea that in no case was the assent necessary to the validity of the deed, but he gives ample reasons why the assent should be presumed in that case; that as the preferred creditors were the innocent holders of forged notes, they would doubtless be willing to receive payment from any source. And compared with this case, other reasons equally strong may be added. The condition of their assent was not a release of all claims on the person of the debtor, or such parts of his estate as might be fraudulently concealed, or which he might afterwards acquire, as is the case here. And in that case, the assigned property being designated and described, the creditor could scrutinize the assignment and ascertain the faith in which it was executed. Here they are left without the slightest estimate or description of the amount, kind or locality of the assigned property, except that it is all the personal estate, claims or demands, and all the lands in Georgia and Alabama, which the firm owned jointly, but not individually. Hence a creditor who might wish to examine the motive for the assignment, and the prospect of payment under it, so as to make his election, whether to join in the execution of the deed or not, must roam through the United States, without the usual and necessary means of making the discovery.

And in this place it is necessary to notice what I consider a prominent objection to this deed; it expressly excepts, from its operation, all the separate or individual property, belonging to each of the persons composing the firm. Who can say, their separate property does not exceed the value of their joint estate, or that it does not bear a large relative proportion to it; or that they did not preparatory to this assignment, use the precaution to have no individual debts, and increase their separate property out of the joint stock? It is a rational presumption that their separate property is sufficient to constitute a reservation, which, if expressed in

JULY 1829. the deed, would exhibit the most glaring fraud. Nor

Nshould the fact escape notice, that they assign only such Robinson.

lands of the firm as lie in the two States; what quantity of Rapelye and real estate they may jointly own in the State of New York, Smith.

where they reside, or elsewhere, is in no way shewn or estimated. The presumption is strong, that there was a deep and secret motive for this vague, yet efficient designation.

By the rule of decision which has uniformly prevailed in Connecticut, assignments less exceptionable than this, have been adjudged fraudulent and void, as to creditors who do not assent to the terms. The principles of a case reported in 4 Day, 146, were these, "A., being in failing circumstances, executed a deed of assignment of certain credits to B. in trust, for the payment of all A's creditors, in proportion to their respective claims. Two schedules were annexed, the first specifying the names of several creditors, and concluding thus: "and others, to the number of about twenty creditors." The other spccifying several debtors, with the amount of their respective debts, and concluding thus: “and many more to the amount of more than $10,000.” That assignment was made bona fide, and due notice given to the creditors. The creditors named in the schedule, had no knowledge of the assignment at the time it was made, but none of them afterwards dissented, except C. who did dissent. B. was agent to a number of the creditors; he accepted the trust, and proceeded to make collections. It was held, that the assignment was void in law, and that C. was entitled to recover the credits assigned by process of foreign attachment."

In the Courts of New York, a doctrine has prevailed more favorable to assignments in trust for the payment of preferred creditors, than in any other tribunal of equal authority. But even there, I think the principle has not been carried so far as to sustain this deed, supposing it in fact to have been executed by the persons who purport to

have signed it as creditors. a 14 John. R.

In the case of Hyslop v. Clark,a a schedule was annex458.

ed to the deed containing all the property conveyed with a particular description thereof. The deed contained a stipulation, that in case any of the creditors should refuse to release their demands against the assignors, then, in further trust, to pay such of their creditors as they should appoint; certain of these creditors refused, and it was held that the trust failing as to them, resulted for the benefit of

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the assignors; that the deed was therefore void by the statute of frauds, as to other crcditors; and being void in part,

Robinson was void in the whole on the ground, that it tended “to delay, hinder and defraud creditors." The same I conceive Rapelye and may be said of this deed.

a 15 John. R.

Smith. It was, however, held in the case of Murry v. Riggs, a that the deed of assignment may exclude from its benefits 571. such creditors as neglect or refuse to assent to the assignment within a limited time, throwing the distributive shares to which they would have been entitled, into the general mass for the benefit of other creditors provided for by the deed.

But in a subsequent case, Austin v. Bell.b Spencer, 6 20 Joho. 142. Chief Justice, reviewing the case of Murry v. Riggs, remarks, that Chief Justice Thompson, in delivering the former opinion, observed that "for any thing appearing, all the creditors of Murry & Co., the assignors, were satisfied with the assignment, and the provision therein made for the payment of their debts.” In this case, the reverse is the fact He went on to say, “this is an important feature in which the case of Murry v. Riggs, was distinguishable from that of Clark & Hyslop, and that Chief Justice Thompson in the same case assented to the decision in Hyslop v. Clark, and it could not be inferred he intended to overrule it by any thing said in the other case. The deed in the case of Austin v. Bell, was executed by persons composing a mercantile firm, to trustees, for the payment of the debts of the firm. It conveyed all their estate, joint and several, real and personal, their wearing apparel and household funiture excepted; and also the debts and demands due to them, either jointly or severally; the directions of the trust were among others, that the creditors named and classed in a schedule annexed, should be paid in the order in which they were classed; provided, they should within a limited time, become parties to the deed by executing the same; and upon the further trust, that in case any of the creditors named should not, within the time, become parties to the assignment, then the grantees should pay to the grantors, the proportion of such creditors who neglect or refuse. The deed also contained a release similar to the one before us. Very few of the creditors executed the deed, and among those who refused were the creditors whose claim was in contest. Some, however, did execute, which afforded the deed all the aid that can be derived from the assent of one or a few of numerous credi

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tors. The Chief Justice, in that decision observed, that

“without in the least impugning the doctrine, that a man Robinson

in debt has a right to give a preference to creditors, I am Rapelye and bound to say, that a deed which does not fairly devote Smith.

the property of a person overwhelmed with debt to the payment of his creditors, but reserves a portion of it to himself, unless the creditors assent to such terms as he shall prescribe, is in law, fraudulent and void, as against the statute of frauds, being made with intent to delay, hinder or defraud creditors of their just and legal actions." It is admitted, this decision was mainly influenced by the provision in the deed, that the proportion of the dissenting creditors should be paid to the assignors in the event of their refusal. But if all assented, there was no reservation, so that it could only be created by the act of the creditors in refusing their assent, and the whole of the property held jointly and severally was conveyed. It was not subject to several objections applying to this: here is shewn to have been an absolute reservation of all their separate property and all the lands of the firm, except such as are situated in Georgia and Alabama; besides the implied reservation of whatever residue may result from the refusal of part of of the creditors, to execute the deed, or of the whole, if all had refused.

The Supreme Court of Massachusetts, in the case of a 13 Mass. R. Ingraham v. Geyer, a decided, that an assignment in trust

for such creditors, as should within a certain time become parties, and release their demands, is void as against the dissenting creditors.

On the other question raised in the argument, whether a voluntary assignment for the benefit of creditors valid by the lex loci, can affect the rights of creditors in another State or nation, than where made, I decline the expression of any opinion at present, as it could avail nothing in this case, and is considered by many of the first jurists as an important, and unsettled question of international law.

But for the reasons that the deed is not shewn, or in any manner avered to have been executed by either of the assignees or creditors; that the plaintiff and many other creditors have refused their assent, which was required to entitle them to any interest in the deed, and could only be given on terms of releasing their demands against the debtors, that all the individual property of the debtors, as well as any real estate owned by them jointly, except in the two States, is reserved, and because no estimate, inventory or

146.

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