Jaffray v. Steedman

The opinion of the court was delivered by Mr. Justice McGowan. N. T. Purdy & Co., on January 25, 1890, executed a voluntary deed of assignment for the benefit of their creditors to J. Blake Steedman as assignee, by which he was directed to convert the assigned estate into money, and from the proceeds thereof to pay as follows : “First, to pay and discharge all the just and reasonable expenses, costs, and charges connected with and for canwing into effect this assignment and the trust hereby created. Second, to pay and discharge in full, with legal interest thereon, if the residue of the proceeds is sufficient for that purpose (but if not, then ratably and in'proportion, without any priority or preference whatever), the claims of all said creditors who shall, at or before twelve (12) o’clock m. on the 25th day of March, 1890, accept in writing the terms of this assignment; and in consideration thereof execute a release or releases of their claims against the said parties of the first part. — 38 — Third, and then and next to pay and discharge in full, with legal interest thereon, if the residue of said proceeds is sufficient (but ratably and in proportion, if it be not sufficient), the claims of all and every other of said creditors without any priority or preference whatever,” &c. It is admitted that a large number of the creditors of Purdy & Co., on or before the day and hour indicated in the assignment, filed their claims with the assignee, and accepted and gave notice in writing to the assignee that they did accept the terms of the deed of assignment.' The plaintiffs (respondents) on March 25, 1890, in addition to filing their claim and a written notice of an acceptance of the assignment, filed with him a formal release under seal of' their claim against Purdy & Co. No creditor of Purdy & Co., other than the plaintiffs, have filed a formal release of their claims against Purdy & Co. with the assignee, either under seal or in a separate written instrument. Under these circumstances the plaintiffs, claiming that they are the only creditors who have complied with the terms and conditions of the assignment, commenced this action against J. Blake Steedman, as assignee and agent, and John C. Man, as a representative creditor, to have paid to them first their whole claim due to them by Purdy & Co. The defendants in their answers deny that the plaintiffs are the only creditors of Purdy & Co. who have complied with the terms and conditions of the assignment, and are alone entitled to have their claim, which is a large one, first paid in full. They deny that it was necessary, under the terms of the assignment, for any creditors to execute a separate formal written release under seal, at the time of accepting under the assignment. The cause came on for trial before his honor, Judge Wither-spoon, who decreed as follows: “I find as matter of fact, that the plaintiffs are the only creditors of N. T. Purdy & Co. who complied with the conditions of preference imposed, within the time limited in the second paragraph of the deed of assignment. And I conclude as a matter of law, that the plaintiffs are entitled to be first paid their claim by the assignee out of the proceeds of the assigned estate. No sufficient reason appears for requiring the assignee to account before the court as prayed for by plaintiffs.” — 39 — From this judgment the defendants appeal upon the following grounds: “I. That his honor erred, in concluding as matter of law, that the plaintiffs are entitled to be first paid their claim by the assignee out of the assigned estate. II. That his honor erred in finding as a matter of fact that the plaintiffs are the only creditors who complied with the conditions of preference imposed within the time limited in the second paragraph of the deed of assignment. III. That his honor erred in directing the assignee to apply and pay to plaintiffs’ claim so much of the proceeds of the assigned estate of Purdy & Co. as may be necessary to discharge their claim in full. IV. That his honor erred in not finding that all creditors of Purdy & Co., who accepted in writing by 12 o’clock m., March 25, 1890, the terms of the deed of assignment, were entitled to participate in the distribution of the assets of the said estate. V. That his honor erred in not finding that it was unnecessary for the accepting creditors to execute a release at the time of filing the notice of their acceptance under the terms of the assignment. VI. That his honor erred in not finding that the time mentioned in the second paragraph of the assignment, referred exclusively to the act of accepting hy the creditors and not to their executing a release. VII. That his honor erred in not finding that the acceptance of the terms of the assignment was in effect the execution of a release to the assignors.” 