Case ID: pen-w_3/html/0083-01.html
Source: Caselaw Access Project
Author: {"author": "Rogers, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

M’CLURG Against LECKY.
    A debtor cannot in an assignment, make a reservation, at the expense ofhis credititors, of any part of his income or property, for his o ven .benefit, nor can he stipulate for any advantage either to himself or family.
    Such assignment is not only fraudulent and void, as regards the property reserved for the use of the debtor or his family, but is so in foto.
    
    When the assignment istainted with either moral or legal fraud, the property does not pass, but remains in the debtor, liable to the execution of those creditors who have not assented te'the assignment.
    Writ of error to the Common Pleas of Allegheny county.
    This was an action of trespass brought by Alexander M> Clurg, Sturly Cuthbert, James Cuddy, James Ekin, and George Led-lie against William Lecky, Esq. Sheriff of Allegheny county, for taking and carrying away eertain goods and chattels, which the plaintiffs alleged were theirs, and which the defendant had levied and sold as the property of Morris B. Belknap, by the authority of a fieri facias at the suit of Robert T. Stewart
    
    
      Morris B. Belknap was the owner of a tract of land, upon which the “Pine Creek factory” was erected, and for which on the 8th March, 1837, he executed a deed of conveyance to the plaintiffs: the consideration mentioned in the deed was five thousand dollars. On the same day Belknap executed an assignment to the plaintiffs of all the engines, machinery, horses, wagons and other goods and chattels which were upon the premises, and which were enumerated in a schedule annexed to said assignment; and the following agreement was then entered into between them:
    “Whereas Morris B. Belknap, by indenture bearing even date herewith, hath sold, released, enfeoffed and confirmed unto the said M’ Clurg and Co. and Ekin and Ledlie, all that certain piece of land situate in Indiana township, on which are situate the buildings commonly called the Pine Creek Factory: and whereas, by a eertain other writing, commonly called a bill of sale, also bearing even date herewith, the said Morris B. Belknap, hath sold and assigned unto the said M’Clurg 8¡' Co. and Ekin and Ledlie, all and singular, the engines, machinery and other articles whatsoever, in and belonging to the said “Bine Creek Factory:” and whereas also the said M’Clurg <$• Co. and Ekin 8?Ledlie, havea greed to stock the said factory, and to work and earry on the same. Now these articles of agreement witness, that the said M’ Clurg Co and Ekin 8? Ledlie, have agreed to employ; and hereby do employ, the said Morris B. Belknap, as agent, to superintend and conduct the business at the said “Pine Creek Factory and the said Morris B. Belknap doth hereby promise and agree, to and with the said M’ Clurg fy Co, and Ekin 4' J^edfie. that he the said Belknap shall and will well and faithfully superintend and conduct the works, business, and operations, of’ said factory, and shall and will devote and give his labors and attention exclusively thereto; and whereas the said Morris B. Belknap is indebted to the said Ml Clurg 8f Co. and Ekin 8¡' Ledlie in divers large sums of money; and whereas he, the said Belknap, is also indebted to sundry other individuals in large sums of money, for some of which judgments are now of record in the court of Common Pleas of Mlegheny county, against said Belknap', and whereas the said Morris B. Belknap is unable to pay and satisfy said judgments and debts, and is also unable to stock and carry on the business of the said “Pine Creek Factory,” and therefore sold and assigned the same, as aforesaid, to the said M’Clurg <§’ Co. and Ekin § Ledlie. Now these articles of agreernent further witness, that the said- M’ Clurg <§' Co. and Ekin Ledlie, are to have two thirds, to wit, each of the said firms ono third, of the annual profits of the business that shall be done at the said Factory, and of the rents and profits that shall annually arise, and grow out of the said one hundred acres of land and the houses and improvements thereon lying and being, and the remaining third part of the said annual profits, the said Morris B. Belknap is to have, and the said one third of the annual profits is to be appropriated to the maintenance and support of the said Morris B. Belknap and his family, and to the payment and extinguishment of the aforesaid