Case ID: wright_1/html/0625-01.html
Source: Caselaw Access Project
Author: {"author": "WRIGHT, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*WOOLSEY v. URNER.
    Fraudulent assignment — release.
    A clause in an insolvent’s assignment of his effects declaring it inoperative as to creditors, who do not within sixty days execute a release of tbeir whole debt, and become parties to the assignment, makes it void as to disagreeing parties.
    The plaintiff, under legal process against De Witt, an absconding debtor, attached a quantity of merchandise in the hands of the defendant, and having recovered judgment against DeWitt, has now brought a scire facias against the defendant as garnishee.
    The defendant pleads that De Witt, before the attachment, assigned all his property, including the goods attached, to him, for the benefit of De Witt’s creditors.
    The plaintiff replies, that at the date of assignment, he was a creditor of De Witt’s, and that the assignment under which the plaintiff claims as trustee, contains amongst others the following clause making it void in law, as against the plaintiff, that is to say: .
    “Thirdly. After satisfying in full the claims first and second above specified, then to pay and distribute all the residue of said proceeds, pro rata, according to the amount of thq respective claims, among all the remaining creditors of the said De Witt, named or referred to in the schedule hereto annexed: Provided, however, and on this condition, that all and each of the said creditors of every class and description, shall, within sixty days from the date hereof, become parties- to this assignment by executing the same and releasing the said De Witt from all claims and demands whatever, and that each of said creditors on becoming partners to this assignment, shall surrender to the said assignee all notes, drafts, acceptances, bonds, and obligations whatever, that they may hold against the said De Witt, and no part or share of said property assigned, or of the proceeds thereof, shall be paid to any of the creditors of any class who shall not within the time aforesaid, have become parties as aforesaid and released the said De Witt as aforesaid..”
    To this replication there is a general demurrer and joinder.
    
      Chase, for the demurrant,
    insisted that the assignment was valid. The preferred debts here were small in amount, and the whole deficit not more than twenty-five per cent. He cited 2 Binney, 174; 14 John. 458; 3 Price 6; 2 Pet. 675; 5 Mass. 72; 4 Mason 222; 17 Mass. 454; 5 Pick. 28; 8 Pick. 298; 5 Greenl. 245; 6 Greenl. 395; 2 Paige, 491; 4 Wash. C. C. 232.
    
      Starr contra.
   WRIGHT, J.

The only question presented by this demurrer is whether the clause in De Witt’s assignment, which declared it inop607] *erative as to those creditors who refuse to execute a release and surrender the evidence of their demands within sixty days, makes it void ? In Atkinson & Rawlins v. Jordan, Ellis & Co. (5 O. 363), it was decided, after a full examination of the authorities, that an assignment by failing debtors of their effects, with a provision, prohibiting from participating in its benefits, creditors who did not execute a release of their whole debt upon a mere possi' bility of receiving a portion of the proceeds, was an attempt to place the assignor’s effects beyond the reach of legal process, in order to coerce a relinquishment without a consideration, and therefore void as against creditors refusing to come in. The case before us seems, in principle, precisely within that decision. The reflection we have bestowed upon the decision since it was made, has rather strengthened our confidence in its correctness. The demurrer is overruled.