Case ID: abb-pr-ns_3/html/0046-01.html
Source: Caselaw Access Project
Author: {"author": "\n      By the Court—Brady, J. Daly, F., J., concurred. Cardozo, J., (dissented)", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ADAMS against HOUGHTON.
    
      New York Common Pleas; General Term,
    
    
      June, 1866.
    Assignment fob Benefit óf Creditors.—Execution.—Acknowledgment,
    Under the Act of 1860 (Laws of 1860, 594)—regulating assignments—an assignment for the benefit of creditors must be acknowledged by the. debtor in person. It cannot be acknowledged by his attorney or proved through the medium of a witness.
    Appeal from a judgment rendered upon trial by the Court.
    ! This action was brought by Charles S. Adams, receiver, against Charles W. Houghton, Columbus Hart, James W. Hart and William J. Davidson. The plaintiff sued as receiver of the defendants, the Harts and Davidson. His complaint showed the recovery of judgment against those defendants, the issuing and return of execution, the institution of supplementary proceedings, and the appointment, and qualification of the plaintiff as receiver. It further showed that the defendants Columbus Hart and Davidson, for themselves and in the name of James W. Hart, Columbus Hart acting as his attorney, executed to the defendant Houghton, as trustee, an assignment for tho benefit of creditors, under which Houghton had taken possession of assets of defendants. It prayed judgment that the assignment be adjudged fraudulent and void, that the defendant Houghton account for the property received under • it, and deliver up the same to the plaintiff, as' receiver, and for an injunction and further relief.
    The principal ground upon which the plaintiff claimed that the assignment was void- was that instead of being executed * and acknowledged by all the defendants in person, the defendants Davidson and Columbus Hart, only, executed and acknowledged the instrument personally, while on the part of James W. Hart it was subscribed and acknowledged by Columbus Hart as Ms attorney.
    A written power of attorney from James W. Hart to Columbus Hart to execute, &c., an assignment preferring creditors duly acknowledged was filed with the assignment and appeared by the complaint.
    On the trial of the action the Judge found that the execution and acknowledgment of the assignment were duly made and were valid, and he therefore dismissed the complaint.
    From this judgment the pláintifl: now appealed.
    
      Griswold & Dickinson for the appellants.
    
      D. T. Walden
    
    for the respondent, contended: I. That the assignment was duly executed. One or more of several partners may make an assignment for the benefit of creditors, if authorized so to do by the other partners. (Fisher v. .Murray, 1 E. D. Smith, 341; Sheldon v. Smith, 28 Barb., 592 ; Robinson v. Gregory, 29 Barb., 560; Kelly v. Baker, 2 Hilton, 531; Baldwin v. Tynes, 19 Abbott, 32.)
    ■ The power of attorney executed by James W. Hart expressly authorized the making of the assignment by the other partners.
    II.—The assignment was duly acknowledged, as required by the act of 1860, chap. 348. The act requires only that the assignment shall be acknowledged (§1). The parties executing this assignment were William J. Davidson and CóMmbus Hart, and they both duly acknowledged it. Strictly, the partner, James W. Hart, did not make the assignment; it was made by the other partners for him, by his authority. The act of 1860 has not changed the law in relation to the manner of executing an assignment. An assignment may now be executed as prior to the act. The Legislature have in addition required that the parties executing the assignment shall acknowledge the execution before an officer duly authorized. H in tMs case, the partner, James H. Hart, is presumed to have made the assignment through his attorney, then the acknowledgment by his attorney in pursuance of his power, must be considered the act of his principal. In Cook v. Kelly (12 Abbott R., 35; 14 ib., 
      467), and Fairchild v. Gwynne (16 ib., 23), the assignment was not acknowledged by those who signed it. The power of attorney was acknowledged (Lovett v. Steam Saw Mill Ass., 6 Paige, 54, 60; Johnson v. Bush, 3 Barb. Ch., 207, 240; Baldwin v. Tynes, 19 Abbott, 32.)
   By the Court—Brady, J.

