Viers v. Detroit Paper-Package Co.

Grant, C. J. (after stating the facts). Counsel for the defendants concede that the contract was void as to creditors of the package .company, but contend that McBride and Dunbar acted in good faith, without any intent to defraud the creditors; that they in good faith paid debts of the corporation exceeding the value of the [195] personal property and accounts sold and delivered to them; and that, therefore, they have a prior lien upon the personal property which was leased. They insist that the case is within the rule of Walker v. Cady, 106 Mich. 21. The parties differ widely as to the value of the assets and accounts turned over to McBride and. Dunbar, and which they agreed to use in payment of the debts. They were informed that the company owed complainant. Mr. McBride testifies that he supposed it was a small amount, while Mr. Thompson, the manager of the corporation, who negotiated the agreement, testified that he informed them of complainant’s full claim. They were under no obligation to pay debts in excess of the value of the property, claims, and accounts absolutely sold to them. They might do so, and, if they did, the contract provided that such overpayments should be deducted from the $25,345. We find nothing in the record to indicate that McBride and Dunbar acted in bad faith. The legal effect, however, of this transaction, was to place the leased property beyond the reach of creditors, in a manner which the law does not permit. Felker v. Chubb, 90 Mich. 24. The trial judge evidently found that McBride and Dunbar were informed of complainant’s claim. Upon this point McBride and Thompson are the sole witnesses, and we find nothing in the record to justify us in reaching a different conclusion from that of the trial judge. In view of the dispute as to the value of the property and accounts absolutely sold, and the remedy provided by the contract if McBride and Dunbar paid debts in excess of such value, we think the judge reached the correct conclusion, that defendants have no lien for such overpayment, and that the property leased is subject to complainant’s judgment. Decree affirmed, with costs. The other Justices concurred.