Sackett v. Mansfield

Breese, J. The question presented on this record is, does the following provision in a deed of voluntary assignment by a debtor of his property, for the benefit of his creditors, render the deed fraudulent and void as to creditors: That the said assignee “ shall take possession of the said property assigned, and shall, with all convenient diligence, sell and dispose of the same, at public or private sale, as he may deem most beneficial to the interests of the creditors, and shall with all reasonable dispatch collect, get in and recover the debts assigned,” etc. A very .able and learned argument has been made to the court by the counsel for the appellants, who are creditors of the assignor, in which the whole doctrine of voluntary assignments from their inception, is most elaborately discussed, and references made to all the American authorities tending to elucidate it, and the conclusion is forcibly pressed upon this court, that such a clause renders the assignment ipso facto fraudulent and void as to creditors. No argument or brief is submitted for the appellees, and we must decide the case without the aid we would have derived from the labor of their counsel, had it been directed to this question. We have examined all the authorities cited, and have had occasion heretofore to acknowledge their force in cases where they properly applied. We have always maintained the doctrine, that new and unusual clauses in such deeds of assignment cast suspicion on them, and to render them valid, they should contain an unconditional surrender and transfer of the property for the benefit of the creditors generally, with special preferences allowed. This court has recognized the authority cited by appellant’s counsel in two cases which have been before us. The first was the case of McIntire v. Benson et al., 20 Ill. 500, in which we held that a clause in a deed of assignment, that the assignee should execute the trust faithfully according to the stipulations of the deed, being responsible only for his actual receipts and willful defaults, made the deed fraudulent and void. The other case was that of Bowen v. Parkhurst et al., 24 ib. 257, cited and commented on by the appellants, in which we held that a voluntary assignment of a debtor for the benefit of creditors, which authorized a sale of the property assigned, publicly or privately, on a credit, could not be sustained,—that it was fraudulent and void. It is insisted that the provision in this deed is equivalent to a provision, that “ the terms and conditions ” on which the property shall be disposed of, shall be in the discretion of the assignee, and therefore he has, of necessity, the power to sell on a credit, for the terms on which personal property are usually sold, are, for cash or on credit. In support of this view many cases are cited from New York, and among them the case of Schofeldt v. Abernathy, 2 Duer, 533. The court in that case bases its decision on the case of Nicholson v. Leavitt, 2 Selden, 510, where it was held, that a clause authorizing a sale of the property upon a credit, rendered the deed fraudulent and void. This court has decided in the same way. The court in Duer say, “ the words are not the same, but in the meaning there is not the slightest difference. 6 Terms and conditions ’ can only mean terms and conditions of payment, and unless in connection with the words that follow in the clause, they convey by a necessary implication, a discretionary power to sell upon credit.” . But the provision in the deed in that case, was wholly unlike the one in this case, and that case is overruled by the decision of the Court of Appeals in the last resort, in the case of Kellogg v. Slawson et al., 1 Kernan, 302, on which appellant’s counsel had commented freely. The chief justice of that court, with Justice Johnson, “who delivered an opinion to the same effect,” and all the judges of the Supreme Court, concurred in the opinion pronounced by Justice Parker, and it has not been disturbed by any subsequent decision. Then, when “ the terms and conditions” of sale are left in the discretion of the assignee, even in New York, whose courts are quite hostile to voluntary assignments, such a clause does not invalidate the deed. But contrast that provision with the one before us, and there will be found but a faint resemblance. The provision in that deed, authorized the assignees to sell and dispose of the property, “upon such terms and conditions, as in their judgment might appear best for the interest of the parties concerned, and convert the same into money,” etc. In the deed before us, this is the provision: the said assignee “ shall take possession of the said property assigned, and shall, with all convenient diligence, sell and dispose of the same, at public or private sale, as he may deem most beneficial to the interests of the creditors, and shall with all reasonable dispatch collect, get in and recover the debts assigned,” etc. Can human ingenuity torture the language of this assignment into an authority to sell on credit? Does the stipulation contain anything more, or confer greater or other authority, or a larger discretion than the law would imply without this language.? -In every assignment, however free'from special provisions it may be, a certain amount of discretion is necessarily granted to the assignee. He is authorized generally, to sell and dispose of the property, and convert the same into money; has he not necessarily, from the very nature of the trust conferred upon him, to judge for himself when he can best convert the property into money ? The execution of all such trusts are under the control of a court of chancery, which will compel the assignee to use proper and reasonable diligence in converting the property into money. Some delay of creditors is a necessary consequence of all such assignments, but that alone does not vitiate them. The delay must be shown to be the intent and object of the assignment, not the necessary consequence of it. The object and intent being meritorious, to devote the property to the payment of creditors, the unavoidable delay in bringing the property to sale, has never been considered as bringing such assignments within the statute of Frauds and Perjuries. (Scates’ Comp. 541, Sec. 2, chap. 44.) ' Malice, fraud, covin, collusion, or guile, are necessary elements to make up the intent or purpose to delay, hinder or defraud creditors, and they must be entertained by both parties to the deed. Ewing v. Runkle, 20 Ill. 448. It is a true principle, that a party must be understood as having intended that which is the necessary consequence of his acts, but it by no means follows, that a general assignment of property, made expressly for the benefit of creditors, and with the avowed purpose of devoting the avails of it to them, was made with malice, fraud, covin, collusion or guile, with the intent or purpose to delay, hinder or defraud them. It is a question of fact, hot a legal consequence, from the acts done. This view saves honest assignments, which have been upheld by all courts. The view taken by appellants would destroy all of them: not one could escape the general wreck,, as all necessarily delay creditors. The real question in all such cases is, as to the bona ftdes of the transaction. As this court said in McIntire v. Benson, 20 Ill. 500, the great and indispensable requisite in all voluntary assignments by debtors, is good faith; the great and fatal objection, fraud, or the intent to defraud creditors, and we might have added, to delay or hinder them, prompted thereto by malice, covin, collusion or guile. None of the cases cited by the counsel for the appellants are at all like this case. The stipulations in the deeds were very different. This deed made an exhibit in the cause, fulfills, in our judgment, all the requirements of a valid deed of assignment. It purports to be an assignment for the benefit of creditors with preferences, which are always allowed. It is for the benefit of the assignor’s creditors, and in no sense or degree for the benefit of the assignor himself, except as to the surplus, if any, after paying all the debts. To effect this object, the property is unreservedly appropriated, without any contrivance to defeat its accomplishment. It is free from all provisions tending to delay, hinder, or defraud creditors in the collection of their debts, and although the effect may be to delay creditors, such is not its apparent object, nor is there any evidence that it was made with any such intent; and it appears on its face to be bona fide, with no unusual provisions in it, calculated to excite suspicion of its fairness. The true test of the validity of such deeds is, that wherever the law would imply a discretion, such discretion may be given in the deed—where a discretion is given in the deed, which the law would not imply, the deed is fraudulent and void. We are well satisfied the law would give, by implication, all the discretion to the assignee, which is given by this deed; it is therefore neither fraudulent nor void. The judgment of the court below is affirmed. Judgment affirmed.