debts and judgments, and in the payment of the said debts,'those due by said Belknap to said M’Clurg ¿y Co. and Ekin 8r Ledlie, ar,e to have n.o priority or precedence, but after payment of the installments due on the aforesaid judgments, the balance of the said,one-third of the annual profits which shall not be needed and required, as aforesaid, for the maintenance and support of the said Belknap and his family, is to be paid in just proportions, to and among the other creditors,'until their debts shall be fully paid and satisfied; and these articles of agreement do further witness, that the said M’Clurg Co. and the said Ekin .fy J^edlie, their heirs or assigns, shall and will re-convey to the said Belknap 'ibis heirs or assignes, the said one hundred acres of land, with the appurtenances, and shall and will surrender and yield up to the said Belknap, jiis heirs, executors or assigns, the property sold to said M’Clurg Co. and Ekin 8¡' Ledlie, by the aforesaid bill of ¡sale, &Q soon as the judgments and debts aforesaid, shall be fully paid and satisfied, and so soon as the debts, responsibilities, expenses and obligations, which the said M’ Clurg 8,' Co. and Ekin fy Ledlie, shall have incurred .on account of said factory, and of ¡this agreement shall be paid and satisfied; provided that in no event ¡shall the s,a.t4 MClurg k Co ,apd Ekin 4* Ledlie be required to surrender and re-feonvey the aforesaid premises, and to terminate the arrangement by this agreement until the termination of five years after the date hereof, thence, and from thenceforth, the agreement hereby made, shall cease, determine and be void, and these articles of agreement do therefore witness, that in case of the death of the said Belknap, or in case sickness or other good cause shall prevent him, the said Belknap, from managing and superintending said factory, according to the true intent and meaning of these articles, then and in such case the said M’Clurg Co. and Ekin §• Ledlie shall employ another individual as agent and superintendent of the said factory, who shall be paid a reasonable salary out of the said one third part of the anual profits allowed said Belknap for the use of his creditors and support of his family. And whereas there are now due to the hands or workmen at said factory about twenty-three hundred dollars by said Belknap which said M! Clurg §* Co. and Ekin 8? Ijedlie have agreed to pay and satisfy. And whereas there are now in bank certain notes of said M. B. Belknap, on which said Ekin 8? Ledlie are endorsers, and which it is expected they will have to pay. Now these articles further witness, that the said money to be paid to said hands and workmen, and the money which shall or may be paid on account of said notes by said Ekin 8,’ Ledlie shall be paid and satisfied to said M’Clurg 8,’ Co. and E-Mn <§’ Ledlie, out of the said one third of the profits allowed as aforesaid to the said Belknap, and all further and other advances which said M’Clurg Co. and Ekin 8r Ledlie shall or may make to pay and satisfy the debts due by said Belknap, shall also have priority and preference to all other debts and demands due by said Belknap In witness,” &c
    The deed, assignment and agreement were all recorded on the £4th May 1827. One of the subscribing witnesses to the papers, by whom they were all drawn, gave evidence that there was no secret trust, and none but what appeared upon the face of the papers. It also appeared, that the plaintiffs took possession of the works and personal property immediately upon the execution of the deed, as■signment and agreement; employed different clerks, and were con ducting tbe same, when the sheriff made his levy and sale, as hereafter mentioned.
    On the 24th-March, 1827, a capias was issued against Morris B. Belknap at the suit of Robert T. Stewart, requiring bail .in six «thousand dollars: on the same day the defendant was taken and confessed ajudgment without stay of execution for three thousand five 'hundred and forty dollars and eighty cents, upon which ay?, fa. -was immediately issued, and levied upon tbe personal property at ■the “Pine Creek Factory,” which was afterwards sold by the defenditfd for tw& thousand two hundred gnd ninety.-jtwo dollars and twenty cents. Evidence was given, shewing that Belknap owed debts at the time of his arrangement with the plaintiffs, exceeding i.n amount thirty thousand dollars, and that he had no other properly than that transferred, excepting some household furniture.