1 It is undoubtedly the policy of the law to promote equality among the creditors of insolvent debtors. Section 2014 (General Statutes) declares that all assignments for the benefit of creditors shall be without preference or priority of any kind whatsoever, “save only as to debts due to the public, and save only as to ■ such creditors as may accept the terms of such assignment and execute a release of their claim against the debtor,” &e. It is manifest that the purpose of this assignment was to give the same rights to all the creditors. It is true, it classified the creditors, leaving it, however, to themselves to elect under which class they would come in, those to be first paid who shall, at or before a given time, accept in writing the terms of the assignment, and in consideration thereof execute a release or releases of their claims against the parties of the first part; and then and next to pay all other creditors in full or pro rata with — 40 — out requiring release, &c. This did not violate the law against preferences. Trumbo, Hinson & Co. v. Hamel & Co., 29 S. C., 527. It seems that all the creditors gave notice in writing of their acceptance of the terms of the assignment before the time limited for that purpose; but that none of them executed “releases” of their claims except the plaintiffs, who executed and delivered a formal release of the balance of their claim against the debtors; and they now inisist that they alone of all the creditors complied with the terms of the assignment, as to the class of creditors provided for in paragraph No. 2, and that therefore they are entitled to be first paid. The Circuit Judge so ruled, and the only question in the case is whether that ruling was error. 2 All agree that the plaintiffs are entitled to stand in class No. 2; but it is insisted that all the other creditors who accepted in time the terms of the assignment are, notwithstanding.they executed no releases, also entitled to be ranked in that class, on the grounds : that the assignment did not require the release to be executed within the time fixed for its acceptance and, indeed, may be still executed ; but if not, that there really was no necessity for the execution of a formal release, as the written acceptance itself operated as a satisfaction in full of the balance of the accepting creditors’ claims, and therefore in fact and' in law constituted a “release” in the sense of the statute and of the assignment, which is in the same terms. The words of the assignment are very clear and positive: “shall, at or before [a day and hour named"], accept in writing the terms of the assignment; and in consideration thereof execute a release or releases of their claims,” &c. Two things were required — acceptance and release — upon the same subject matter, one the supplement of the other, and coupled together by the word “and” in the same sentence. It seems to us that, from the mere reading, it must be obvious that the intention was that both the acceptance and release should be within the time indicated. 3 But it is further contended that the acceptance in writing alone should be regarded as tantamount to a release, and that the clause expressly requiring the execution of releases may be regarded as surplusage. The court has n‘o dispensing power, and we do not think that we are at liberty to — 41 — expunge the clause by construction. If acceptance alone was. to all intents and purposes, a release, we do not see why the requirement as to releases should have been superadded. It is one of the well known rules of construction that, if. possible, effect should be given to every part of an instrument. There is another reason peculiar to this case, which may increase the difficulty of holding that the acceptance of the terms of the assignment amounted to a release. It will be observed that there are two classes of creditors provided for by the assignment. In one of them, No. 3, no release is required. When a creditor merely gave notice of his acceptance of the terms of the assignment, who could say that he did not mean to accept that class of the assignment which required no release? “Where a time is expressly limited by the assignment, within which the release must be executed, it must be executed within such time in order to secure the creditor a share in the distribution by the assignee, and, if it be signed afterwards, the releasor can take nothing under the assignment.” Burrill on Assignments, sections 427, 477, and 486; Pearpoint v. Graham, 4 Wash. C. C., 232. In the Bank of Newberry v. Walker Glenn (12 Rich., 304), an assignment provided that any creditor, to avail himself of the provisions of the assignment," should within six months accept its provisions in writing, and in consideration thereof release the debtors from liability. “Held, that payments made by the assignee to a bond creditor did not amount to an acceptance, according tcthe terms of the assignment, so as to discharge the obligors from liability for the balance of the bond which remained unpaid.” We do not think the cases relied upon by the appellants sustain their view. In Arnold v. Bailey (24 S. C., 493), the assignment did not require the execution of a release, but provided that every accepting creditor shall receive the sum which may be apportioned to him in full satisfaction: “Held, that the acceptance in writing of the terms of an assignment, and especially a receipt of a portion of the proceeds of the assigned estate, is a sufficient consideration to support the agreement to accept in full,” &c. In Pierce, Butler Co. v. Jones & Son (8 S. C., 273), the same principle was announced, “that there was consideration to support an agreement, though in parol, to accept from the insolvent — 42 — debtor twenty-five cents on tlie dollar in full discharge of the debt,” &c. The judgment of this court is, that the judgment of the Circuit Court be affirmed.