Litchfield v. White

This action was commenced by judgment creditors of Robert H. White, to set aside, as fraudulent and void, an assignment of his property made by White to the defendant, Leonard, in trust, for the benefit of his creditors. The assignment, which was set forth in the complaint, was executed by both the parties to it, and provided that the trustees should retain out of the trust funds his expenses, “and a reasonable compensation for his services in execution of the trust.” The trustee covenanted “to execute the trust to the best of his ability,” and it was mutually covenanted “ that the trustee should not be accountable for any loss that might be sustained, of the trust property or the proceeds thereof, unless the same should happen ~by reason of Ms own gross negligence or wilful misfeasance.'’'’ Held, that the assignment was void.

That the covenant of the trustee to execute the trust to the best of his ability, was qualified by the subsequent clause, discharging him from liability for losses not occasioned by gross negligence or wilful misfeasance.

That the failing debtor could not rightfully withdraw his property from the reach of legal process, and discharge the holder of it from that degree of diligence, viz., ordinary diligence, which the law requires from its officers in the execution of such process.

(See 3 Sandf. 545; 7 N. Y. 438, S. C.)