    The court below submitted to the jury, whether the object the parties had in view was fraudulent and dishonest in point of fact; instructing them also, that the transaction was not so per se, in point of law.
    The plaintiff assigned the following Errors.
    1st.' The court erred, in charging the jury, that the whole of the instruments of writing, bearing date the 8th day of March, 1827, were to be considered as forming hut one deed.
    2d. The court erred in charging the jury that there was no secret trust in the case, for the benefit of Belknap.
    
    3d. In charging the jurg, that the provision made for Belknap and his family by the articles of agreement, was a fair, lawful and valid one as against his creditors, and was not such a resulting trust for the benefit of Belknap, who was in failing circumstances, as would avoid the assignment as to his creditors.
    4. In charging the jury, that the assignment made by Belknap of his personal property, was not calculated to delay, hinder or defraud creditors; and that the delivery of the possession thereof in the manner it was done, was sufficient to transfer and pass the right of property as against his creditors, and that the deed of assignment was good against them.
    5. That by the record it appears that the judgment was given for the plaintiffs below, against the defendant; whereas by the law of the land, the judgment ought to have been given for the said defendant below, against the said plaintiff.
    
      Selden and Wilkins for plaintiff in error,
    cited Clots v. Woods, S Serg. 4" Razole275. Cunninghams. Neville, 10Serg. fy Razóle, 201. Babb. s. Clempson ib. 419. M’Mlister s. Marshall, 6 Bin. 338. 5 Cowen 566. 20 Johns. 442. 2 Kent’s Com. 420-2-3, Pasmores. Eldridge, 12 Serg. 4’ Razóle 198. Bzird. s. Smith, 4 Dal. 87. Cow den v. Brady, 8 Serg. 4’ Rawle 510. Dean v, Patton, 13 Serg. 4' Razóle 345. Will s. Franklin, 1 Bin. 502. 2 Pick. 129. 1 Hop. 373. 5 Cozoen 547. Martin s. Mathiot 14 Serg, and Rawle 214. Cameron s. Mozilgomery 13 Serg. 4’ Razóle 131. 1 Gallis. 419. 2 Kent’s Com. 414.
    
      Burke, with whom was W. Forward, for defendant in error.
    The assignment, under which the plaintiffs below claim the property in dispute is, by the finding of the jury, divested of the imputation of fraud, in fact. The St at. 13 Eliz, in terms, annuls only such conveyances as are made with intent to defraud creditors. Vide, section 2d, of said statute, 2 Rziff. 588 — 9. By the 3d section, it is an indictable offence; therefore there must be designed fraud. 1 Bin. 502. 1 Jlttk. 167. Pr. Ch. 2S5. So of the Stat. 27 Eliz. 2 Ruff. 636, sections 2 & 3, where deeds, &c. are made to defraud purchasers. The terms of the act do not embrace such as are bona fide, and for a valuable consideration. 3 Crunch, 88 — 9, 4 Wheat. 507. 11 Wheat. 205. They are expressly excluded from the effect of the statutes. Vide section 6, Stat. 13 Eliz. and section 4, Stat. 27 Eliz. On this part of the case, the only question was as to intentional fraud, or fraud in fact, which was fairly left to the jury. Here there was a good and valuable consideration for the deed. It was bona fide; it was what it purported to be on the face of the papers. 7 Wheat. 579. It covers no object not avowed} there was no secret agreement, contrary to what is expressed in writing. If there was any such concealed agreement, then, the deed is embraced in the 3d section, Stat. 13 Eliz. Tf there was none, it is embraced in the 6th section, and the deed is good. So the court charged the jury, leaving them to decide on the fact of a secret trust; and declaring that if they found affirmatively, it would avoid the deed. The jury have negatived it.
