Shattuck v. Freeman

Dewey, J.

Several objections have been taken to the validity of the title of the plaintiff to the property in controversy.

1. It is said that no creditor had become a party to the assignment, before the attachment, by expressing formally his assent to it, and therefore nothing passed by the conveyance to the plaintiff, as against creditors. It is attempted to maintain this position, by reference to the decisions of this court in cases of voluntary assignments made at common law, and before the statute of 1836, c. 238. Such undoubtedly was the rule of law as held in those cases, and such an assignment, until one or more of the creditors of the assignor had assented to the assignment, was invalid as respects attaching creditors. But one of the evils intended to be provided against by the enactment of the statute just referred to, was that of intervening attachments between the time of the execution of the assignment by the debtor, and the acceptance of the same by his creditors. In cases where the amount of property transferred was large, and the creditors numerous, it was usually found impossible to carry into full effect the provisions of the assignment; as the property was liable to a direct attachment in favor of any creditor, before any other creditor had assented to the assignment, and by the trustee process, after such assent; which latter process gave an attaching creditor a lien upon all the surplus remaining after discharging the debts of those creditors who had previously assented to the assignment.

The first section of the statute under consideration authorizes the debtor to assign his property to his creditors, or to an assignee, for the use of his creditors, and provides that such assignment shall be valid and effectual against any attachment thereafter made. It will be perceived, that this section contains no provision making the assent of any creditor a prerequisite to the vesting of the property in the assignee and the placing of it beyond liability to future attachments ; and it was doubtless so flamed ror the purpose of avoiding the evils before alluded to, and *14thus the more effectually to secure an equal division of .the propert) of the insolvent debtor among all his creditors. The fourth section is also in accordance with the view we have taken, as to the necessity of any express assent on the part of the creditors to give effect to the assignment, and provides that any creditors may become parties to the assignment, provided they shall apply before the final dividend is declared, subject only to the restriction, that they are not allowed to disturb any dividends already declared. This assignment was therefore proper, in point of form, and assented to and executed by all the parties requisite to give it legal effect, and must therefore be held valid, unless the other objections taken to the transfer are found sufficient to defeat it.

If there had been evidence tending to show that this assignment was entirely fraudulent in its original inception, and such circumstances had been disclosed as indicated the whole transaction a corrupt design to place >' roperty beyond the reach of the creditors, and to secure the same for the use of the debtor, it might have been proper to submit the question of fraud to' the jury; but on the facts as presented here, we perceive no such ground of defence.

2. The further question, then, is as to the effect of the evidence offered to defeat this assignment, on the ground of a subsequent abandonment or surrender of the rights acquired under it. One ground here taken is, that the actual possession of the property, from the day of the transfer to the time of the attachment, has been in the debtor acting as the agent of the assignee, and in that capacity disposing of the property. We do not perceive any legal objection to the retaining of the services of the debtor, as the agent of the assignee, at a reasonable compensation, in closing the concerns of the debtor, where such assistance is needful, and he is a competent person to render this service. He is, however, to be treated with as any other servant or agent of the assignee, and for all his acts prejudicial to the interest of the creditors the assignee would be liable to the same extent, and in the same manner, as he would for the acts o<* any other person acting for him in such capacity. If there*15fore, as appeared in this case, Carver, the debtor, had applied part of the proceeds of the goods assigned to the payment in full of tlie demands of particular creditors, to the prejudice of the remaining creditors, it will be at the risk and loss of the assignee, if the remaining estate is not sufficient to pay the proper proportionate share of the other creditors.

More reliance is probably placed by the defendant upon the evidence of neglect on the part of the assignee, to take immediate measures to convert the assigned property into available cash funds, and the omission to make any dividend among creditors. These circumstances, taken in connexion with the delay of the creditors to express their assent to become parties to the assignment, it is urged, show such a virtual abandonment of all rights acquired by the plaintiff under the assignment, as to justify any individual creditor in treating it as a nullity, and would authorize an attachment of the property as still in Carver, the debtor.

Assuming, for the purpose of properly raising this question, that the case discloses culpable negligence on the part of the assignee, and unnecessary delay in converting the property into money, and in declaring any dividends in favor of creditors, the court are of opinion, that such a state of facts would not justify the attachment by one of the creditors, for the purpose of acquiring a lien upon it in his own favor to the exclusion of other creditors, in the manner here attempted.

The remedy for such neglect or misfeasance on the part of the assignee is fully provided by the seventh section of the act under consideration, and is so regulated as to protect the rights of individual creditors, without defeating the great object of the statute, the equal distribution of the effects among all the creditors. Full power is given to this court, and also to the court of common pleas, upon the application of any creditor, to order and decree such proceedings as will secure a prompt settlement and distribution of the avails of the assigned property, and each of these courts is authorized from time to time, on such application, to make all such orders and decrees touching the matter, as the proper administration of said trust shall require ; *16and this is the only remedy in such cases, for any creditor who feels aggrieved by the misfeasance or neglect of the assignee. The defendant having wholly failed to justify the taking of the property under the attachment, a verdict was properly taken in favor of the plaintiff.

Judgment on the verdict.