Case ID: ohio-ch_1/html/0190-01.html
Source: Caselaw Access Project
Author: {"author": "Whisht, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SHAW AND BALL v. LOWRY.
    Fraudulent assignment — preferred creditors — possession.
    A failing debtor may prefer one creditor to another, and pay him in goods or money, and may sometimes fairly mortgage personal property and retain the possession.
    An assignment by a failing debtor, of all his goods in Cincinnati and elsewhere, and that thereafter might be purchased, to indemnify against endorsements, to be delivered up in case of loss to pay such endorsed paper, and then certain preferred creditors, where the goods were in the possession of auctioneers, is fraudulent and void.
    Trover for sundry goods. Plea not guilty.
    
      Storer and Fox, for the plaintiff, and
    
      C. Hammond, for the defendant,
    submitted the cause to the court upon an agreed state of facts, by which it appeared that Stinson & Co. who were embarrassed merchants, on the 9th of October 1829, executed an assignment to Shaw and Barr, of all the stock of goods in their store, corner of Main and Fifth Streets, Cincinnati; and of all goods belonging to them at Louisville, or at any other place, or which might thereafter be purchased by them, or for their use.
    
      The condition of the assignment recited that Shaw had accepted drafts drawn by Stinson & Co. for their debts, for about $9000, and that Barr & Co. (of which company the plaintiff Barr was a partner) had endorsed notes and drafts for Stinson & Co. for about $9000, and provided that if Stinson and Co. should pay the debts, or release the liability of the plaintiff, the assignment should be void; if otherwise, and Shaw or Barr & Co. had to pay, then Stinson & Co. should deliver the goods to be sold; and the proceeds applied first to pay said liability, and second to pay certain specified creditors, and borrowed money. No actual delivery was made of the goods. Those in dispute were then in the hands of auctioneers, who were notified by the plaintiff that they claimed the goods, and forbidden to pay the proceeds to others. Before any further steps were taken, Stinson & Co. confessed a judgment to the defendant, on which execution was issued, and levied upon the goods, which were sold; and if upon these facts the plaintiff have a right to recover, judgment is to be entered for the proceeds of the sale; if not for the defendant.
   Whisht, J.

delivered the opinion of the court. Although a failing debtor may prefer one creditor to another, and pay in goods or money, and although he may in some cases pledge or mortgage personal property as security, and possibly retain the possession, if all is open and fair, and in good faith, yet this transaction will hardly stand that test.

These goods were not in the possession of the debtor when the assignment was executed. They were then in the hands of an auctioneer. No possession was intended to be given until the plaintiffs were damnified, and there is nothing in the case which shows them to have been damnified at all, or to have had any right to the possession of the goods either when the suit was brought, or now. The assignment itself is in singular terms, and suspicious. It embraces all the goods the debtors had in Cincinnati, Louisville, or any where else; what they had, and what they might thereafter acquire. If this assignment is to be held valid, it would open a convenient way of throwing a shield over goods that a debtor trades in, and obtains credit upon, to protect them in case of need from legal process, and secure them to the debtor himsef, or to the preferred creditors. Can it be supposed that an assignee of personal property, which passes by delivery, where the assignee is left in possession under circumstances like those attending this transaction, acquires a property that can be followed into the hands of a bona fide purchaser? If the assignment invested him with property, he may follow every article, and the purchaser of a paper of pins, or a pair of stockings, of the assignor, would be liable to respond, to the assignee. Such a state of things would work injustice, and be obviously fraudulent. It was evidently the object of this assignment to place this property out of the reach of legal process, and protect it against the general creditors of the assignor. Such an object is unlawful, and fraudulent, and vitiates the assignment. But were this not the case, I do not see how the plaintiff’s right could be sustained, who never had possession, but only a contract of Stinson & Co. to deliver at a future day, upon the happening of a contingency, which is not shown to have happened. ' The notice to the auctioneers can have little efficacy. It does not appear that the defendant, who, as a judgment creditor was pursuing his claim by legal process, ever knew of the claim of the plaintiff. Upon the whole we think this assignment cannot be sustained, and that the case is with the defendant.

Judgment for the defendant.