Hardcastle v. Fisher

LEONARD, Judge, delivered the opinion of the court. 1. The deed falls within the provisions of our act concerning voluntary assignments, and we must treat it as such in determining the present controversy. The omission of the assignee to file an inventory and give security, or to discharge any other duty imposed upon him by the statute, can not affect the rights of the creditors ; and we are not at liberty, from any thing now before us, to presume that the creditors themselves have abandoned the assignment, and left the property embraced in it to be the subject of a general scramble among the creditors. 2. Three of the supposed debts provided for in the deed, and which were to be paid first and in preference to the great mass of the debts, are admitted by the demurrer to be fictitious claims fraudulently put into the assignment by the contrivance [75] of the grantor and these supposed creditors, but without the concurrence or knowledge of the assignees or the other creditors. We think it pretty well settled by the course f decision in this state in reference to a voluntary assignment, that the fraud of one or more of the creditors does not defeat it altogether and render it wholly ineffectual in favor of the others ; and we are not disposed, after reconsidering the matter, to change the course of adjudication upon this subject. The courts of Yirginia, North Carolina and Alabama have taken the same view; (Anderson v. Hooks, 9 Ala. 704; Sewall v. Henry, 5 Grattan, 31; Harris v. Graffenreed, 11 Iredell, 89; Brannock v. Brannock, 10 Ib. 428;) but in New York, the old rule — void in part, void in toto — seems to be adhered to and applied to these transactions. (Fiedler v. Day, 2 Sand. Sup. C. R. 596.) We think it, however, the part of wisdom, since the legislature have interfered in reference to these assignments, to uphold them, rather than to defeat them by lending too easy an ear to objections ; and that the better way to render them effectual in securing the effects of insolvent debtors to their creditors, will be to exclude the fraudulent claimant from any participation in the fund, by holding the assignment void as to him, and letting it stand in favor of honest parties. 2. The attaching creditor, however, can not be allowed to stand in the place of the excluded claimant, and take his share of the fund. There is no legal principle upon which we can allow this. The impeached claim is extinguished by the fraud, so far as any participation in the assigned effects is concerned, and the effect of this in reference to the other creditors is, that the share, that would otherwise have been appropriated to its payment, sinks into the residue for the benefit of those who are entitled to the residue by the terms of the deed. The other judges concurring, the judgment is affirmed.