Vincent v. Watson

The opinion of the Court was delivered by Chambers, J. An execution attachment was issued on 21st July, 1849, on a judgment of the plaintiffs against William Irvin, for $11,300; and served the same day on Watson & Whitaker, garnishees, attaching the rights of Irvin, arising under an agreement between Irvin and Watson & Whitaker, made on the 7th of the same month. By that agreement Irvin leased to Watson & Whitaker for five years, two furnaces with the ore banks, at a rent of 75 tons of pig metal yearly for each furnace, to pay yearly and for the time they were in blast. By the same agreement Irvin sold to said Watson & Whitaker all the personal property at said furnaces for $12,816, to be paid in pig metal, payable in four equal payments, extending to November, 1851. Watson & Whitaker to collect all the debts due said Irvin at one of the furnaces, and account to Irvin for the same, and they were to enjoy the benefit of all advances made by the said Irvin to workmen on wood contracts, &c., and to account for the same, “ and to assume and pay whatever domestic debts or liabilities of said Irvin they may think proper, and to be allowed for the same;” Watson & Whitaker to enjoy the benefit of all contracts made [99] at said furnaces for wood, &c., and pay all debts and liabilities arising from the same.” There was also transferred to said Watson & Whitaker 15 tons of pig metal, and a small amount of groceries in transit from Pittsburgh. It was in evidence that Watson & Whitaker paid $1190 before service of attachment, and $2270 of the debts of Irvin, and also paid in the spring of 1850 a judgment of Leech of Pittsburgh for $1950, on which execution had been issued before the sale. The Perry furnace was in blast but two months after 7th July, 1849. It was in evidence that before the service of the attachment, Watson, at the Harry furnace, publicly assumed all the debts of the hands and the farmers throughout the country; the hands had ceased work, and collected round the furnace; and said also that he and Whitaker would pay the debts of the Perry furnace. Irvin, at the time of making the agreement recited, was in failing circumstances, and insolvent. The judgment of "the plaintiffs for a large Sum, being for a balance of purchase-money of real estate, was nearly ready for execution. Irvin was no doubt desirous of providing for the payment of what was owing by him to the labouring men connected with the establishments, as well as the farmers of the neighbourhood who had furnished provisions. Though this purchase may have been bond fide on the part of Watson & Whitaker, and' the intentions of Irvin honest, yet the circumstance of his indebtedness, and an appropriation of his effects in a way that prefers one class of creditors to the postponement and prejudice of others, exposed this sale and agreement to Strong legal exception. This Court is not called upon by the record to say whether, in their opinion, this sale and agreement are within the provisions of 18 Elizabeth, e. 5, in which conveyances by debtors to the end, purpose, and intent, to delay, hinder, or defraud creditors in the recovery of their debts, are declared fraudulent and void as against such creditors, or' whether they are not in conflict with the Act oí Assembly prohibiting preferences amongst creditors by way of assignment. Statutes on this subject are- entitled to and have received from the courts a liberal construction for the protection- of creditors, and to meet the schemes- and devices by which a fair appearance may be given to that which is in reality collusive and illegal. The plaintiff, by his proceeding to attach the funds of Irvin in the hands of Watson & Whitaker arising out of their contract, elected to treat such contract as valid and operative. It is aflirmed and adopted to enure to the use of the plaintiff, so far as anything might be due or receivable by Irvin by virtue of its provisions. In the construction of this contract of sale, as between the parties to this action, it is to be considered free from all imputation of fraud, actual or legal. Irvin having sold his property to Watson [100] & Whitaker at a price agreed upon, might agree to accept, in payment of that price, his liabilities to any debtors or any class of debtors. They are to assume and to pay whatever domestic debts or liabilities of said Irvin they may think proper, and to be allowed for the same. Watson & Whitaker were- not limited in time in making these assumptions and payments, further, we think, than the time given for the payment of the purchase-money by instalments. At the issuing of the attachment execution in this case, but two weeks had expired from the date of their contract with Irvin. Watson & Whitaker were accountable to Irvin if they did not assume and pay to the creditors described to the amount of their purchase-money; and to the same extent they would be accountable to the plaintiffs, who by their attachment succeeded to the rights of Irvin, for anything payable beyond the amount of such debts assumed. The plaintiffs requested the Court below to charge the<jury “that the general assumption made by Watson in the presence of Mr. Hanna would not bind defendants, at least so far as regards those creditors who were not present, there being no consideration to support it.” The Court answered this point by saying “that said assumption was binding on them even as to the creditors not present, and as such assumption was made before the service of said attachment, the plaintiffs are not entitled to recover. In this answer we do not perceive any error. The defendants had the right to defend on the assumption made, and on the right to assume, since the service of said writ. All that Irvin would have the right to recover was the balance of any of the payments as they became due that had not been appropriated to the class of creditors described, and the attaching creditor had no greater rights. It is unnecessary to consider at length the point made in this Court, that Watson & Whitaker were not bound on their assumption to creditors that would give to such creditors a right of action against them. In the opinion of this Court they were bound, as far as the consideration received would go. The creditors of Irvin might maintain an action on thht assumption: Beers v. Robinson, 9 Barr 229 ; Hind v. Holdship, 2 Watts 104; Arnold v. Lyman, 17 Mass. R. 400. The error assigned not being sustained, the judgment of the Court below is affirmed.