    The only question, then, can be, is the deed fraudulent in law? In order to decide this question, it will be proper to inquire what were Belknap’s rights over this property, at the time that he made the deed in question; and what rights of his creditors were defeated by it. The plaintiffs below were creditors of Belknap to a large amount. They had endorsed for him, and rendered him many favors. He might lawfully have preferred them to all other creditors; and he might have given such preference by judgment, mortgage or deed. He might have defeated all his existing creditors, by giving a deed, or other sufficient security, for future advances. 1 Burr. 474. 2 Johns. Ch. 314 — 15. 7 Crunch, 34, 50. 2 Johns, Ch. 306 — 7. An insolvent debtor may honestly place his property in such a situation as to prevent its being taken by process, for the purpose of prefering a creditor, or causing a just distribution. 14 Johns. Rep. 464. That a debtor may prefer, has been repeatedly de cided; 7 Wheat. 577.; and a creditor may be a party to the fraud, in order to avoid the deed. Ibid. 5S0. 11 Wheat. 79. If, then, Belknap had conveyed all his property to the plaintiffs, the deed'would have been good. The debts due them at the time would have been a good consideration; and thus Stewart, and all the other creditors, would have been cut out. By the deed in question they have not been injured; for the arrangement made furnished the only hope of his future ability to pay his debts. Why, then, should creditors complain?
    But the deed is alleged to be bad, because of the reservation of an interest in Belknap. No case has been cited, and none can be found in the books, where a reservation, (if such it can be Galled-,) like the one in question, was held fraudulent. Pie reserved ncr part of the property conveyed. It was only of part of the profits of the new establishment; and these profits to be created, not from what he owned at the time of the assignment; but from the advances and capital of the plaintiffs. His only interest was the su pport of himself add family, for which he was to devote his whole time. He was an artisan of uncommon skill. It was in full proof that his services were an ample consideration; they were of immense-value to the concern. It has been shown that a general assignment to the plaintiffs, absolutely, would have been good. They might-have stopped the works, and the creditors would then have been cut out. The continuing the works by new advances was the only hope of profits ever arising. The creditors had no right to the new creations and machinery. They had no right to the old, which Belknap might not have defeated by mortgage or absolute sale. What right, then, had creditors to the profits or proceeds of property, when they had none to the fund out of which they were to arise? And upon what principle can a reservation out of such profits, for an ample consideration in services to be rendered by the debtor, be held void?
    But though there were a trust in favor of the debtor, the deed would not thereby be rendered void in toto. It would be void only quo ad the reservation. A court of equity will take the part reserved to the debtor. 2 Johns. Ch. 307. 4 Johns, Ch. 457. 6 Bin, 338. The last mentioned case has been referred to by the counsel for the plaintiff in error, for the purpose of showing, that a reservation in favor of the debtor renders the deed void in toto. We rely upon it to show that, in Pennsylvania, where the transaction is morally .fail’, the deed is void only as to the reservation. Compensation may be allowed to a debtor out of his estate. 15 Johns, Rep. 589. 20 Johns. Rep. 447. 4 John. Ch. 457. Parties may judge of it. 2 John. Ch. 316. But there must be no power of revocation, or future control over the property, inconsistent with the face of the deed. In this case none is pretended. 15 Johns. Rep, 583. 8 Serg. <5f* Ramie, 450. 14 Johns. Rep. 483. Though an assignment be suspicious, it is not void. Chancery would set it aside only on payment of money due. 1 John. Ch. 483. A debtor may mortgage goods, and reserve a surplus to himself. 5 B. §>. E. 420. 2 John. Ch. 807. Mortgage is good; creditors may attach the surplus. 6 Mass. R.ep. 343. Debtor may retain the use of property mortgaged. 3 Cowan, 138. In England the rule upon the subject of a resulting trust in favor of the debtor or his family is this: If the reservation is by covin, secret, and with design to defraud, the deed is void. If it is not covinous, but open and faij*, the deed is good at law, and the whole legal estate is in the trustee. 5 D. fy E. 420. 1 Anst, 881. The remedy of a-creditor is in equity; to peach the part reserved; because an execution at law will not reach an equitable interest. 2 Johns. Ch. 312; and the cases cited by the Chancellor, AJohiis. Ch. 453. An assignmentof a chose in action has never been held to be fraudulent, because no process in law or equity could touch it. Rob. on Fr. Con. 421-2. Apply these principles to the present case. The profits to accrue were not property. No creditor could take them. No profits had accrued at the time of the levy, and of course no creditor was or could be hindered, delayed or defrauded. In the case in 5 D. Cy E. 420, the reservation was of profits, and held fraudülent, neither in law or equity; In this case there iá no covin. If the reservation makes the dood void, it is on principles of common law, and not by statute. It is a mere legal implied fraud, as against the policy •bf law or principles of equity. In such cases, a deed is voidable only so far as policy and reason go; and the residue is valid. 3 Fes'. J>\ 2S3. 11 Wheat. 89, 90; and cases cited; When deed is void by statute, it is void ift toto. This is the true distinction. All the cases where deeds are avoided, on account of resulting trusts; are cases where there was nd consideration passing from the debtor! Here there was á valuable and honest consideration.
