Case ID: hilt_1/html/0462-01.html
Source: Caselaw Access Project
Author: {"author": "Beady, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Willian B. Smith, receiver, &c., of Aaron Woodruff, v. Samuel B. Woodruff.
    A. W., being insolvent, assigned a stock of goods to G, one of his creditors, for $1,000, upon condition that G. would deduct his claim therefrom, and pay the balance to the other creditors. G. sold the property to S. W. upon the same terms — the latter, however, agreeing to pay the balance to the creditors of A. W. only in caso they would accept it in full, and discharge A. W. Held—
    
    I. That this sale was to be regarded as an assignment for the benefit of creditors, and was void because it appropriated only a specified property, and not the whole of the debtor’s estate.
    II. That the balance in the hands of S. W., after the payments' of the claim of G. some others, was to be regarded as money had and received to the use of A. W.'s creditors, and could be recovered by them from him.
    III. But that no action could bo maintained therefor by a receiver of the property of A. W., appointed on the application of one of his judgment-creditors. Neither A. W. nor any one claiming under him had any right of action against S. W. therefor, 
    
    Appeal by defendant from a judgment of tbe Marine Court. Tbis action was brought by the plaintiff, as receiver of the property, &c., of Aaron Woodruff. Aaron Woodruff, being insolvent and owing about $1,700, sold bis stock of goods to one A. D. Gale for $1,000. Gale was one of Woodruff’s creditors, and, by the agreement between them, Gale was to pay himself out of tbe $1,000, and apply tbe balance to the payment of tbe rest of Woodruff s debts. G ale thereafter sold tbe property to tbe defendant, Samuel B. Woodruff, for $1,000, be agreeing to pay out of tbe sum Mr. Gale’s claim, and to apply the balance to the payment of the other creditors, provided they would thereupon release Aaron Woodruff He made some payments under this arrangement-, but at tbe time of this action had an admitted balance of about two hundred dollars in his hands. The plaintiff, having been appointed receiver of tbe property of Aaron Woodruff, in supplementary proceedings taken out against him by a judgment-creditor, brought this action to recover that balance of two hundred dollars in Samuel B. Woodruff’s bands. Judgment was rendered for tbe plaintiff by tbe justice who tried tbe cause, and it was affirmed by tbe general term of tbe Marine Court. Tbe defendant appealed.
    
      D. T. Walden, for tbe appellant.
    
      S. S. Freeman, for tbe respondent.
    
      
      
         See Porter v. Williams, 5 Seld. 142, contra.
      
    
   Beady, J.

Aaron Woodruff sold bis stock of goods to A. D, Gale for $1,000, and, by tbe agreement of sale, Gale was to take out tbe amount of bis debt against Woodruff, and pay the balaifcg; of tbe $1,000 to tbe other creditors of AVoodruff. Tbe defendant, bearing of tbe sale, bought tbe stock from Gale on similar terms, and partially, though not entirely, carried out tbe arrangement. He was to pay over the surplus, after payment or settlement of Gale’s claim, to tbe creditors, provided tbe creditors would accept that surplus and release Aaron Woodruff from all bis liabilities. It does not appear that Aaron imposed any conditions upon bis creditors in tbe agreement made with or directions given to Gale, but appropriated to them tbe surplus after tbe payment of Gale’s debt. Gale never acted upon that agreement or appropriation further than to sell tbe stock, which be bought from Aaron; and Aaron states that tbe defendant, when be bought, agreed to carry out tbe arrangement which be (Aaron) made with Gale.

Regarding tbe transaction between Aaron and the defendant as an assignment for tbe benefit of creditors, it would be void because of tbe conditions annexed. Grover v. Wakeman, 11 Wend. 187. Or, regarding it as an assignment for the benefit of creditors without conditions imposed, it would be equally void, because it is the appropriation of specified property, and not the whole of tbe debtor’s estate (Grover v. Wakeman, supra), aside from tbe doubt, which may well be entertained, whether a trust, eo nomine, for the benefit of creditors, can be created by parol. But there are other considerations which command attention. It is well settled, that if A deliver money to B, to be paid over to 0, the latter may recover it in an action for money had and received. Farmer v. Russel, 1 Bos. & Pul. 296; Weston v Barker, 12 John. 276; Tiernan v. Jackson, 5 Peters U. S. R. 598; Nelson v. Blight, 1 Johns, cases, 305. It is said that there must be some assent, express or implied, to hold the money thus 1 ad and received for the purposes designed (Williams v. Everett, 14 East. 582), to prevent accruing equities between the parlies, which might otherwise bo interposed, to frustrate the contemplated appropriation; but that question does not arise in this case. The defendant promised to apply the money as directed, fd did so as to all of the surplus except $200. It is true, that 3 directions of the assignor or debtor were general, and that the proportion which each creditor was to receive was not mentioned ; but that does not destroy the obligation or duty, because ■the law will presume the appropriation to have been equally among the creditors in the proportions which their respective demands bore to the surplus. The defendant was, by his agreement, liable to the creditors of Aaron for this proportion, and the debtor could not maintain against him an action to recover .the money so had and received to the use of the creditors. It had ceased to be his property, and the defendant had, by express promise, incurred a liability to the creditors. It will bo found, .on examination, that Weston v. Barker is analogous in the facts to those proved herein, while the principle applicable to both is the same. The debtor, not having any demand, right of action, or property, against, or in the hands of the defendant, the receiver acquired by his appointment no right to any property in the hands of the defendant or under his control, and the judgment of the court below was erroneous. The extent of the defendant’s liability is the proportion to which the plaintiff is entitled on the principles herein enunciated, and for which the defendant may be sued by the judgment-creditor at whose instance the receiver was appointed. It may be said with great propriety, that if it appeared that the defendant had settled with tbe creditors of Aaron on terms wbicb would leave a sum in bis bands belonging to Aaron, that to tbe amount thereof tbe receiver could recover. There is, however, no exposition of that kind herein.

Judgment reversed.