Brahmstadt v. McWhirter

Maxwell, Ch. J. The plaintiffs were a firm doing business at York, in this state, and being unable to pay their debts in full, made an assignment for the benefit of their creditors to Frederick W. Liedtke, clerk of the district court of York county. The defendant, who was a creditor of the plaintiffs, commenced an action against them by attachment, in the county court of York county. The county court sustained the attachment, which judgment was affirmed by the district court. The plaintiffs bring the cause into this court by petition in error. But two questions are involved in the case : First, Is the assignment void on its face as to creditors? Second, Can the clerk of a district court act as assignee ? The deed of assignment recites that: “Whereas the said co-partnership is justly indebted in sundry considerable sums of money, and has become unable to pay and discharge the same with punctuality or in full, [9] and the said parties being desirous of making a fair and equitable distribution of all their property and effects among their creditors, now therefore,” etc. The assignment also contains this provision: “The said party of the second part (the assignee) shall take possession of all and singular the lands, tenements, and hereditaments, property, judgments, and effects hereby assigned, and - sell and dispose of the same, and generally convert the same into money upon such terms and conditions as in his judgment may appear just and for the interest of all parties concerned.” It is claimed that this provision renders the instrument void on its face. It will be perceived that the authority is to convert the property into money, not to sell upon credit. The words “ terms and conditions,” taken by themselves, might imply an authority to sell on credit, but construing the entire instrument,'it is clear that no such power was intended. In McCleery v. Allen, 7 Neb., 22, the assignment, after providing for a sale for cash, contained these words: “ And to dispose of the same in any manner whatsoever as freely and lawfully as the assignor could do himself, which the said party of the second part, trustee as aforesaid, may deem advisable to do, tending in his opinion to convert the same into money for the benefit of all interested.” It was held that this was authority not only to sell on credit, but to exchange the property assigned for notes, bonds, mortgages, or other forms of indébtedness, and the assignment was held to be void on its face. And we adhere to that decision. The reason is, the terms of an assignment cannot extend the time of credit between debtor and creditor. The creditor whose debt is due cannot be compelled by the terms of the assignment to wait until such time as the trustee sees fit before the property is applied to the payment of his debt. And if by its [10] terms such power is given, the instrument will be void upon its face as tending to “hinder and delay” cred-. itors. That the property cannot be applied at once to the payment of the debts will not invalidate the instrument, if the delay is such as necessarily results from a reasonable exercise of the power given to the trustee, and is not the result of the conditions of the instrument. In Keep v. Sanderson, 2 Wis., 42, and S. C., 12 Id., 391, it was held that a provision similar to the one cited above was authority to sell on credit, and it was void as to creditors. Those cases were cited in the ease of McCleery v. Allen, 7 Neb., 24, not as an indorsement of the doctrine, but to show the extent to which the courts of the several states had gone in holding an assignment void on its face. Such words, in our opinion, do not necessarily give the trustee the power to sell on credit, and an assignment for the benefit of all the creditors of a debtor will not be declared void on its face, unless it is clearly so. In the vicissitudes of business, when a debtor finds that he is unable to pay all his debts and makes an assignment for the benefit of all his creditors, all that the law requires is a faithful application of the property to the payment of the debts without unreasonable' delay. As to the objection that the assignee being clerk of the district court, and could not therefore approve his own bond, it is at most a mere irregularity, and does not render the assignment void on its face. The bond is sufficient in form and amount and is signed by a large number of persons as sureties, and there is no objection made that it is not sufficient. And the trustee may at any time, when thought necessary, be required to give an additional bond. So far as appears, the trustee was endeavoring faith [11] fully to carry out tbe trust at tbe time tbe action was instituted, and being for tbe benefit of all tbe creditors of tbe assignors the assignment is favored in law. Tbe judgment of tbe district court is reversed and tbe cause dismissed. Judgment accordingly. ■