delivered the opinion of the court:
The questions here involved arose on the demurrer of appellees to appellants’ bill of complaint. The bill has a two-fold purpose: First, to compel an accounting and settlement of the alleged partnership matters between appellant Wright and John Cudahy; and second, to have the agreement between Cudahy and his individual creditors, and the deed of trust upon certain real estate, and the pledge of certain additional securities securing the payment of the promissory notes therein provided to be given, declared to be an assignment for the benefit of all the creditors of said John Cudahy. The first branch of the case is not involved in this appeal, as the trial court held the bill was properly brought, as against John Cudahy, to settle alleged partnership accounts, but dismissed it as to appellees Hutchinson, Hamill and Margaret F. Cudahy. Hutchinson is the trustee, and Hamill his successor in trust, named in the agreements and trust deed which are alleged to constitute the assignment, and Margaret F. Cudahy is the wife of John Cudahy, who joined with him in the trust conveyance.
The principal questions raised on the appeal to this court are, first, whether or not said agreement, and trust deed upon real estate, and the pledge of certain choses in action, mentioned in the bill, constitute an assignment for the benefit of the creditors of John Cudahy under the law of this State; and second, if it be such assignment, whether or not Wright is, in any sense, a creditor of Cudahy, and entitled for that reason, or as the representative of the creditors of the alleged co-partnership, to call upon a court of equity to have said instruments of writing construed to be an assignment and the trust estate administered accordingly.
While the arguments of counsel have been largely addressed to the second question, we do not think its solution important here, inasmuch as the first question is really the meritorious one, and would, in this or some other proceeding, probably have to be eventually solved.
The deed of trust given to secure the promissory notes of John Cudahy contemplated by the agreement is not made an exhibit to the bill nor is its substance stated, and from the terms of the agreement and allegations of the bill and the rules of chancery pleading we must assume that, except so far as modified by the provisions of the agreement, it is in the ordinary form of a deed of trust upon real estate, in the nature of a mortgage, given to secure the payment of the indebtedness therein described, and that it contains the usual condition of defeasance.
The question then is, do the provisions of the agreement and the pledge as set out in the bill, taken in connection with such- a deed of trust, when construed in the light of the facts alleged in the bill, constitute an assignment for the benefit of creditors? We are clearly of the opinion that this question must be answered in the negative. A defeasible, and not the absolute, title to both the real and personal property is conveyed. The payment of the notes is secured by the deed of trust, and the personal property is pledged as “additional security.” The provision in the agreement that any piece of property should be released to the grantor or pledgor, whenever he should place in the hands of the trustee its value as fixed and set opposite its description attached to the agreement, was a mere provision for a partial redemption, and, so far from converting the writings into an assignment for the benefit of creditors, shows that not only was the equity of redemption retained by the grantor, but that he reserved the right to redeem each piece or parcel of property separately, as he might be able.
The questions at issue have been frequently reviewed by this court and need not be elaborated here. In Walker v. Ross, 150 Ill. 50, in an opinion of the Appellate Court for the Third District, adopted by this court as a correct exposition of the law upon the subject, after reviewing the principal decisions of this court upon the question, it was, among other things, said: “The court has repeatedly said that the statute contemplates no such thing as a constructive trust. These cases further hold that there must be an absolute transfer of the whole interest of the assignor, legal and equitable, in the property assigned in trust for the benefit of creditors, and hence that absolute conveyances made directly to the creditor in payment, or any form of lien so given as security for the payment, of a bona fide debt, though having the effect to give him a preference, is not an assignment for the benefit of creditors, within the meaning of the statute. Wherever such instruments have been held void under section 13, it has been upon the ground that, having been made in contemplation of an assignment in trust afterwards actually executed, they were to be deemed a part of it. (Preston v. Spaulding, 120 Ill. 208; Young v. Clapp, 147 id. 176.) Otherwise a debtor, solvent or insolvent, notwithstanding the statute, may lawfully transfer any part or the whole of his property, absolutely, in payment, or encumber it by mortgage, deed of trust in the nature of a mortgage, judgment confessed, or pledge as security for the payment of such debts preferred. (First Nat. Bank of Chicago v. North Wisconsin Lumber Co. 41 Ill. App. 383; Young v. Clapp, 147 Ill. 176, and cases supra.) We perceive no conflict between these cases, or any of them, and that of Farwell v. Cohen, 138 Ill. 216, so much relied on by counsel for appellees as to what is necessary to constitute an assignment for the benefit of creditors. In the latter it is defined just as in Weber v. Mick and others, and in its application to the instrument there in question, which was in the form of a bill of sale of a stock of goods from the debtor to one of his creditors, the court held that on its face it was an absolute transfer of the whole interest, legal and. equitable, in the property, without any condition of defeasance providing for its return upon payment of the debts mentioned, and was made to Cohen expressly in trust, as well for the benefit of other creditors named, with preferences.” And it was further said in that case that the instruments, which were chattel mortgages, “did not, in terms or effect, absolutely transfer the whole interest of the debtor, legal and equitable, in the property. They did contain a condition of defeasance providing for its return upon payment of the debts mentioned.”
Counsel are in error in supposing that under the rule laid down in Farwell v. Cohen the writings in question should be construed to be an assignment for the benefit of creditors. The distinctions between them and the conveyance held in that case to be an assignment are the same, in many respects, as those pointed out in Walker v. Ross, supra. That the property was conveyed to a trustee with power to sell does not necessarily change the nature of the instruments as a mere conveyance of property as security for the payment of a debt. The power of sale might be ineffectual under the statute, but the conveyance could be foreclosed in the same manner as any other mortgage.
For the reasons stated the judgment of the Appellate Court is affirmed.
Judgment affirmed.