    , In Pennsylvania there is nó reason why a reservation for the benefit of the debtor should avoid a deed which is free from tnpral turpitude; Here all interest in property, real or personal, legal or ¿quitáble, except choses in action, can be taken in execution. A direct reservation of a trust, expressed in the deed, leaves the property open to legal process, and a creditor cannot be defrauded. He cannot even be delayed, for he is not compelled to resort to a court of equity; he can take the property by ejectment dr execution. When the deed embraces notes, book account!, or choses in action, ■and contains a trust in favor of the debtor, a creditor is -riot injured. His execution would not touch them; he could secure them only in case there ivas a bankrupt law applicable. They were as much out pf his power before the assignment as after. The only remedy of the creditor in either case; WPuld be a cu: sa: ■ The debtor would not be released from imprisonment, until he should procure a reassignment for the use of His creditor's. There is no case which, annuls an assignment, because it embraces choses in action, or other-property, Which a creditor could ndt take by legal process, and reserves them in trust for the debtor or his family. The Stat. Eliz. ■or the common law, never extended to such a case. If the present deed should be defeated, it would be subversive of the principle settled in 6 Bin. 338; and of a number of decisions in N'ew-York, and in the Supreme Court of the United States. If the pláintifls have been deceived and misdirected by these oracles of the law, they have been peculiarly unfortunate.
    The next error assigned is, the charge of the coiirt on the subject of the retcnsion of the personal property by Belknap. Upon’ this subject the court below adopted the principle laid down in thei case of Clow v. Wood, 5 Serg. fy Razóle, 275; and unless this court are now determined to over-rule that decision, the charge' must be sustained. The retension of possession by the vendor is not fraudulent, when it is accounted for apd is consistent with the face of the deed. 3 Cranch, 88 — 9. Pr. Ch. 285. 10 Serg. fy Rawle, 419--28. 1 Jolms.Ch. 484. 1 Peters. Sup. Ct. Rep. 438, 449. So where the purpose is fair andhonest, and appears on the face of the deed. 1 Wash. Va. Rep. 184. 12 Serg. fy Razóle, 201. 2 Bos. fy Pull. 59. Where it is according to the usual course of bu^ siness; and where immediate possession cannot be given. 1 Yeaies; 3. 1 JLttk. 170 — 5. 7 D. fy E. 71, 234. Or where all the possession is given, which the nature of the Case admits of; or where possession is to be after the performance of some condition. 1 Crunch; 317. 2 H. Black. 501. 1 JLttk. 158, 232. Ready furnished lodgings, Cozip. 234. So goods of a friend purchased at sheriff’s sale/ 2 Bos* fy Pull. 59. Possession by a banker or factor not fraudu»' lent. 1 Bos. fy.Pull. 84. 2 Mass. Rep. 398 — 400. 5 D. fy E. 226-7. Where no false credit is held out, possession not fraudulent. 1 Johns. Rep. 156. As where an executor or bankrupt remains in possession; or a husband, of property settled under marriage articles. 3 Burr. 1369. 1 JLttk. 101, 158. Coup. 432, 434, note.So goods left with another to sell, or for safe keeping. 