Danforth v. Denny

Woods, J. The property in question was, on the 6th day of May, 1850, delivered to the trustee, as security, in the first place, for a demand which he held against the principal debtor, and after that for the payment of certain other specified debts of said principal debtor, of which a schedule was made, and the amount of which appeared upon the schedule; and it was then agreed between the trustee and the principal debtor that the trustee should pay said debts to the extent of the avails of the property, provided he should be allowed to hold the property for that purpose. Before the service of the writ in this case, the trustee saw the creditors named in the schedule, and agreed with them to pay them according to the arrangement made by him with the principal debtor, and the creditors agreed to accept payment in that way. Blanchard, of course, had authority to receive the goods in — 164 — pledge on bis own behalf, and he received them also on behalf of the other creditors named in the schedule, with the assent of a portion of them given at the time, and with the subsequent sanction and ratification of the others. This arrangement between the owner of the property and his creditors, by which the property was to be holden by Blanchard for the benefit of himself and the other creditors named in the schedule, and the avails of which were to be applied in discharge of those claims, so far as they would go, was unquestionably, by the principles of the common law, a valid contract, and gave those creditors an equitable interest in the property which the court may well protect. The transaction constituted a valid pledge or assignment of the goods for the security and payment of the debts specified. Meredith Manuf. Co. v. Smith, 8 N. H. Rep. 348. Nor was the contract or assignment under consideration reudered invalid by virtue, of chapter 134 of the Revised Statutes, which provides that “no assignment for the benefit of creditors shall be valid unless it provides for the equal distribution of all the estate, rights, and credits of the debtor among all his creditors, in equal proportion to their respective claims.” A construction has been given’ to the act of July 5, 1834, which was in its provisions similar to that now in force and before cited. Meredith Manuf. Co. v. Smith & Trustees, 8 N. H. Rep. 347. It was there decided that “ it was not the intention of the legislature to prohibit a debtor from assigning any particular property he might possess, for the purpose of paying any particular debt or debts that he might owe.” And in Low v. Wyman & Trustees, 8 N. H. Rep. 536, it was decided that a pledge of all a man’s property for the payment of a particular debt, is not within the statute of July 5,1834. The court there say: “ The statute could never have been intended to embrace a mortgage or pledge of any or all of a man’s property, for the security of a particular debt. A debtor has an undoubted right to convey all his property — 165 — to one of his creditors in satisfaction of his debt. And if he can convey all his property in satisfaction of a particular debt, there seems to be no sound reason why he should not be permitted to pledge all his property to secure the payment of such debt.” In Baker v. Hall & Trustee, 13 N. H. Rep. 298, it was decided that a mortgage by a debtor of all his property to secure the payment of a portion of His debts, leaving others unprovided for, is’ not an assignment within the meaning of the statute of July 5, 1834, entitled “ An act for the equal distribution of property assigned for the benefit of creditors.” We think, therefore, that it is quite clear that at the date of the pledge, or assignment, or security in this case, the trustee, in his own behalf and for and in behalf of the creditors specified in the schedule, had a valid lien upon the property in question, and full authority to appropriate it to the discharge of their claims against the principal debtor. The full assent of all the creditors for whose benefit the property was placed in Blanchard’s hands, was given before the trustee process was served; and the aggregate amount of the claims secured, was greater than the value of the property pledged, and more than the amount that was realized upon the sale of it. It is contended, however, by the plaintiff, that by the subsequent transactions disclosed, the lien of the trustee, and of those for whom he held it, upon the property created by the pledge or assignment, was waived and lost. The property placed in the trustee’s hands was in no wise interfered with, nor the lien thereon lost, by reason of the attachment made on the writ in favor of Winkley, that being made expressly subject to the lien or pledge to the trustee and the other creditors, and the possession of Blanchard was in no wise disturbed thereby. Blanchard claimed the lien, and he was allowed to retain the possession under the claim, and the officer took only what he might, subject to — 166 — the rights thus asserted and maintained by Blanchard. It was in this state of the case that a portion of the creditors named in the schedule, assented to the pledge. But their assent, at that time, was as effectual against the claims of the plaintiffs, who acquired whatever rights they had after-wards, as if the same had been previously given. And Winkley never claimed the property as against the claims of those who thus assented after his attachment. The lien took effect, then, in behalf of all included in the schedule. But it