The statute of 186 (Laws, p. 594), is mandatory. (Fairchild v. Gwynne, 16 Abbott Pr. Rep., 23). And it requires that every assignment for the benefit of creditors shall be in writing, and shall be duly acknowledged. It is an affirmative statute, introductory of a new law and directing a thing to be done in a certain manner; that thing shall not, even although there are no negative words, be done in any other manner. (Dwarris on Statutes, p. 641.) The execution cannot therefore be proved by a subscribing witness. (Cook v. Kelley (12 Abbott Pr. Rep., 35; same case, 14 Abbott Pr. Rep., 466). The statute contemplates an acknowledgment by the debtors making the assignment and not by their attorney, or through the medium of a witness. The object is to secure the cooperation of the debtors and their disclosures of the assets belonging to them. Hence, it provides that the debtor or debtors shall make and deliver an inventory or schedule to the county judge of the county in which such debtor or debtors resided at the date of the assignment, and that an affidavit shall be made by such debtor or debtors, and annexed to and delivered with such inventory or schedule, that the same is in all respects just and true according to the best of such debtor or debtor’s knowledge and belief. It is true that the schedule mentioned may be made after the assignment is executed, but the formula prescribed is evidence- of the design of the legislature to exact a united action on the part of joint debtors personally and not by representation. There is ho difference in effect between proof by a subscribing witness and an- acknowledgment by an attorney delegated to execute the assignment, neither being the direct act of the assignor; and so far as the schedule is concerned it by no means follows that an attorney has any knowledge of the property of the firm which he assists, in transferring. If an assignment may be executed and acknowledged by an attorney appointed for that purpose by one of the debtors, it may be executed and acknowledged in the same way as to all, and the abuses which the statute was intended to prevent still prevail to the detriment of the creditor. (See op., Mullen, J., in Fairchild v. Gwynne, 16 Abbott, supra, p. 31). In such a ease the debtors would not assume the obligations or incur the penalties of any false statements contained in the inventory or schedule; and the inventory, however false, might so far as the attorney is concerned, be -correct according to the best of his knowledge and belief. Such is not the knowledge and belief required. It is that of the debtor which the statute exacts, and it is this which must be expressed.

It may be said that this view of the question presented trill render it impossible to execute an -assignment where the debtor or one of them is absent or is a resident of a foreign country, but this is not necessarily the result. The laws are ample for such cases. Acknowledgments may be made abroad before the officers authorized to take them.' It may prevent hasty or ill considered assignments, or the intentional absence of debtors as a part of the fraud to be practised upon creditors,, but whether either or all of those consequences follow is a matter for legislative interference. If the statute is too stringent and the debtors are asked to do things seemingly oppressive the law-makers must provide the remedy by relieving them of the burdens imposed. It may be said in addition to this, as to a partner resident abroad, that it is of great importance to the creditors that his oath, as to the assets immediately under his charge, should be furnished although it may be that under, the section of the statute relating to the affidavits to be annexed to the schedule, the non-resident partner, not residing in any county in this State, would not be required to make it, in order to give validity to the assignment. It may also be said, that as to non-resident co-partners the statute does not and should not apply, with the same strictness as to residents. The-general scope of the statute, all its provisions being considered with reference to the object in view, contemplates and includes resident co-partners and not necessarily members who do not reside in this country. But however that may be, and whatever may be the construction of the statute as to them, the present case is one of resident partners, one of whom executed a power of attorney, in an anticipation of an assignment, and then, absenting himself for what reason does not appear, continued to be absent when the assignment was made. The object of the statute was not accomplished, therefore, by the manner of executing the assignment in this case, and its mandates were not obeyed. The acts of all the partners, directly, in reference to the assignment and to the assigned estate were not secured, "and the omission to distinguish the assignment by them renders it invalid.

The judgment of the Special Term should be reversed.

Daly, F., J., concurred.

Cardozo, J., (dissented)

This case presents two questions under the statute of 1860, respecting assignments: viz., 1. can an assignment be executed by an attorney in. fact; and, 2, what effect does the omission to file the schedules required by the statute have upon the assignment ?

I think we shall arrive at a more -accurate conclusion, and find less embarrassment by considering these questions separately.

1. It is too late in this Court to claim that the statute is merely directory, so far as it demands that the assignment shall be in writing and acknowledged by the parties executing it, and while my individual opinion, concurring with the view of Mr. Justice Clerke in the case of Fairchild v. Gwynne (12 Abb. Pr. R., p. 35) is, that the cases in whichit has been decided that the statute in that particular, is mandatory, are erroneous. I propose to consider the question now presented, and which I think will require but a few remarks, upon the conceded ground that, until reviewed by the court of appeals, the law should be ■considered settled that the statute in this particular is mandatory.

But I know of no decision, and I apprehend that on principle it will be difficult to say that there is anything in'the statute which deprives an insolvent debtor of the right to grant ' •a power lo another, to execute an assignment for him.

. That right certainly existed at common law, and unless by ■express words, or necessary implication, the statute under consideration has destroyed it, it still continues. Keeping in mind .the familiar .doctrine that the attorney acts in the name of the principal, and that what he does within the limit of his authority, is the act of his principal, I do not see how it is possible, to say that James W. Hart, the absent insolvent debtor, has not duly executed and acknowledged the assignment in question. He gave a special power to Columbus Hart and William J. Davidson, and each of them, to make the assignment for him, and it is acknowledged in his name, by them, as his attorneys. The assignment, therefore, so far as he is concerned, was made and duly acknowledged by him.

[The opinion then proceeds to discuss the other question; not adverted to in the opinion of the majority of the Court.]