Case ID: abbn-cas_5/html/0334-01.html
Source: Caselaw Access Project
Author: {"author": "Van Hoesen, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MATTER OF PARKER.
    
      N. Y. Common Pleas;
    
    
      Special Term, December, 1878.
    General Assignment for benefit of Creditors. — Discharge of Assignee. — Re-assignment.
    An assignee for the benefit of creditors who has accepted and entered upon his duties, but has failed to file his bond, will not be discharged on his own motion, and permitted to reassign the property to the assignor.
    
    
      Ho should bo removed upon the application of a creditor of the assignor, and held to a strict accountability for the assigned estate.
    
      Motion, by assignee for benefit of creditors to be discharged.
    
      John L. Parker, on Fovember 1, 1878, executed to Henry A. Marriotte a general assignment for the benefit of his creditors, which was on that day duly filed in the county clerk’s office. The assignee having been unable to furnish sureties, made this application on an order to the assignor to show cause why he should not be discharged, and re-assign the property. Other facts sufficiently appear in the opinion.
    
      Miron Winslow, for assignee and motion.
    
      
       See the preceding case.
      In the Matter of Leahy (N. Y. Common Pleas, Special Term, 
        October, 1878), it was held that under section 3, subdivision 5, last clauso, of the general assignment act of 1877, which provided that if after the assignor’s neglect to file schedules, the assignee failed to do so for thirty days, “the assignment shall be void,” — the failure rendered the assignment absolutely void as to all parties, and the remedy against the assignee was not under the statute, but by an action for an accounting.
      The clause in question was inserted in the act by way of amendment; and the attention of the court does not seem to have been called to the general provision of section 25, that after the filing or recording of an assignment, the court should have the powers of a court of equity in reference to the trust and any matters involved therein.
      The clause under which the decision was made, was in 1878 repealed by an act which took effect June 21, and the court will now remove the assignee who fails to file a schedule, and will enforce the trust.
      The matter of Leahy came before the court on a petition by creditors for removal of an assignee and for an accounting.
      On December 11, 1877, James Leahy executed and delivered to Henry H. Stotesbury, a general assignment of all his property, which was duly recorded in the New York county clerk’s office, and the assignee entered into possession of the assigned estate, but no inventory was filed.
      On January 10, 1878, an agreement was entered into between Leahy, Stotesbury and the creditors at a meeting held on that day, that the said Stotesbury should purchase the assets of Leahy, and guarantee the creditors thirty per cent, of their several claims. ■ This agreement was afterwards carried out.
      Certain of the creditors, who'claimed that they did not join in the above agreement, being dissatisfied with it, made this application.
      
        Blumenstiel & Ascher, for petitioners.
      
        James Dunne, opposed.
      J. F. Daly, J. — The general assignment act of 1877 (§ 3, subd. 5), provides and declares that in case an inventory shall not be made and filed within thirty days by the debtor or the assignee, the assignment shall be void. This express enactment cannot be disregarded nor limited. An assignment declared void is as if it had never been. There are no longer assignors nor assignees.
      If the person named as assignee has property which he received under the void instrument he has no title to it ; it may be seized on process against the assignor and its proceeds in the “assignee’s” hands may he reached by appropriate action by any creditor. But no trust based upon the assignment as a valid instrument can be enforced, because the assignment does not exist.
      Proceedings under the general assignment act of 1877 and 1878, affirm the existence of an assignment, and if there be no assignment, the proceedings cannot be maintained.
      Such is the position of the parties before me. The assignment of James Leahy to Henry H. Stotesbury, was dated and made on December 11, 1877, pursuant to the statute first cited. The assignee accepted the trust pursuant to the first section of the statute. But no inventory or schedules were ever filed by the debtor or by the assignee pursuant to the third section of the act. It followed that after thirty days, or on January 11, 1878, the assignment was void. This left the title of all the property in the assignor. He sold it afterwards by a regular bill of sale to the assignee, who secured or paid to the creditors of the assignor a composition of thirty per cent. The petitioning creditors did not, as they claim, join in the agreement for thirty per cent., and now claim the right to call the assignee to account. This cannot be done under the general assignment acts, as before stated. If Stotesbury be a trustee for the creditors under the arrangement by which he took the estate, an accounting may be had by suit in equity.
      It is claimed by the petitioners that the effect of the act of 1877 is to make the assignment void as to the creditors, but to leave it valid as between the parties to it. No such limitation is to be found in the statute. Where such an effect is intended, as in the statute of frauds, appropriate language is' used to express the intention. In this case the enactment is general and absolute.
      The statute of 1878 (General Assignment Act Amended), does not help the case, as the assignment became void before the latter statute was passed.
      Petition denied with $10 costs.
      As to the power of a court of equity to compel an account, see Jones v. Butler, 30 Barb. 641; S. C., 20 How. Pr. 189, where it was held that a trustee cannot object to validity of the trust deed under which he acts and holds property, on the ground that the parties thereto were infants, when a court of equity is asked to compel him to render an account. Whether the contract between the parties is to be upheld, or not, lie cannot dispute the authority under which he holds the trust funds, and seek in such a way to retain the trust property to his own use.
      So it has been held that a trustee cannot set up the want of registration which, under the statute, makes his deed void, in opposition thereto (Cooper v. Day, 1 Rich. Eq. 26, 39.)
    
   Van Hoesen, J.

[After stating the facts.] — It was the duty of Parker to make an inventory of his estate within twenty days thereafter, but if he failed to do so, t"he duty of making such inventory was then devolved by law upon Marriotte. Marriotte could have applied to this court for an order compelling Parker to appear, and disclose under oath all he knew concerning the assigned estate. Instead of doing his duty, Marriotte says that he thought he would wait until Parker furnished sureties for his (Marriotte’s) bond as assignee, but as Parker fails to produce sureties for him, he asks to be discharged, and for leave of the court to reassign the assigned estate to Parker. Marriotte evidently views the assignment as a matter in which only Parker and himself have an interest, and he does not see why Parker’s creditors should be consulted, or be paid.

Instead of granting Marriotte’s application for a discharge, and for leave to reassign the property to Parker, the proper course is to remove him, and. to hold him to a strict accountability for the assigned estate.

Any creditor of Parker may now apply to the court for Marriotte’s removal, for an accounting, and for the examination of Parker and his books.

The application of Marriotte is denied.