Rankin, Duryee & Co. v. Lodor

PHELAN, J.- — -Two positions are relied on by the plaintiffs in error: 1. That the deed of assignment from the Ransoms to Lodor as trustee, is inoperative and void in law, for the want of the assent of all the creditors, who are named as constituting the third party to the deed; 2. That, it the deed is not wholly inoperative and void for the want of the assent of all the creditors, at least it is so as to those creditors who had levied upon the property, against such other creditors as had not signed the deed previous to such levy. The first position we consider to be untenable. It does not require the assent of all the creditors in such a deed of assignment as this, to prevent it from being wholly inoperative. The following may be laid down, as settled legal propositions in this State: A debtor in failing circumstances may make an assignment, preferring one creditor or one class of creditors to another. If he conveys his whole property to trustees, for the payment of his debts, and retains no control whatever over it, and stipulates for no share of the proceeds to result to himself, he may provide for the payment of one class of creditors under the deed absolutely, and for another class only on condition of their releasing all further claim upon him, by signing the deed containing such stipulation. Where the provisions of the deed of assignment are clearly beneficial to a creditor, his assent to the deed will be presumed, without his signing it; where it is not so, his assent will not be presumed, but must be actually had. As au [390] thority for these propositions, see Robinson. v. Rapelye & Smith, 2 Stewart, 86; Ashurst v. Martin, 9 Porter, 566; Wiswall v. Ross et al., 4 Porter, 321; Gazzam v. Poyntz, 4 Ala. 374; Kinnard v. Thompson, 12 Ala. 487; Governor, use &c. v. Campbell, 17 Ala. 566; Brown v. Lyon & O’Neal, 17 Ala. 659; Elmes v. Sutherland, 7 Ala. 262; Mauldin v. Armistead, 14 Ala. 702; Abercrombie v. Bradford, 16 Ala. 560; 2 Story’s Equity, § 1036. When we consider the foregoing settled principles of law, and look at the provisions of the deed in this case, it needs no argument to show, that such a deed as the present does not require the assent of all the creditors, to give it operative force as a deed. ' There is a class of deeds in trust, or assignments, which are not good at all, without the assent of all the creditors. It is sufficient to say, that this deed does not come within that class. The class of cases to which I refer, is considered, and the law applicable to them laid down, in the cases of Elmes v. Sutherland, 7 Ala. 262; Hodge v. Wyatt, 10 Ala. 271, and Kemp & Buckey v. Porter, 7 Ala. 138. They are, generally, where a man seeks to postpone the payment of his debts, by conveying property in trust to secure or pay them. In such a case, cdl the creditors must assent, to give any validity to the deed, because that is the manifest intention of the grantor. 7 Ala. 262. The provision of the deed in this case, in respect to the power of the trustee to appoint agfents, and touching his responsibility for his own conduct, as well as that of his agents, is a literal copy of the provision in the deed in the case of Robinson v. Rapelye & Smith, 2 Stewart, 86; and the case of Ashurst v. Martin, 9 Porter, 566, is an authority which covers this question, in favor of the validity of such a provision. It remains to be seen, whether the second position relied on by the plaintiffs in error is correct, viz: that, if the deed is not wholly void and inoperative for the want of the assent of all the creditors, it is at all events so as to. those creditors who have refused to sign it, and have made levies on the property, against all who had not signed the deed previous to such levies. What, let us ask, is such a deed of assignment, as the one made by the Bansoms to Lodor ? A mercantile firm in failing circumstances, wishing to turn their [391] property to the best advantage for their creditors, and also to secure to themselves such benefits as the law will allow in such a case, determine, for satisfactory reasons, to provide absolutely for the payment of one or more debts, but in respect to the great body of their creditors, to make to them only a proposal for a compromise. Such a proposal they may lawfully make, either to each creditor separately, or to the whole at once. Eor obvious -reasons, the failing firm prefer to make the offer to all at once, because by that means they will be most likely to gain the benefit which they seek,' viz: the acceptance of their offer to compromise. “We have the right by law,” say the failing firm, “to prefer one creditor over another, where there’are no liens fixed by law on our property. Now, if we propose to give a preference to those who will first accede to this ;offer to compromise, we have reason to hope and expect that our creditors, to a great extent, will be tempted to accede promptly to our proposal in order to gain this preference?” The assignment of the Hansoms to Lodor is nothing more than an attempt to do, in lawful form, the thing I have been describing. This is the complexion put upon the matter by the argument of the plaintiffs in error, and to this extent I am disposed to agree Avith them. So far, then, as concerns Perrine & Crocheron, one of the parties of the third part, the instrument is a deed complete in law under any aspect of the case, putting out of view the question of fraud in fact, Avhich is not presented by the assignment of errors, and seems not to have been made a question in the court below. They signed the deed before the levies of the complainants on the trust property were made; so that, as to them, the instrument is made complete as a deed. But-here the plaintiffs in error insist, that, although the deed, as to Perrine & Crocheron, is complete, the effect of that goes no farther than to make good the priority of Per-xine & Crocheron only; and that those creditors who had their attachments and executions levied, after Perrine & Cro-cheron had signed, but before the execution of the deed of assignment by the othér creditors, will be preferred to those other creditors, although the latter may have signed the deed [392] within the time prescribed by its terms. They consider the instrument, as to all those who did not sign before their levies, as conveying to the trustee nothing but a mere power, which the grantor himself might revoke, as to them, at any time before the execution of the deed by them respectively; and that being a mere power, an attaching or execution creditor may step in, and by his levy revoke it in place of the grantor. The fault of the argument is found to lie in this position : After the execution of the deed by Perrine & Crocheron, the instrument was no longer a power revocable b}*- the grantor, as to them at least. As has been shown, it then became a deed complete in law, and as such, vested, of course, in the trustee the whole legal title to the trust property. There cannot be the slightest doubt, that, after that event, Lodor, the trustee; could have brought his action of detinue, and recovered against any and all persons who might disturb him in the possession of this property, whether under color of execution against the Ransoms or otherwise. Brown v. Lyon & O’Neal, 17 Ala. 659. No point is raised, as we have said before, by the assignment of errors, touching the question of fraud in fact in the execution of this deed. After the execution of the deed by Perrine & Crocheron, and the vesting of tire whole legal title, by force of that act, in the trustee. Lodor, there remained nothing upon which an attachment or execution could be levied, since nothing but the legal title is subject to lev3r and sale by attachment or execution. It follows, from what has been said, that those creditors named in the deed of assignment, who came in and executed the deed within the time prescribed by its terms, after the execution of the same by Perrine & Crocheron, although subsequent to the attempt of complainants to levy on the trust property by attachment and execution, were entitled to preference and priority, according to the provisions of the deed of assignment. Whether it was necessary for the complainant, Lodor, to make proof of the bona fides of the debts secured by the deed, as the case is presented; or, if so, whether the admissions on which the parties went to a hearing, do not suffice [393] for that purpose, we decline to decide, for the reason that the question is not presented by the assignment of errors. As the points already discussed are the only ones presented for our consideration, we have simply to add, that we find no error in the decree of the Chancellor, in those particulars, and the same is consequently affirmed.