Pollock v. Sykes

Whitfield, J., delivered the opinion of the court. The one thing raised into prominent relief by the record, standing out clear and distinct as a mountain in the landscape, is the purpose of Lancitot to secure payment to the creditors named in the trust instrument. It was about that he was exercised. That had been, for some days prior to the execution of either instrument, fully and finally determined upon by him. They had furnished the money upon which he had operated, had been his friends in need, and, naturally, he desired to, and determined to, protect them by preference. And, so far as any fully formed purpose as to the disposition of any of his property was concerned, that purpose was the only one originating with him, as determined upon by him up to the time of the conversations with his attorneys. True, he told Bowen some two days before the instruments were executed, that if he made an assignment, he would be protected; but this shows only — 710 — a floating, shadowy thought as to what he might do as to an assignment, and negatives clearly any existence in his mind, then, of a definite determination to do so. But he also told Bowen, in that very conversation, that he had fixed the bank matter. One purpose was fully formed and settled. As to the assignment he had no purpose. The possibility merely that he might do so, had occurred vaguely to him. When his attorneys suggested to him that the execution of the trust deed would necessarily close his business, he, then, for the first time, determined to make the assignment. The trust deed was, in pursuance of his original purpose, executed some thirty minutes before the assignment, though both may have been prepared for execution coetaneously. But the fact that he, at the suggestion of his attorneys, then formed the purpose to execute an assignment, cannot, in reason or principle, affect the other purpose, prior in existence as to time, and different in nature, to execute the trust deed. Both may have been conceived before either was born, but indisputably one was conceived before the other, and one was born before the other, and the twins were as unlike, in essential nature, as Esau and Jacob. The instruments manifest wholly distinct purposes, and the purposes were fully formed and determined upon, in the mind of the grantor, at different times, originated from wholly different motives and considerations, and were not supplementary the one of the other, but have distinct and separate purposes, appropriately manifested by instruments separate and distinct in their nature. The test, in all these cases, must be what was the thought, intent and purpose in the mind of the grantor. Time is of evidential value only, greater or less according to • the particular circumstances of each case, not determinative. Peed v. Elliott, 34 N. E. R., 320; Shillito v. McConnell, 26 N. E. R., 832. When the time between the execution of the instruments is very short, the inference of identity of transaction, oneness of purpose in making both, is, of course, stronger. But it is true, also, that where attention is directed too exclu — 711 — sively to mere nearness of time, there is danger of unreasonably straining that inference. To hold with the supreme court of Illinois (Preston v. Spaulding, 120 Ill., 208) that, where the mere mental determination has been first reached to make a general assignment, to dispose of all, whatever instruments may be subsequently executed must all be referred to that mental determination, will not help appellants, for no such determination to make a general assignment was first and orig-' inally formed by Lancitot. Or to hold with the supreme court of Indiana (Shillito.v. McConnell, 26 N. E. R., 835) that the Illinois test is unsound, because human tribunals have no practical means of ascertaining just when such mental determination was formed, and hence, that the proof must show, in addition to the fact that the mental determination to make a general assignment was first formed, some act — such as the execution or commencement to execute such general assignment — also furnishes appellants no aid; for again it is to be said, that here no such purpose, first and originally, to make the assignment, existed. See, emphatically upholding this view, Shillito v. McConnell, 26 N. E. R., 832. The holding of both these courts, properly xmderstood, is merely that when the determination to make the assignment is first and originally formed, the determination subsequently formed to also make instruments containing preferences, both being thus executed, makes void all the instruments — thus parts clearly of a common scheme, and that scheme one to evade the statute against preferences in a general assignment. But he who first determines to make only a special provision for particular creditors by a trust deed on part only of his property, not then intending to make a general assignment, may never either form the purpose of making such assignment, or in fact make it. There was, in such case, in his mind no common scheme to dispose of all, with the trust deed as part of such scheme. And if afterwards, he — the special provision having been previously fully determined upon — from new considerations suggested to — 712 — him, does so subsequently determine to make such assignment, and does make it, such purpose is clearly not one with the first, but a wholly separate and independent purpose, and when, as here, that first purpose of his, is first completely executed, the special provision is, on this ground, unassailable. It involves a plain fallacy to argue that whatever Lancitot’s first purpose may have been, when his attorneys suggested to 'him the then necessity of an assignment, he then changed that first purpose, and formed the one new purpose of making both instruments; for the first purpose was not changed, the