Kiser & Co. v. Dannenberg Co.

Simmons, Justice. Certain creditors of J. P. Hartley filed their petition against him and against Chas. S. Taylor and M. O. & J. P. Kiser & Co., praying for an injunction and the appointment of a receiver, and for the cancellation of a mortgage executed by Hartley to Kiser & Co., and other writings connected therewith. The petition and amendments, together with the answer and affidavits, so far as material, are set out in the reporter’s statement. The ruling granting the injunction and appointing a receiver, was upon the ground that the mortgage and contempo-raneous writings and agreements constituted an attempt to make an assignment on the part of Hartley, and not conforming to the statute, the whole transaction, including the mortgage, was void. The statute upon which this ruling was predicated requires that “in all cases of voluntary assignments by insolvent debtors for the benefit of creditors, it shall be the duty of the person . . making such assignment to prepare and attach to the [550] deed, or instrument by which the assignment is made, at the time of executing the same, a full and complete inventory and schedule of all the assets of every kind, held, claimed or owned by such insolvent person . . at the time of the execution of such deed or other instrument of assignment, which inventory or schedule shall be sworn to,” etc. And it further provides that “no deed or other instrument of assignment by insolvent persons . . shall be valid unless accompanied by the sworn schedule required.” Acts 1880-1, p. 174. It appears from the record that Hartley, on the 9th of October, 1891, being then insolvent, executed to Kiser & Oo. a mortgage upon a stock of goods and other personalty, to secure an indebtedness to them of $3,429.90, the mortgage containing a power to ’sell the goods at wholesale or retail; and at, the same time transferred to them, as collateral security, notes and accounts having a face value of about $3,000. Contemporaneously with the execution of the mortgage, Kiser & Co. executed the following instruments: “ Taylor, Ga., Oct. 9, 1891. “Chas. S. Taylor: We hereby agree that your debt against J. F. Hartley,*amounting to seven hundred and eighty-five and 50-100 dollars, shall be paid first, before we realize anything on our debt from said' Hartley, arising from goods, notes and accounts, and mules and. horses. (Signed) M. C. &. J. F. Kiser & Co.” “ Taylor, Ga., Oct. 9, 1891. “ Whereas J. 31. Hartley did on this day convey to M. C. & J. 3?. Kiser & Co., by an absolute mortgage, his entire stock, and wishing now to protect Chas. S. Taylor of Crawford county, Ga., we hereby agree and bind ourselves, that said stock of goods shall, when sold, bring eighty cents in the dollar of invoice cost, and all over twenty-six hundred dollars shall be paid to Chas. S. Taylor. Having transferred about three thousand dollars of notes and accounts to us as collateral, we agree that Chas. S. Taylor shall be paid, out of the first money [551] received, his debt in full — seven hundred and eighty-five and 50-100 dollars. (Signed) M. C. &. J. F. Kiser & Co.” The mortgage and other writings, being executed at the same time, and all springing out of the same agreement between debtor and creditor, are to be construed together as one instrument. Burrill, Assignments, §128. Thus understood, they constitute, in our opinion, an “instrument of assignment” within the meaning of the statute. W"e have held that the act is to be liberally construed in favor of creditors and strictly against the debtor and his assignee. “It is to be enforced in a liberal spirit to suppress the evil at which it aims a blow.” Coggins v. Stephens, 73 Ga. 414; Crittenden v. Coleman, 70 Ga. 293. Here a debtor insolvent at the time, transfers and delivers to a creditor his entire stock of goods and other personalty, with power to sell, the creditor agreeing that the goods shall bring a certain price, and agreeing further to appropriate the proceeds first to the debt of another creditor, then to its own, and to pay the surplus to such other creditor. Whether the trust was merely for one of the defendants, or, as was contended, for the entire body of creditors, we need not consider. It is the element of trust which brings it within the statute. Nor does it matter that the conveyance was in form a mortgage. It is sufficient that the security inures not merely to the benefit of the mortgagee, but also to that of another creditor for whom he holds in trust. In our opinion the act embraces every conveyance by the insolvent debtor of his property, whether absolute or in the form of a security, to be held by the person taking it for the benefit of some one or more of the creditors of the debtor. If its provisions could be evaded by changing the character of the instrument, the statute would amount to a mere nullity. “ To give such a construction is to suppose the legislature ab [552] surdly attempting to suppress a mischief in one form, and leaving another equally convenient and effectual in which it might with impunity be accomplished.” Ranhey, J., in Harkrader v. Leiby, 4 Oh. St. 611. In that case it was held that a mortgage under which the mortgagee becomes a trustee for another creditor or creditors, is an assignment, under the act relating to assignments “by insolvent debtors. In Bloom v. Noggle, 4 Oh. St. 45, it was held that if the mortgagee “attempts to extend the lien beyond the necessity of his own indemnity to secure the debt of another creditor, the mortgage is in substance and effect an assignment within the provisions of the act.” Treating this transaction as an assignment within the meaning of the act of 1881, and there being no sworn inventory and schedule prepared and attached, the mortgage, under the- terms of the act, was void. Coggins v. Stephens, and Crittenden v. Coleman, supra. Other questions in the' case are ruled by the head-notes. Judgment affirmed.