Wyles v. Beals

Shaw, C. J.

We are inclined to the opinion, that by the common law of Massachusetts, as it stood prior to 1836, this assignment would be bad; but, passing over all other objections, the court are of opinion, that this assignment is void against creditors, as being repugnant to the spirit and provisions of the insolvent laws, embracing as well St. 1836, c. 238, regulating assignments, as St. 1838, c. 163, and the numerous acts in addition thereto. A question has been made, whether the assignment law of 1836 is repealed by the insolvent law of 1838. In most respects it is; for, though the former is not repealed in terms, it is repealed so far as it is repugnant to,- or inconsistent with the latter; and as in most respects both had the same object in view, and acted upon the same persons and subjects, the latter, by providing ampler and more practical and specific means to accomplish the same end, is incompatible with, and so does repeal, the former. In one marked line of policy they concur, which is, that to make an assignment by an insolvent valid, it shall embrace all his property, not exempted by law, and shall be so appropriated as to admit all creditors to an equal share in the distribution. If, with this object in view, the latter has repealed the former, it is because it has made a step in advance in the same line of public policy, and taken its place. It is unnecessary therefore to distinguish them. We think this assignment repugnant to these insolvent laws, in various particulars.

1. It is an assignment by partners, and does not purport to transfer their whole property, but only their partnership property; it does not purport to transfer their separate property, nor allege, nor does it elsewhere appear, that they had no separate property; and yet it provides for a discharge of their entire partnership debts, from the execution of the instrument.

The separate property of partnership debtors is liable for then joint debts. A rule has been adopted for practical use, that when the joint and separate estates are in a course of administration at the same time, as between the different classes of, creditors, partnership property shall first be applied to pay partnership debts, and separate property to the separate creditors of each partner; yet, as between debtor and creditor, each partner is hable, and his whole separate property chargeable, as well for his partnership as his several debts. It not unfrequently happens, that a man of ample means and credit enters into partnership with a person, supposed to have capacity for business, but with little or no property. Credit is given to a partnership, on account of the known amount of the separate property of one of the partners, each being hable in solido for the whole of each partnership debt. Under such an assignment as this, partners might obtain a full discharge from ah partnership demands, whilst one or both of them has property, which the law makes chargeable with those debts, and which is sufficient to pay them.

2. It does not avoid attachments, but, on the contrary, authorizes the assignee to pay off all liens in full. Whereas the insolvent laws provide that all attachments on the property of the debtors, shall be dissolved, except when it is for the benefit of the general creditors that they should be preserved.

3. It makes no provision for defeating preferences, effected by payments, pledges, collusive attachments and other means.

4. It takes from creditors the appointment of assignees, and places the power in the appointees of the debtor, who are not" under the responsibilities resting on assignees under the insolvent laws.

5. If such an assignment is valid, and passes the property to the assignee, it defeats the right of creditors to proceed in invitnm, under St. 1838, c. 163, § 19.

6. It defeats the right of creditors to require conveyances in aid of the assignment, to have a voice in the question of the discharge of the debtor, and more especially, to have a full examination of the debtor under oath, which might secure to creditors property which might not otherwise be disclosed, and which could not be reached by attachment.

7. It takes away the superintending power of magistrates and officers, appointed by law, to see to a full surrender and an honest administration of the assets, and a fair, general and equal distribution amongst creditors.

8. It is inconsistent with the fundamental principle of the insolvent laws, that the debtor shall give no preferences to particular creditors, and that the whole of the debtor’s property shall be equally distributed amongst all his creditors, and that upon these conditions only shall the debtor be released from his debts.

It is no satisfactory answer, that by the trusts of this assignment, the appropriation was to be made to and amongst the parties thereto, in the same manner as it would be made by the insolvent law. If it proposed to pay a dividend to creditors, not parties to the assignment, it would be void as to other creditors, by the old law. Widgery v. Haskell, 5 Mass. 144. Parker v. Kinsman, 8 Mass. 486. If it does not provide for a dividend to creditors not parties, it does not provide for an equal distribution.

But even if a distribution could be made in exact conformity with the provisions of the insolvent laws, it would afford little aid in support of this assignment, which in its whole character is opposed to the policy, spirit and principles of the insolvent laws, which repeal all laws inconsistent with their provisions.

It cannot affect our decision, that the consequence in this case will be, that an individual creditor will get his whole debt, against this assignment. It is, or has been, in the power of other creditors to institute compulsory proceedings, under § 19 of St. 1838, c. 163, so as to bring the estate under the operation of the insolvent laws, and thus effect an equal distribution of the assets. Judgment for the plaintiff.