Muhr v. Pinover

Robinson, J., delivered'the opinion of the Court. The debtor in this case, being in failing circumstances, made an assignment of all his property, except so much thereof as is exempt by law from execution, for the benefit of his creditors. And the question is whether the reservation of property exempt from execution, makes the assignment fraudulent and void as to creditorsf If it does, it must be because such a reservation operates in some way “to hinder, delay or defraud” the creditors of their just demands against the debtor. An assignor has no right, of course, to reserve any part of his property for the benefit of himself or his family, which, by any process at law or in equity, could be made liable for the payment of his debts. But when the law itself exempts certain property of the debtor from execution, property in regard to [487] which the creditors can have no interest or concern, and which cannot be made subject to the payment of their demands, we do not see on what grounds the reservation of such property can he said to he in fraud of creditors. It certainly does not operate in any manner to delay, hinder or defraud them of their rights, because it does notin any way interfere with their remedies, nor does it take from them any property of the assignor, which could be sold for the payment of their claims. This seems too plain for argument. To make such an assignment void there must he a reservation of property which could be made subject to the payment of the debts of the assignor. And with the exception of Sugg vs. Tillman, 2 Swan, 208, and which was subsequently qualified by Farquharson vs. McDonald, 2 Heisk., 404, the decisions in this country are uniform in regard to the question. Heckman vs. Messinger, 49 Penn., 465; Mulford vs. Shirk, 26 Penn., 473; Dow vs. Platner, 16 N. Y., 562; Smith vs. Mitchell, 12 Mich., 180; Brooks vs. Nichols, et al., 17 Mich., 38; Simpson vs. Roberts, 35 Ga., 180; Canal Bank vs. Cox, 6 Me., 395. But then it is said the Act of 1861 exempts the property of the debtor only from sale under execution, and makes no provision for the exemption of property under an assignment for the benefit of creditors. This may be so, but the Act of 1861 was passed in pursuance of the State Constitution, which provides that “Laws shall he passed by the General Assembly to protect from execution a reasonable amount of the property of the debtor, not exceeding in value, the sum of five hundred’dollars.” The object of the law was to prevent a debtor from being stripped of all his property, and it ought to be liberally construed. As his property could he taken and sold only by way of execution, it provided in terms for the exemption in such cases. By the terms of the Act, the debtor may select property to the value of one hundred dollars to he ascertained by three appraisers to be summoned and sworn by [488] the officer levying the execution. And if the property cannot be divided so as to set apart a portion of it, of the value of one hundred dollars, without loss and injury to all parties concerned, then the property is to be sold, and the debtor is to be awarded one hundred dollars of the proceeds of sale. Now an assignee for the benefit of creditors is in equity, a trustee for all parties in interest, and although the Act of 1861 makes no provision by means of which the property exempt may be ascertained under a voluntary assignment, yet we see no reason why this may not he done under the supervision of a Court of equity on application of the assignee, or any other party in interest. No provision is made by the Act, where the debtor applies for the benefit of the insolvent laws; and yet in such cases the exemption is made under the, direction of the insolvent Court. Construing the Act of 1861, in connection with the provision in the Constitution, it is clear, we think, the Legislature meant to exempt under all circumstances the property of the debtor of the value of one hundred dollars from the claims and demands of his creditors. It would be, it seems to us, a narrow construction to declare an assignment for the benefit of creditors fraudulent and void, merely because the debtor reserved from its operation, property which the law itself exempts from execution. The latter part of sec. 8, of ch. 7, of the Act of 1861, does not mean that the debtor’s right to claim one hundred dollars out of the proceeds of sale made by the' officer, shall be confined to cases in which the officer has levied on a single parcel of land, or a single article of personal property. Such a construction would practically defeat the object of the law, but it is to be construed as meaning that where he has levied on a single piece of property, being all the property of the debtor, the- officer shall not sell the same, unless it shall bring more than one hundred, dollars. The case of State, use of Young vs. Boulden, 57 [489] Md., 314, is not in conflict with this view. There the Court held that the right of exemption was one which the debtor could waive, and one which he must claim before the property is sold. If he does not make the claim, hut stands by and permits the officer to sell the property, he will not he allowed to claim one hundred dollars out of the proceeds of sale, under sec. 3, of the Act, for the reason that he is only entitled to one hundred dollars in cases where he cannot select property of that value without loss and injury to all parties in interest. When this cannot be done, the Act directs the officer to sell the property, and allows the debtor to claim one hundred dollars out of the proceeds of sale. (Decided 23rd June, 1887.) Judgment affirmed.