Anderson v. Lachs

Cooper, J., delivered the opinion of the court. It is urged that the court below should have decided that [114] the deed of assignment was void on its face; first, because there is an express reservation therein to the assignor, of the surplus remaining after the payment of the debt to Speed, no provision being made for the payment of other debts due by the assignor; and, second, because authority is conferred on the trustee to sell the property conveyed “ in the usual course of trade,” and “ to collect or sell at public or private sale the notes and accounts ” assigned. The decided weight of authority is that the reservation to the assignor of the surplus remaining after the payment of the debts provided for does not 'per se invalidate the deed, the reason being that the legal effect of the instrument is the same whether such provision is or is not made. Burrill on Assignments, § 207. In the case of Mattison v. Judd, ante, 99, we held that when the deed conferred power on the trustee to sell in the usual course of business or course of trade, power to sell on credit was not thereby given, but that such language only gave authority to sell in small quantities according to the usual custom for cash instead of at public auction or in bulk. The authority given to the trustee to sell the choses in action, while unusual, does not inevitably or certainly tend to the injury of creditors. On the contrary, it may be that under some circumstances it would be of decided advantage that such course should be pursued. If is argued that trustees, protected by such authority, may, in strict conformity with the letter of the conveyance', sacrifice the choses in action, and greatly impair the value of the trust estate. So, under the power to sell the goods and other personal property, equal injury may be done. No power sufficient to administer the trusts can be given which may not be abused by the faithless; but it is not to be presumed that trustees, who are required to act honestly and prudently, will fraudulently abuse the powers conferred. If they do, they are personally liable to creditors, and are always subject to the control of the Chancery Court. The power conferred in this case is analogous to, and not more susceptible to abuse than power to compound with debtors, and such power does not avoid the conveyance. White v. Monsarrat, 18 B. Mon. 809; Price v. DeFord, 18 Md. 489; Carlton v. Baldwin, 22 Texas, 724; Watkins v. Wallace, 19 Mich. 57 [115] The appellant also contends that .the deed is fraudulent in fact, because of an antecedent agreement between the assignor and Speed (the creditor), that, if at anjr time it should be necessary to execute the assignment for Speed’s protection, it should be done. The act itself of making the assignment being lawful, it is difficult to apprehend how a previous promise to do it can make it unlawful. If the debtor Hillyer could at any time lawfully execute the conveyance by which his property is devoted to the debt due to Speed, how are other creditors injured by the fact that he had previously promised on certain contingencies so to do ? It is not admissible from the fact alone, that such precedent agreement was made, to infer the existence of a scheme devised for the purpose of entrapping others into sales of goods to the debtor, which goods were then to be by him appropriated to the payment of the debt to Speed. The law would not tolerate the consummation of such a scheme, but it does not in the absence of proof presume its existence. The objection that there is a reservation of a benefit to the debtor, because it is shown by evidence aliunde the deed that Speed accepted the assignment in discharge of the debt, is equally untenable. The deed professes to devote the property to the payment of certain debts due to the beneficiary, and its effect is neither limited nor extended by the contract of the debtor that he should be released from personal liability on the debt. If this contract had appeared on the face of the deed, no other creditors could by any possibility have been injured thereby, and it is not more hurtful to them by reason of the fact that it existed only in parol. It is also assigned for error that the court below excluded, when offered in evidence, a circular letter addressed by Hill-yer to his creditors a short time before the execution of the deed. What the contents of the letter were is left to conjecture, the only statement relative thereto contained in the record being that it was offered for the purpose of proving Hillyer’s financial condition at that time, and was excluded by the court because the admissions of Hillyer were not receivable in evidence against Speed, the plaintiff. We are unable to say from this perfunctory statement that the court erred in excluding the testimony. We are satisfied from the evidence that Speed in [116] good faith released his debt against Hillyer in consideration of the execution of the deed ; and such being the case the trustee became a purchaser for value, and was not bound by any fraud of the assignor, if any existed. Judgment affirmed.