Harvey v. Mix

Ellsworth, J. Several questions are made in this case, which we shall not comment upon at length, as there is one, which in our view of the case, is decisive. The assignment of the 1st of September 1851, undoubtedly, is open to very serious objections, growing out of the general law of fraudulent conveyances, as well as the law of 1828. The liberty granted to the assignees, to dispose of the property as-' [423] signed, “ as they saw fit,” and “ pay such other debts besides those named in the assignment, as the assignees may deem it prudent and proper to settle,” are provisions which clothe the trustees with extraordinary and exceptionable powers, which, almost of necessity, hinder and delay creditors in collecting their debts. 3 Kernan, 218. But the most obvious objection to the assignment is, that it is in trust for creditors, and not made for their common, and equal benefit. Such a defect makes the assignment utterly illegal and void. To meet this objection, it is said that the assignment is a mortgage, and therefore a good conveyance according to the case of Bates v. Coe, 10 Conn. R., 280. But the doctrine of that case does not go to this extent; and that decision would not have been made as it was, if the court had not held, according to their view of the deed, that it was not a deed in trust, but merely a conditional, and bona fide conveyance; and even in this conclusion to which the court came, some have thought that the court mistook the law and essentially impaired the value of the statute of 1828; but be that as it may, the present assignment was one, avowedly in trust, and not being for the equal benefit of all the assignor’s creditors, is of no force or validity. But the defendant insists that afterward, on the 10th day of December, 1851, he bought the property in question, and thereby, and before he was copied as the debtor of Harvey, Needham, Root & Co., acquired a new and perfect title to it, and so, on the 21st of September, 1852, the day he was copied, he had nothing in his hands which belonged to Harvey, Needham, Root & Co., nor owed them anything for what he had received from them. The true character of this purchase by the defendant is the chief question in the cause, and the ground upon which the defendant mainly rests his defence. If the sale was a good one, the defence is complete; if not, there is no defence on the merits, and the defendant is liable to the plaintiff. The plaintiff denies the supposed sale, and if made in fact [424] and in form, he denies the consideration pretended, and further he insists, that the sale, if made, was not made by-Harvey, Needham, Root & Co., but by one of the partners, in his own name, and that no one of the assignees could acquire a good title by a subsequent purchase against any of the creditors of Harvey, Needham, Root & Co. The defendant takes issue upon all these questions of fact and of law. Under the charge of the court, the jury have found, that there was a bona fide sale to him in December, 1851, as claimed by the defendant; that he paid for the goods at their valuation, $10,836.53, which money was applied to cancel the debts of Harvey, Needham, Root & Co., and that although the business was done by Harvey, it was done for the benefit of the company, and that throughout the entire proceedings, there was no unfairness or fraud. We do not see any thing wrong in the charge of the court, on these questions. Certainly one partner could sell the partnership property for the purpose of paying company debts, and the form of the sale, whether in the company name, or in the name of the remaining and active partner, could not be material, if the sale was intended to be, and was in fact for the benefit of the company, as the jury have found it was. The company could sell their property in December, notwithstanding their ineffectual assignment of September previous; but if no sale had been made, and the title of the property had remained in Harvey, Needham, Root & Co., under the defective assignment, until the defendant had been served with the copying process, the defendant doubtless would now be liable as holding their property. Before the defendant was copied, could he not have re-delivered the property to Harvey, Needham, Root & Co,? could they not have sold it to whomsoever they pleased ? could they not have given to purchasers, or creditors, good and valid orders for its avails upon the assignees ? and if so, why could not the defendant, a bona fide creditor, become a purchaser of it, or apply it, under the directions of [425] the representative of Harvey, Needham, Root & Co., in payment and satisfaction of company debts ? An assignment, which is defective and void because of some technical informality, is not of course an obstacle to the assignee’s appropriating the property, before he is copied, in payment of the assignor’s creditors, according to the directions given in the assignment, and such payments would be a good accounting, whoever might afterward sue the assignee, for the property. And this principle, we think, is quite sufficient to uphold this defence, which in its essential particulars, does not vary from that case; and the idea put forth, on the argument, that the principle does not apply where the assignment was not bona fide, but was mala fide, (if any such distinction there be,) is not material to the present case, for the jury have found, there was no moral wrong or evil intent, in making the assignment of September, 1851. If this be so,!.! we ask, why could not the defendant make an outright purchase of the property, and thereby acquire a new and good title, if he conducted fairly, and paid for the property, a good and adequate consideration ? Nor can we perceive, if the assignment was conceded to be fraudulent in fact, why such an assignee could not abandon the assignment of a creditor, and take a new title for his good debt. In Sanford & al v. Wheeler, 13 Conn. R., 165, and Weedon v. Hawes, 10 Conn. R., 50, this court held, that a mortgage-deed, given to secure good debts and bad debts, was not entirely void, if the mortgage was not made with an actual intent to defraud, or delay, creditors; much more must it be true, in such a case, that a new and unexceptionable deed for the payment of the good debts will be sustained, if the property does not exceed their amount. In Thomas v. Goodwin, and his Trustee, 12 Mass., 142, the trustee, who had received property under a suspicious assignment, was copied by a creditor of the assignor, after he had applied the avails of the property, which had been in his hands, according to the directions of Goodwin, the assignor, and he was held not [426] liable. The defendant set up this application of the money as his defence, and it was sustained. Parker, Ch. J., says; “ under this declaration the defendant cannot be charged as the trustee of Goodwin, notwithstanding the original transaction between them. In this process, the condition of the parties, at the time of the service, must be looked at, and although previously to that time, the person, summoned as trustee, may have received the property of the debtor' under circumstances which would render him liable, yet if he has since discharged himself of all trust, by delivering back to the debtor the property received, in such manner that it may be attached by his creditors, or if he has paid the proceeds to bona fide creditors of the principal, in satisfaction of their just demands, so that, at the time of service of the writ, he truly has nothing in his hands, he cannot be subjected to a judgment.” The defendant, being copied only as the debtor of Harvey, Needham, Root & Co., in the factorizing process, and so sued in the scire facias, and not as the debtor of Hosea B. ' Harvey, evidence that he was the debtor of Harvey, or had Harvey’s goods in his hands, was inadmissible, as was decided in McBride, Sheldon & Co. v. The Pro. Ins. Company, 22 Conn. R., 287-8. We advise judgment for the defendant. In this opinion, the other Judges, Storrs and Hinman, concurred. New trial not to be granted.