Loring v. United States Vulcanized Gutta Percha Belting & Packing Co.

By the Qourt,

Gierke, P. J.

Upon the evidence, the justice at special term found, that the defendant was a corporation formed under the act of February 17, 1848; that it had made an assignment of all its property to John 0. Sargent, defendant, for the benefit of all its creditors, pro rata, as set forth in the complaint; that the assignment was made in contemplation of insolvency; and that judgments were recovered against the corporation, and executions issued thereon, as set forth in the complaint.

We see no reason whatever for disturbing these conclusions, from the evidence. The assignment, then, although made in contemplation of insolvency, is it excluded from the operation of the statute, declaring such assignments void, merely because it provides for an equal distribution of the assets of the corporation among all its creditors ? It is contended that the only object of the prohibition is to secure this equal distribution; and if the assignment secures this, it could not have been contemplated by the legislature to be within the purview of the enactment. But this is mere speculation. Even if we were to take for granted that the legislature had no other object in view, yet this would not warrant us in ignoring the express provisions of a prohibitory enactment. It is always safe to assume, if the law *331makers intended to make any exceptions, that they would expressly mention or refer to such exceptions. They have done nothing of the kind in the enactment under consideration; and the fact that it requires ingenious reasoning to make such a position not glaringly absurd, convinces me it would be very improper to suppose that the exception contended for in this case was contemplated or intended.

Neither are we to presume that the sole object of the statute was to secure this equal distribution among the creditors. It may have had, and probably had, another object in view. We are warranted in supposing that it was also designed to prevent an insolvent corporation from putting its property into the hands of an assignee chosen by its officers or trustees, instead of having it placed in the custody and under the control of a receiver appointed by the court. The legislature perhaps deemed such a disposition of it as subjected it more directly to judicial supervision more advantageous to the creditors than if it were committed to a person who may not be as disinterested, or as competent, as a receiver appointed by the court after hearing all parties concerned, in relation to the appointment. This would be in conformity with a well known maxim, “Fortior est custodia legis quam hominis.”

The special term, therefore, was correct in declaring the assignment void. But we think the provision of the decree directing the payment of the plaintiff’s judgment out of the assets of the company, is erroneous. It gives that very preference which the statute is so careful to avoid. Other provisions of the revised statutes—those relative to proceedings against corporations in equity—(2 R. S. 462, §§ 36, 37,) declare whenever a judgment or decree shall be obtained against any corporation, and an execution issued thereon shall have been returned unsatisfied, the court may sequestrate the property, and may appoint a receiver, and upon a final decree the court shall cause a just and fair distribution of the property to be made among the creditors, who shall *332"be paid in the same order as in the case of a voluntary dissolution of a corporation. (2 R. S. 470, § 79, marginal.) Our whole legislation on this subject carefully guards against any preferences, except those mentioned in the section last referred to. The jurisdiction of the court, therefore, in cases of this hind, should not be exercised in conformity with' its general inherent- equity powers, but in harmony with those provisions, - even when the proceedings are not identical with the precise remedy or procedure on which those provisions are based. ■ ...

[New York General Term, February 3, 1862.

Ingraham, Btvrnourd and Clerke, Justices.]

That part of the decree requiring the assignee to pay the receiver $1500, is manifestly erroneous. The receiver of the assets of the company, already appointed, is directed to proceed according to the provisions of the revised statutes, in collecting the assets. The defendant Sargent should also account and pay over to the' receiver any balance remaining in his hands of the $1300 received by-him.- , The order to be settled on two days’ notice. ■ • ■