3 JLitk. 44/ In order to make possession of a debtor fraudulent, he must have' possession in his own right. 8 D. fy E. 82. 1 JLtth. 158. If pos-r session is as agent, manager or trustee, not fraudulent. 7 D. fy Ei 67. 3 D. fy E. 316. The true distinction is between absolute and conditional sales. When sale is absolute, want of possession is fraud per se. 1 Cranch, 316; but only in such cases. 3 Cranch; 89. 11 Wheat. 81 to 99, and note. The rule is weíl laid down in Clow fy Woods; and this case comes within it. Here the object of the parties is disclosed in the agreement; it was fair and honest: the retension of possession by assignor was part of the agreement:' it ivas highly useful to the establishment that he should do so. Appearances agreed with the real state of things — the manager — the plaintiffs; owners, providers, buyers and sellers. Plaintiffs gave public notice of the transfer to the hands. Belknap had or claimed no possession in his own right. His possession was, according to the agreement, a fiduciary one; and no one act was done by either him or' the plaintiffs, holding him out to the world, in any other character than that which the agreement gave him. There is no case in England, which calls these principles into question, where it turns on either of the Slat, of Eliz. or the rules of the common law* Cases of this kind must be carefully discriminated from those •which arise under the statute of bankruptcy. 21 Jas. chap. 19, sec. 11. 3 Ruff. 105 — 7; which makes special provision for the case of •a bankrupt, who is in possession of goods by the compact of the owner, and is the reputed owner thereof. This section applies only to cases of bankruptcy in England. It is no part of the common law; but a .mere statutory provision not in force in this, country. The same remark applies to the cases quoted from Massachusetts, •arising .under their attachment laws, which are in the nature of bankrupt laws. 6 Mass. 342. 2 Pide. 135. So as to our domestic attachment laws. The English cases, and those under attachment laws, therefore, in which it may have been determined, that there •was a reputed ownership, and therefore the property might be disposed of, according to the bankrupt or attachment laws, furnish no authority that they are cases of fraud under the statutes of Eliz.
    
    But where courts in England have decided that any case is not one of reputed ownership under their laws of bankruptcy, it is conclusive that it cannot be a case of fraud. Such cases are the highest ¿authority in fayor of the plaintiffs.
   The opinion of the court was delivered by

Rogers, J.

An insolvent debtor may, by a bona fide assignment of his estate, in trust, prefer one creditor to another, when there is no bankrupt, or other law, prohibiting such preference, so as not to interfere with any legal lien, binding on the property assigned. A debtor may also insert a condition in the assignment, that the creditors shall not be entitled to their order of preference; ,or he may exclude their claim altogether, unless within a given and ¡reasonable time, they execute a release to the debtor. 1 Bin. 502, Welt and Franklin. 2 Bin. 174, Lippencott v. Barker. 6 Bin. 338, McCallister v. Marshall.

