Planck v. Schermerhorn

The Chancellor. The complainant is entitled to a receivership as to the judgment debtor, as a matter of course: and it is granted accordingly. From the affidavits it appears that at the time of the assignment of 1842, the assignor had property sufficient to pay all his debts; exclusive of the property assigned for the benefit of his wife. And though the money he had received on account of [645] the estate of his wife’s father belonged to him, so far that he could not legally give it to her, or to a trustee for her use, at the expense of his creditors, still he had a right to dispose of it in trust for her benefit, with or without a pecuniary consideration ; so, long as he retained in his own hands an ample fund for the payment of all his debts. Upon the facts as they appear in these papers, therefore, the receivership as to the property embraced in the assignment of April, 1842, must be denied. No receivership is asked for as to the farm assigned to McGoffin. It is not necessary, therefore, to inquire as to the validity of the assignment of that part of the property. But the assignment of 1844, to Jacob M. Schermerhorn, of all the residue of the property of the assignor, appears to be invalid for several reasons. In the first place it attempts to appropriate a part of the assignee’s property for the use of his wife, to satisfy an alleged claim, in her favor, which she could not have recovered from the assignor by any suit, or proceeding, either at law or in equity. For that reason, if the property of the assignor, at the time of that assignment, was not sufficient to pay all his other debts and this alleged claim also, or so much of it as was attempted to be secured by the assignment, then such assignment was a fraud upon the creditors; inasmuch as it would deprive them of the power of ever obtaining payment of the whole of their debts. On the contrary, if the defendant had ample property to pay all his debts, including the debt due to this complainant, then it was a fraud upon his creditors .to assign all his property to an assignee, and to authorize such assignee to employ the proceeds thereof in defending suits which might be brought against the assignor, by his creditors, to recover their several debts. For it is equally fraudulent, under the statute, to make an assignment of property for the purpose of delaying creditors in the collection of their debts, as it is to assign it for the purpose of defeating the final collection of such debts. And this provision of the assignment could have been inserted for no other reason than to enable the assignee to leave the property in the possession or under the control of the assignor; and thus to defend suits which might be brought against the latter to [646] obtain possession of the assigned property, and retain the ex penses of such defences out of the proceeds of such property. The creditors are entitled to payment in cash when their debts become due. And where a man has ample means to pay all his debts in cash, as they become due, there seems to be no reason for making a general assignment, and giving preferenees, except for the purpose of delaying the creditors in' the assertion of their legal rights. The power in this assignment to lease or mortgage the estate assigned is also void; and the reservation of the right- of the assignee to name the successor of the trustee, in case the trustee named in the assignment wishes to resign the trust, is also objectionable. For it might deprive the court of the power to remove the trustee and appoint another in his place, upon the application of the creditors. For if a creditor should make an application for' that purpose, the present trustee, with the assent of the assignor, might immediately substitute another in his place, of the assignor’s own selection ; and so on from time to time, as often as the trustee should be liable to removal by neglect of his duty to the" creditors. The receivership as to the assigned property, other than that embraced in the assignment of 1842 and in the assignment to McGoffin, must therefore be granted; unless the defendants Isaac M. and Jacob M. Schermerhorn, or one of them, -shall within thirty days after service of a copy of the order to be entered herein, give a bond with two sufficient sureties, in double the amount of the complainant’s judgment, with interest thereon; conditioned for the payment of the complainant’s debt and costs and the costs of this suit, if such complainant succeeds in obtaining a decree setting aside the assignment of 1844, to Jacob M. Schermerhorn, as fraudulent and void against «the creditors of the assignor.