Wolf v. Gray

CoCKRlLL, C. J. for'dfedf^ors — - rei'ease.*1011 In Clayton v. Johnson, 36 Ark., 406, assignment for the benefit of creditors was upheld, which stipulated for a release of indebtedness from assenting creditors as a condition to their participation in the assets. There was no express reservation to the debtor in that case of the assets remaining after the assenting creditors were paid. In the subsequent case of McReynolds v. Dedman, 47 Ark., 347, an assignment similar to that in Clayton v. Johnson, except that it contained an express reservation of the residue of the estate to the assignor, was adjudged fraudulent upon the ground that it was in effect an attempt on the part of the insolvent debtor to prefer himself to non-assenting creditors — that is, to those who refused to execute releases. Quickly following this decision came the case of Collier v. Davis, 47 Ark., 367, in which it was ruled that in every assignment, such as that passed upon in Clayton v. Johnson, there is an implied reservation of the surplus to the use of the assignor; that, as the effect of an implied reservation is like that of an express reservation of the same benefit, there could be no distinction in principle between them, and that one could not be sustained while the other was condemned. The case of Clayton v. Johnson was, therefore, overruled upon that point. It was not the stipulation for a release — the validity of which, upon the principles of justice and humanity, Chief Justice English so earnestly and ably maintained in the latter case — that was condemned in Collier v. Davis, but only the reservation of the surplus by the debtor to himself before satisfying his creditors. An insolvent debtor who executes an assignment for the benefit of his creditors, Judge Smith who pronounced the judgments in both the latter cases maintained, “may stipulate for a release, but he must dedicate all his property, not exempt by law, to the payment of all his creditors; not necessarily to the payment of all in equal proportions, for he may prefer such as will execute releases. But the deed must provide for the distribution of any surplus that may remain in the hands of the trustee, after the payment of the preferred creditors, amongst the other creditors, whether they assent or not,” McReynolds v. Dedman, supra. The stipulation for a release received the unqualified approval of the court in Clayton v. Johnson, and its authority upon that point is not impaired, except as modified by the cases before cited. It follows that the law is established here, in accord with much authority elsewhere, that a stipulation for a release in a general assignment, which is made only as a condition of preference, does not invalidate the instrument. 2. Failure to provide for notice °frefa°"d]‘ion of We fail to appreciate the contention that an omission in 1 the assignment of directions to the assignee to notify the creditors of the condition upon which they may be preferred avoids the deed. A reasonable time is fixed by the deed within which the assent shall be given. Those who do not execute the release within the time fixed, can share only as non-preferred creditors. There is therefore no embarrassment to the assignee in making the distribution or in otherwise executing the trust. It is his duty to notify the creditors of the assignment in any event, whether the debtor directs it or not, but a failure of the one to direct or the other to perform has never been held, so far as we are informed, to avoid the deed. not fraudulent-No other objection is made to the terms of the ment, but it is insisted that it should be annulled because, ft is said, the assignors fraudulently withheld a part of the assets at the time of its execution. The undisputed facts in relation to this feature of the case are as follows: When the assignment was executed the assignors were indebted to Hill, Fontaine & Co., who were cotton factors in the city of St. Louis, in a large amount; against this account the factors held cotton which had been shipped to them by the debtors who made the assignment, and which they afterwards sol'd and applied in part payment to the debt, leaving a balance due of about $3,700.00. An estimate of the value of- the cotton in the hands of the factors appears to have been deducted from the amount of the debt due them at the time of making the assignment, which left an estimated balance of “about $3,300.00” due the factors, and a preference in their favor was declared in the deed for that amount. The fair inference to be drawn from this proof is that, before the assignment was made, the cotton had been specifically appropriated by the debtors to the part payment of the general balance due the factors. The factors had a lien on the cotton to secure the balance due them; the debtors could not withdraw it from their control; the debt was greater than the value of the cotton, and the agreement to appropriate it to the payment of their debt was not a fraudulent withholding of assets by the debtors. 4. Failure 0 the court to de clare the law— Presumption. If it can be said that there was sufficient testimony to sustain a finding upon each of the other propositions argued by the appellants, it is enough to say that testimony upon the other side contradicts it. The questions arise then upon a conflict of evidence, no declarations of law being made or refused. The presumption is that the court would have declared the law correctly if required to declare it at all, for error is never presumed. The appellant stands, then, as though the court had declared the law in his favor and a jury had found against him on conflicting testimony. We do not mean to intimate that the conclusion of the trial court would be incorrect if the testimony for the appellant stood uncontradicted in every particular. It is probable the result would not be changed but the question is not presented. Affirmed.