Haggerty v. Palmer

The Chancellor. Upon this ease, I am of opinion, that the defendants must account for those proceeds to the plaintiffs. The delivery of the goods was conditional, and taken by the defendant, P., as a trustee for the plaintiffs, until the delivery of the notes. The voluntary assignment and delivery of these goods, in the character of an insolvent debtor, to J. 8f H, to pay other creditors, was an act of fraud, and ought not to deprive the plaintiffs of their equitable lien, in a case where there is no intervening claim of a purchaser for valuable consideration. If the goods had been fairly sold by P., or if the proceeds had been actually appropriated by the assignees, before notice of this suit, and of the injunction, the remedy would have been gone; But while the goods are in the possession, or [439] under the control of P., or of bis voluntary assignee, the plaintiffs have the equitable lien and the better right. The eases under the English bankrupt acts do not strictly apply, for the statute of 11 and 12 Geo. III. ch. 8. declares, that goods placed under the order and disposition of the bankrupt, with the consent of the true owner, shall pass to the assignees. This is a proper rule, under the bankrupt system, to prevent fraud and collusion. But in a case like the present, when the purchaser knew of the usage, and that the delivery of the goods before the delivery of the notes was a deposit in trust, and well understood to be upon condition of a delivery of the notes, it would be very productive of fraud, to give the same force and effect to a voluntary assignment, made for partial purposes, and to the exclusion of the real owner. None of the authorities referred to appear to require us to go this length, and they are all distinguishable from the present case. I shall accordingly decree, that the assignees, J. &c Pf. account for the proceeds in their possession. Decree accordingly.