Wo s.pe pot without repeated efforts to extend the principle still further. In McCallister v. Marshall, 6 Bin. 344, the assignor made a reservation in favor of his family; but this attempt the court .(although perfectly satisfied of the entire honesty of the transaction in other respects,) unanimously decided, avoided the assignment. The same point is ruled in Passmore v. Eldridge, 12 Serg. & Rawle, 201; in Adlum v. Yard, 1 Rawle, 163; and in Johnson’s Heirs v. Harvey, 2 Penn. Rep. 92. In McCallister v. Marshall, a tacit agreement, to vest a part of the property in trustees for the benefit of the family, was held to avoid the conveyance, as to creditors, who had not assented to the arrangement. The statute of 13 Elizabeth, which avoids conveyances, with intent to delay,, hinder or defraud creditors, would be of little service, if a debtor might put his estate beyond the reach of his creditors, and still derive an advantage from it. The rule, clearly deducible from the cases, is, that no debtor can, in an assignment, make a reservation at tlje expense of his creditors, of any part of his income op property, for his own benefit; nor can he stipulate, for any advantage, either to himself or family. This restriction seems to meso, necessary to set bounds to this species of transfer, that, I am unwilling to countenance any arrangement which,, in the smallest degree, interferes with' it,' We. have, then, to inquire, whether the deeds, (for I take'tliem all as an assignment,), contain a stipulation for the, benefit of J^dknap and family? and qn this part of the case, I cannot b/ing my mind, to, doubt. It is part of the contract, that Belknap shall be employed as manager, qr agent, for a compensation (of which he in the first instance is a judge,) syfficjent to cover the-expenses of himself and family, Nor does the agreement stop here. It is agreed, that on the, death of Belknap, or in case he shall be prevented, either by sickness or, other, good cause, from managing or superintending the factory, then it is made the duly of. Cltyrg. 8?. Cjq. and Ekinfy-Ledlie, to employ another agent, who shall be paid, a reasonable salary, out pf the one-third part of fb.q annus) profits allowed Bdknap, for thy purposes expressed in, the assignment,. ' ■

Athough the agreement is not ver}' explicit as regards what may be agood cause for withholding his'services from the' creditors-; or ■who are to'jud-.ge bfitbe amount of his compensation, hfmself, or the Trustees, yet 'W.e cannot fail to observe, the pnxip,us care which i$ takgrt to seguro employment for himself, ¡¡md subsistence to those, vyhoSlq Welfare he had-so mpcli at heart. The import pf the agreement, obviously is, that the fairdjy of Belknap, §hquld at all event#; receive support, even inf'the contingency of any of the, events, happening, which may make if'necessary to employ anq-; •¡.her agent. The payment of .the salary is to bp .entirely at the expense of the creditors; they are only entitled to the residue of the one third of the profits, after these necessary and indispensable expenses are paid. When we take into, view, that at th.o time of thé. assignment, Bdknap \yas insolvent," in' connection with thq fact, of the nu.rfiljér, ¡yid amoupt pf his debts, and that he, by the arrangeihent, secured to Kina self, I may say,' a, perpetual employment/ ‘together wRh,'a comfortable subsistences for himself -and thq. principal objects o'f his solicitude and care, even upon tije contingency of 'his sickness or death, we' cannot be ata loss to. discover the reason'of this extraordinary agreement. Extraordinary, I say, for without the pressure of these powerful and all prevailing motives, it is difficult to imagine, any satisfactory reason, which could induce Belknap 'la make "a contract, which is in every respect, so advantageous to’the assignees.' We cannot but suspect that the stipulations ini’ favor of the debtor wci/e the moving, cause, the s.i)\e qüa npn, of the contract. Witjhout these, to him’ indispensable;" stipulations, who can say that this contract would, ever havie been ■ made? Is not the probability altogether on the, side of the plaintiffs in error, who maintain that these considerations, were the main springs of the assignment. If this arrangement be sustained, then, a powerful inducement will be afforded to such unjust, because unequal, preferences in future, introducing jn its train, as I verily b.elieve, a fruitful source of litigation and, fraud. The cases which have been cited would seem to cover the, whole ground, differing, merely, in the supcradded circumstance, that the debtor agree.s to giyehis services to the assignees asa, consideration for the benefit secured in the assignment. On this the defendant in error relies, but the agreement loses all itq plausibility, when we remember, that- the same compensation continues, although Belknap may. be unable from any of the causes enumerated in the assignment, to afford the services, for which these benefits are said to. fie the equivalent. It is another device, and ingenuity will furnish many such, if we yield to this', to elude, $he statute which prohibits coyin and-fraud. I shall not dwell on the argument, that Belknap constitutes himself his qjvn trustee, aq perhaps there maji be some doubt, whether this be the fair construction of the agppement. It may