McGregor v. J. D. Chase & Sons

Peck, J. The question in this case is whether upon the facts reported by the commisioner the trustees are chargeable. It is claimed on the part of the plaintiff that the deed executed to the trustees by the principal debtor is an assignment, and that it is void under our statutes relating to assignments. It is not claimed on the part of the trustees that there has been a compliance with the requirements of the statute regulating assignments for the benefit of creditors, but it is insisted that it is not an assignment within the meaning of that statute. We are all of opinion that the deed is not an assignment within the meaning of the statute, and therefore not rendered void by reason of a non-compliance with its requirements. In order to come within the statute regulating assignments, there must be a trust created for the .benefit of some person, other than the assignee of grantee. It has often been decided that a transfer directly to a creditor of the grantor or assignor, simply to secure a debt due from the latter to the former, does not come within the statute. The same rule applies where the sole purpose of the transfer is to secure a liability incurred by the assignee or grantee for the assignor or grantor. Such being the objects and purposes of the deed in question, it is not obnoxious to the provisions of the statute. The deed is a mortgage to secure debts which the mortgagor owed to the mortgagees, and liabilities which the mortgagees were under for the mortgagor. It is true it contains a power of sale in the mortgagees to accomplish that purpose, but that does not essentially change its character. Nor does the provision that the mortgagees are to have possession of the [230] real estate and fixtures mortgaged, to complete unfinished jobs and the manufacture of certain lumber conveyed, have that effect. As the property was situated, that was a reasonable provision to prevent waste and sacrifice, and to make the property more productive as a security. The commissioner finds that the property was not disposed of and the business closed as soon as was expected when the deed was executed, but was continued along in consequence of the depression in business, with a view to realize more out of the property, and that this was by the acquiescence of the parties to the transfer. This subsequent change of purpose and management of the property can not have the effect to render the deed void under the statute relating to assignments, "We do not find from the report, looking at the whole facts, that the deed was fraudulent in fact and void for that reason as against creditors. The trustees, some of them, had attached some of this property to secure their debts against the principal debtors. The principal debtors had arranged the suits by executing bills of sale of some of the property. These bills of sale were held at the time of the execution of the deed. Other bills of sale from the principal debtors were held at the same time by others of the trustees as security. The deed in question was taken in lieu of the bills of sale. Although it is found that the deed was taken by the trustees fearing they had not taken sufficient possession under the bills of sale to hold the property against creditors, and fearing it would be attached, yet it is evident the purpose was to secure themselves and get a preference over other creditors. This the trustees had a right to do, and the principal debtors had a right to give such preference. There is no such corrupt purpose to defraud creditors found by the commissioner as will avoid the deed. The deed being valid, and it not being claimed by the counsel for the plaintiff that the trustees have realized enough to pay their claims and liabilities, the trustees cannot be made chargeable on account of moneys in their hands, or that have come to their hands under the assignment. But it is insisted that the trustees should be made chargeable for the property in their hands under the assignment. But as mortgagees the trustees have a right to hold the security till their debt is paid. If the creditor claims there is a surplus [231] of property, lie must redeem it by paying tbe lien of tbe trustees. Tbis be did not do, or offer to do, in tbe county court; nor does be make any sucb offer now. It is claimed, however, that the deed is to tbe trustees jointly, and that tbey cannot bold tbe funds and property for their several debts-against, and liabilities for, tbe principal debtors. Tbe deed, it will be seen, recites these several and individual debts and liabilities, as the consideration of tbe conveyance, and tbey are referred to in tbe rendition of tbe deed. These debts and liabilities, though several, come clearly within tbe scope of tbe mortgage deed. It appears that as to Gregory, it was supposed by tbe parties to tbe conveyance, at tbe time tbe deed was executed, that tbe principal debtors were indebted to him. How tbe fact was at tbe date of .the deed does not appear by tbe report; but tbe report shows that at.the time of tbe bearing before tbe commissioner, Gregory was indebted to tbe principal debtors $1,668.64. Tbe plaintiff claims that Gregory should be held chargeable for that sum. It appears that Gregory was at tbe date of tbe deed liable for tbe principal debtor, but in what sum does not appear. That indebtedness was afterwards satisfied out of the principal debtors’ property ; but whether out of tbe property conveyed by tbe deed does not appear. But it also appears by tbe deed that all tbe principal debtors’ book accounts were conveyed to tbe trustees. If tbis $1,668.64. was a book account, it was conveyed by tbe deed, and belongs to tbe other trustees, and can not be drawn out of Gregory’s bands by tbe other creditors of the principal debtors till tbe lien of tbe other trustees is discharged. Tbe most reasonable presumption is that tbis debt was a book account; for bad it existed in notes or written evidences of debt, tbe parties would probably have known which way tbe balance was. We cannot assume it existed in some other form for tbe purpose of excluding it from tbe operation of tbe deed. Tbe $134.28, which tbe plaintiff’s counsel insist tbe trustees should be made chargeable for, grew out of a transaction between May and Gould, two of tbe trustees, and tbe principal debtors. May and Gould became liable to Chamberlin & Fletcher for tbe principal debtors, and took from tbe principal debtors certain notes against Yarney, Renfield & George as security, which they collected [232] and paid the debt to Chamberlin & Fletcher which left $134.28 balance in their hands. This balance, in pursuance of an agreement between May and the principal debtors, entered into at the time they took the notes, was paid to the West Concord Machine Shop Company. All this took place since the commencement of this suit. Whether the trustees, or any of them, could be made liable for this item or not if this item stood alone, it is not necessary to decide. It is clear that they cannot be made chargeable for it so long as upon the whole case there is no balance due from the trustees to the principal debtor. There is no ground upon which the trustees can be made chargeable. Several important questions have been discussed by counsel which would have arisen to be decided had the commissioner found that the transfer was fraudulent and void as against creditors. These questions we do not pass upon, as they are not material, as we do not hold the deed void. Judgment of the county court discharging the trustees affirmed,