In re the Assignment of Thompson

Learneb, P. J. : Passing for the present the question whether this assignment was voluntary, or obtained by undue influence, we turn to the case of Chapin v. Thompson (89 N. Y., 270, at p. 275). The language there used, together with the decision of the court in modifying the judgment then appealed from, show that the making of the schedule of the creditors and of the inventory of the property of Thompson were a valid recognition by Thompson of the mortgage ; so that, as against the assigned property, it was not void for usury. It has been urged upon us, in this present argument, that by section 3, chapter 466, Laws 1877, the schedule and inventory may be made by the assignor within twenty days after the date of the assignment, and in case of his failure then by the assignee within thirty days of the said date. And counsel have said that if the assignor (and still more if the assignee), in making an inventory and schedule after the execution of" the assignment, could include therein a usurious obligation, and could thus give it validity as against the assigned property, then the assignor (if not the assignee) could thus change the effect of the assignment after it had been executed. That is, during the twenty days after making the assignment, the assignor could include the usurious debt as one which was valid, or could assert its usuriousness. Thus the assignment would havemne effect or the other, according to acts of the assignor (if not of the assignee), done subsequent to the execution of the assignment. There is much force in this objection.. But the opinion above [198] cited expressly1' refers to an inventory and1 schedule’" madd pursuant to'this act, as'being* sufficient to1 cut off the defense of usury, if the debt1 wefe therein r’ecbghized;' And in the very casó(there- decided, which afose under the assignment now'in question/the inventory and schedule were executed five da/ys after the assignment. So that the bodl-t niuSt' have' held' that, by an inventory and schedule made five days after the execution-of the ^ssignmentj-the assignor could recognize a debt as valid, and could prevent the assignee from setting up usury in behalf of the assigned estate. And yet in that same opinion (at page 280) the-'court say: “The execiition and delivery of the instrument (that is the assignment) excludes the grantor from any further dominion over it or its subject matter.” There would be no difficulty in the application of that doctrine in those cases where a schedule and inventory accompany the assignment. But where they are made subsequently and within the twenty days-,- it would seem that it must continue' for that time discretionary with the assignor" to provide for the payment of a usurious debt or not. For a general provision in an assignment to pay debts does not permit the payment by the- assignee- of a usurious debt; (Pratt v. Adams, 7 Paige, 615, cited with approval in the opinion above mentioned at page 278.) Therefore when the assignment was executed by Thompson and accepted by Helmer, October twenty-second, it did not authorize the payment of- this usurious' debt. But* the making of the inventory and schedules "October twenty-seventh' made- the debt" valid as to the assigned property. The finding, then, of the- County Court that- Chapin is not entitled to any relief as against the property of Thompson in the hands of his'assignee is erroneous. And this is of great importance, because the County Court has appointed Stillman Foote receiver of the assigned estate; directing him, after the expenses of the receivership are paid, “ to see that the debts of the assignor Thompson, existing at the time "of the assignment, are promptly and fully paid.” Inasmuch, then",-as the decision-above cited holds that' this mortgage is- a1 debt of Thompson', so far as the assigned property is concerned, plainly this' debt' is one of those which the receiver is directed to pay. Section 6 of the general assignment act authorizes the Cóünty Court to remove the assignee and to appoint another. This [199] has been practically done by the-removal of Heliher'and the appointment of Foote. Trué, Foote is called receiver '; probably on the theory that the assignment’ had been set aside. But he was to discharge the duties imposéd' on the_ assignee:' A most important question- arises as to the power which the learned county judge has assumed to’ exercise in this case. He has’assumed, as a court of equity, to maintain a proceeding, not to enforce and’ carry out the trusts of the assignment, but to set the assignment altogether aside, as obtained by undue influence and as fraudulent against creditors. It is contended by the appellants that he has no such jurisdiction. All jurisdiction which he has comes from the general assignment act. There, is nothing in that act which implies a right to- set aside an assignment, unless it be the language of section 25, viz., “ that after the filing or recording of an assignment under this act the court may exercise the power of a court of equity in reference to th$ trust arid any matters involved therein:” The authorities cited by the respondents’ counsel are Matter of Bonner (8 Daly, 76) and Matter of Cohn (78 N. Y., 252). Both of these are cases of enforcing and carrying out; not of setting aside' an assignment; and therefore they do not aid in the decision of this point. To exercise the powers of a court of equity in reference to the trust, and any matters involved therein, by no means implies a power to' set aside an assignment as obtained by undue influence. Those words are to be construed in reference to the rest of the act. That is' plainly intended to provide a simple and inexpensive method- of enforcing and closing up assignments and of controlling assignees. But an action to set aside-an assigmhe'nt for any cause is a proceeding of a very different character. And, in our opinion, is not within the scope or intent of the act. ¥é come to this conclusion principally from an examination of the whole act; and it can be of very little use to cite and comment upon the several sections. The powers which were exercised by the County Court in this respect were not, as we think, in reference to the trust, or to any matters involved therein. They were powers to declare that there never was a valid trust; arid such powers we triink the legislature did riot intend to give. There is another difficulty. Supposing that this assignment was made, as the County Court held, with intent to hinder, delay and [200] defraud creditors; who can complain? Certainly not Thompson,; the alleged fraudulent assignor. Nor can any creditor, unless he shall havé first recovered a judgment. (Southard v. Benner, 72 N. Y., 424; Spring v. Short, 90 id., 538.) Yet this assignment, is set aside as fraudulent'in respect to creditors at the instance of the assignor and of persons claiming to be creditors, no one of whom appears to have recovered a judgment, according to the schedules. We have not considered it necessary to discuss the question of fraudulent intent. The principal argument for such intent appears to have been Thompson’s solvency. That might be a reason for thinking he was over persuaded by Helmer. But we do not clearly see how a solvent man can intend to defraud his creditors by putting all his property out of his own control in trust for their immediate payment. (Ogden v. Peters, 21 N. Y., 23.) As we are of the opinion, above stated, that the important part, of this proceeding was not within the jurisdiction of the County Court, we think that the allowance of counsel fees and costs should not stand. The judgment appealed from is reversed in the following particulars: So much of the fourth item as declares that the bond and mortgage are usurious and void and that Chapin is not entitled to any relief therein as against Thompson or his property in the hands of. the assignee. The whole of the fifth item. The whole of the eighth item. Without passing upon the power of the County Court to appoint a receiver, as the assignment is no longer set aside, there must be an assignee. We will not interfere with the county judge in removing Helmer. Perhaps we might appoint the present receiver assignee. But it is better to refer the matter to the County Court to appoint an assignee in the place of Helmer. The appellants have costs of this appeal against Thompson. "Present — Learned, P. J., Boardman and Bookes, JJ". Order reversed as stated in opinion.