trust deed being executed in pursuance of the original unchanged purpose, and the assignment was the product of a wholly distinct purpose then first formed. What was done as to extending the receivership over both trust estates could not alter the essentially distinct natures of the trusts. That was mere administration of two separate trusts, specially prayed to be separately treated. This is so decided, in principle, in Field v. Geohegan., 16 N. E. Rep., 912. Much stress is placed on White v. Cotzhausen, 129 U. S., 329, by learned counsel for appellants. But, as clearly pointed out in the masterly opinion of Kellam, J., in Sandwich Mfg. Co. v. Max, 24 Lawyers’ Rep. Annotated, 529, the supreme court of the United States professed in that case only to enforce the law of Illinois as it supposed it to have been announced in Preston v. Spaulding, supra. And it misconceived that case, as is shown in the case of Union Bank of Chicago v. Kansas City Bank, 136 U. S., 223; and in this case it is also shown that some of the circuit judges of the United States had similarly misconceived the decisions of the supreme court of Missouri. See, also, May v. Tenny, 148 U. S., 60. The case of Sandwich Mfg. Co. v. Max, supra, is remarkable for the vigor and ability with which it emphasizes the doctrine that in those states where preferences are prohibited in general assignments, the prohibition is not of preferences per se but of preferences in such instruments, and of the right of — 713 — an insolvent debtor in such states to prefer otherwise, and of the justness of the right of preference. Selleck v. Pollock, 69 Miss. There is observable in the earlier holdings on this subject in states where preferences in general assignments are prohibited, a tendency to construe as one general assignment, in fraud of such statutes, an assignment and any other disposition of property — such as mortgage, trust deed, confession of judgment, etc. —or any such instrument whereby all is disposed of preferentially, or any two or more such instruments. But many recent and well-considered cases point out the fact that preferences were allowed at common law; are now, by statute, in those states expressly allowed to be made, except in general assignments; that the principles of an insolvent or bankrupt law must not be confounded with those to be applied to the making of general assignments; that a single mortgage or trust deed disposing of all is not necessarily a general assignment, within the meaning of these statutes against preferences in general assignments (Kohn Bros. v. Clement, Morton & Co., 12 N. W. Rep., 550), and mark out clearly the distinction between an assignment and a mortgage or trust deed, showing that an assignor intends to divest himself not only of the title to his property, but the control; that an assignment is “made in view of insolvency — that it is the initiation of proceedings for the absolute disposition of the property and distribution of the proceeds;” but that the purpose of a mortgage or trust deed, if it is what it purports to be, is quite different. And hence many cases, in such states, now hold that where there is no assignment, but a mortgage or mortgages, or trust deed or trust deeds made, conveying all, to secure bona fide debts, they are not the kind of general assignments meant by these statutes, and that though that is a general assignment, yet if a trust deed or mortgage precede it, in purpose or execution, by never so short a time, the two are not one general assignment, as held in Shillito v. McConnell, supra. See, in addition, illustrating these propositions, Kahn Bros. v. Clement, Morton — 714 — & Co., 12 N. W. Rep., 550; Sandwich Mfg. Co. v. Max, supra; Cutler v. Pollock, 25 Law. Rep. Anno., 377, at p. 380 specially; Farwell v. Nilsson et al., 21 N. E. Rep., 74; Leets-Fletcher Co. v. McMaster, 19 N. W. Rep., 1035. Estes v. Gunter, 122 U. S., 450, is in direct support of the views advanced in this opinion. Of course, where the purpose first formed is to make a general assignment, and, as part of that purpose, to prefer usurious debts by separate instruments, and both were executed in pursuance of such purpose, both are parts of a common scheme in fraud of our chapter 8 of the annotated code, and where usury exists in either, both will be held to constitute a general assignment, and will fall at the attack of one entitled to set up the usury. Many other grounds of assault upon the assignment are set up by cross petitioners. We cannot notice them seriatim. As to the John E. Hurst & Co. claim, the testimony is insufficient to sustain a rescission for fraudulent representations; and the cross petition of Schloss Bros, and Dunham, Buckley & Co. contains no allegation whatever as to any false and fraudulent representations of Lancitot’s financial condition. An amendment for this purpose seems to have been obtained at the hands of the court, but the record fails anywhere to show that the amendment was ever made in this cross petition. The testimony on this subject, under this petition, was therefore properly excluded. There are other assignments of error, all of which have been carefully considered, but a special notice of which would too much protract this opinion. It is enough to say that we concur, as to all of them save one, throughout, with the learned chancellor — one of the ablest and most accomplished judges who ever adorned the bench in Mississippi. That one relates merely to the failure to enter personal decrees for the cross petitioners, the amounts due all of whom were agreed upon, and some of whom specifically asked personal decrees, and others — 715 — for general relief. The omission to enter these decrees was an inadvertence, manifestly. The decree is affirmed in all things else, but as to this is reversed, and decrees will be entered here for the amounts agreed on.