is, nevertheless, claimed by the plaintiff that the lien of Blanchard, and of the other persons for whom he held the property, was abandoned and lost by reason of the attachment made by Blanchard of the goods in question. Blanchard caused a writ to be made, and the same to be given to an officer, intending to have an attachment made, and one was made, so far as it could be done under the circumstances. Blanchard did not intend an abandonment of his lien already existing, and he did not surrender the possession to the officer, nor did he ever receipt for the goods. Blanchard states in his disclosure that his object and purpose was to effect a further security, and not to abandon his lien, and that he was advised that the proceeding, such as it was intended to be, would not occasion a loss of the security. And it appears that Eldridge, the officer who made the attachment for Winkley and the plaintiff, never claimed the property as against the lien of Blanchard, either by virtue of Winkley or Blanchard’s writ, and that the property was finally sold by the officer, with the assent of all concerned, Blanchard assenting only to a sale, subject to his rights under the pledge; and Danforth & Co. at the time claiming only that Blanchard could not hold for those who assented to the pledge subsequently to the service of Winkley’s writ. Was the lien of Blanchard lost by this transaction? We will not stop to inquire wheiher Blanchard could, by any act of his in attaching the property and surrendering it to the officer, discharge the lien of the other creditors for whom — 167 — he held the goods. It would seem at least unreasonable to hold, that by such an act in his own behalf the agent could in any way affect the rights of his principals. But we will consider the effect of his acts as affecting his own claim to the property. If the transaction or contract created a pledge, and there was a voluntary surrender of the property and the possession of it, or what is equivalent to it, the lien of Blanchard was lost. This is the most favorable view for the plaintiff. Possession, taken and retained, is necessary to the creation and maintenance of a valid pledge. And a voluntary surrender of the possession will work a loss of the lien. But a wrongful dispossession of the pledgee will not destroy the lien. In this case, Blanchard took actual possession, and never surrendered it. Nor does it seem to have been claimed by Eldridge, the officer. And he never intended to abandon his lien. And we are of opinion that nothing was done by Blanchard whereby his lien was lost. As to his own writ, it could have no such effect as is claimed for it. Eldridge could have no other authority in the service of it than as his agent, appointed by the law. He did not take possession of the property, but only got such rights as could be taken while Blanchard kept possession, and intended to retain his lien. It would hardly seem necessary to do more than to state the case, to show that by Blanchard’s process and the acts done under it, accompanied with the intentions of the parties that are shown to have existed, his pledge was not lost. Townsend v. Newell, 14 Pick. 332, is a case much in point, upon the question of the effect of the several attachments upon the claim of the trustee. In that case, goods in the possession of a party having a manufacturer’s lien upon them, were attached, and the party receipted for them to the officer; but at the same time it was agreed that he should retain for his lien, and afterwards the goods were attached at the suit of the manufacturer, and he receipted — 168 — for them, still asserting his lien. And it was decided that the lien was not discharged. The court, in that decision, remark : “ Charles sued out a writ against John Townsend, and attached the goods, and Rice receipted for them to the officer. But Rice claimed a special property in them at the time, and it was manifest that he did not intend to give up any right, but that he agreed to receipt, retaining his lien. We think that the lien was not discharged by these proceedings. It is further objected that Rice caused the goods to be attached on his own account, and again receipted for them. It seems doubtful whether his writ was designed to cover both of his demands against John Townsend; but however this may be, it was clearly his intention to retain his lien, and we are satisfied he did not discharge it by his attachment and receipt.” 1 The principle of that decision would seem fully to establish the position of the trustee, that the pledge remained valid, notwithstanding the attachments detailed in his disclosure. It is most distinctly stated in his disclosure, that he had at no time the purpose of abandoning his lien by virtue of the pledge, but at all times intended to retain it, and refused to give it up. And that account of the matter is fully confirmed by the affidavits of the officer who served the writs and made sale of the property, subject to the claims of the trustee. We quite concur with the views of the court in the decision of Townsend v. Newell, and regard them as applicable to the present case. Moreover, it may be remarked that in the present case there was no voluntary surrender of the possession of the pledge, nor, in fact, any surrender at all. Nor was anything done or assented to inconsistent with the continuance of the lien. It was expressly agreed that the lien should not bp lost. Nothing, then, that was done, was intended, or could operate, to discharge it. Trustee discharged.