Polkinghorne & Lawrence v. Martinez

Arnold, J., delivered the opinion of the Court. The deed of assignment is fraudulent and void as against creditors who have not assented thereto. These infirmities result from the terms of the instrument, and they cannot be cured [275] or helped by the averments of the answer, or by other proof. It attempts to confer upon the assignee discretion and power as to the payment of debts inconsistent with the rights of the unpreferred creditors, and which could not be lawfully delegated, to him by the assignors. Under such an arrangement the rights of unpreferred creditors would depend upon the unrestrained discretion of a stranger, rather than upon the well defined rules of law or the provisions of the assignment. Such as acquiesced, might expect perhaps to receive something, but such as complained or resisted, nothing. Such an arrangement would be a successful method, not of devoting the estate in trust fairly and justly to the payment of debts, but of devoting creditors to hindrances, delays and fraud. It is not lawful for a debtor, in making an assignment for the payment of his debts, to stipulate that he shall possess the power of directing afterwards how the property conveyed shall be used or applied for that purpose. His power to dictate or control the future management and disposition of the estate and its proceeds, and the relative rights of creditors in reference to it, terminates with the execution of the'assignment. The assignment itself must definitely fix and settle the respective rights of creditors. If, instead of this, it reserves to the assignor the power of doing so subsequently, it is fraudulent and void; and as the assignor could not retain such power in himself, he could not invest his assignee with it. The same objection,in principle, exists in both cases. Hyslop v. Clarke, 14 Johns., 458; Averill v. Loucks, 6 Barb., 470 ; Gazzam v. Poyntz, 4 Ala., 374 ; Sheldon v. Dodge, 4 Den., 217; Grover v. Wakeman, 11 Wend., 187; Boardman v. Halliday, 10 Paige, 223; Barnum v. Hempstead, 7 Id., 568 ; Burrill on Assignments, Sec. 119 ; Bump, on Fraudulent Conveyances, 315. Affirmed.