be entitled to some weight, that the compensation is left uncertain and undetermined,. The creditors might reasonably expect something, more definite, which •\vould serve as a guard against any- combination between the. trustees and the insolvent. If this assignment should be sustained, we have reason to fear that those creditors will fie preferred, who will give the most facilities to the debtor, and- when it is re, collected that friends are usualty selected, we oannot but, perceive, fiow much the interest of creditors are endangered. It is not uncharitable to suspect liberality exercised at the expense of others, But it is said that the jury haV.e negatived all idea of actual fraud; and this is true; but the answer readily suggests itself; that such arrangements are prohibited, because they are conceived to be against the policy of the law, wlyich discountenances all assignments containing, any such reservations, whether in the. shape of ¡employment or otherwise. These rules have, been adopted, and I am glad to say, have been strictly adhered to in Pennsylvania, to, prevent the temptation to fraud. However innocent the partícula? transaction may be (and I am bound to believe, that this was a case of that description, after the verdict of the jury) jmt it is dangerous in its consequences to society, and woydd furnish a precedent, a prolific parent of numberless attempts to elude the operations of the statute. In vain, will you attempt to set bounds io the enjoyment which an insolvent and fraudulent debtor may -derive, from the wreck of his fortune, if, after he is irretrievably ruined, he may effect an arrangement, which secures to himself a lucrative employment, attended, as it is here, with a comfortable provision for tho,se who are most dear to him, insured, against acc?dent; and this so dexterously managed, as to be proof against any molestation either by execution against his property or his person. It is no answer, I say, that the jury may apply the corrective, where there is actual fraud. Those who are conversant with the proceedings of a court of justice know full well, ho\y difficult it is to prove fraud. We are all well aware how reluctant juries are, even where there is strong circumstantial proof, to infer the fraudu-, jent intent in the ease of an unfortunate, and in some respects, meritorious debtor. If the feelings and sympathies of juries can be enlisted on the side of misfortune, it presents an almost impassable barrier to a correct and proper decision. I would not wish to be understood to say that the policy pf the law forbids the pmploymgnt of the debtor; for this may not Qnly be an act of humanity, but in some cases, may be almost indispensable, to the proper management of the estate. I mean simply to object to its be¿.ng made a condition of the assignment, it should b„e left, as in ¿he case pf others, to tire sound discretion of the trustees, who will pf course be answerable to the creditors for any abuse of the tyust Jf this attempt should succeed, the creditors are without remedy! for as was justly observed in Johnson’s heirs v. Harvey, the or¿dinary consideration of an estate may be subjected to execution ¡specifically, or wrested from the debtor’s grasp by execution qf his body; but the reservation, of so much of the profits as was necessary fqr' fhe maintenance of Belknap, and his family, would be so inseparable from his person and the services he was to render, as that it could not be made liable in satisfaction in either of those ways, orpass by an assignment under the insolvent laws. And ¡this would be a sufficient answbr, if there were none other, to another point made by the defendant in error. That even if the assign* paent h§ fraudulent, it ayoids the deed only so far as to enable fhe creditor- to take into execution the fund specifically applied to ,the benefit of the debtor. But, although such a reservation in th.e absence of moral fraud, has, in some of the earlier cases, been supposed, not to affect the r.esidue of th.e property conveyed by the, assignment, yet later, and more wholesome decisions, have extended the principle still further, by rendering fraudulent and void the whole assignment, so as to prevent thp preferred creditor from availing himself of any advantage over other creditors. 1 Hop. 373, Marlin v. Cairns. Harris v. Summar, 5 Cowen, 547, 2 Pick. 120, and Passmore v. Eldridge, 12 Serg. & Rawle, 198. When the assignment is tainted with either moral or legal fraud, the property does not pass, but remains in the debtor, liable to the execution of those creditors who have not assented to the assignment. These positions I consider it necessary to uphold, as af-. fording the only check to the debtor’s power of assignment, which has already, in my judgment, been earried too far; for as was justly remarked in Riggs v. Murray, if an insolvent debtor may make sweeping dispositions of his property, to select and favorite creditors, yet loaded with durable and beneficláí provisions for the benefit of himself, and incumbered with oneroüs and arbitrary conditions and penalties, it would be impossible for courts of justice to uphold credit, or to exact the punctual performance of Contracts.

The opinion of the ciourt 'makes it unnecessary to Consider the Second point made by the plaintiff in' errdf.

Judgment reversed*