Case ID: ny_21/html/0143-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Welles, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dunham et al. v. Whitehead et al.
    
    
      Chattel - Mortgage by Insolvent Debtor.
    
    An assignment by an insolvent debtor, of all his personal property, made di/rectty to a creditor, reserving the surplus, if any, to the assignor, is, in effect, a chattel-morgage, and valid as against the other creditors, in the absence of any evidence of an intent to hinder or defraud them.
    Appeal from the general term of the Supreme Court, in the first district, where judgment was entered in favor of the defendants, upon a trial before the court, without a jury.
    This was an action, in the nature of a creditors’ hill, brought by Dunham & Duncan, the plaintiffs, to avoid an assignment made by the firm of Hare & Pugh to Whitehead, one of the defendants, of all their personal property.
    Hare & Pugh being indebted to Whitehead in the sum of $4028, for which he held their note and chattel-mortgage, *on the 5th December 1851, executed to him a deed of assignment, transferring all their notes, accounts and choses in action of every description, to secure the payment of his debt, reserving the surplus, if any, of the proceeds, to the assignors. Hare & Pugh were then in failing circumstances; but the judge (Roosevelt, J.) found as a matter of fact that there was no intent to delay hinder or defraud the plaintiff, and that the transfer was not void in law. From the judgment entered in favor of the defendants, and affirmed at general term, the plaintiffs took this appeal.
    
      Emit, for the appellants.
    
      Melville, for the respondents.
   Welles, J.

This, it seems to me, is a clear case for the defendant. The assignment from Hare & Pugh to Whitehead, dated 5th December 1851, was in the nature of a chattel-mortgage, by which the latter acquired a lien, to the extent of his demand against the former, upon the property and choses in action assigned. It cannot be distinguished in principle from Leitch v. Hollister (4 N. Y. 211). It is claimed by the plaintiffs, that this case is unlike that, inasmuch as the instrument in this embraces and transfers all the assignors’ property and things in action; whereas, that conveyed only a single thing—a chose in action; but it is not perceived how that circumstance can affect the principle. In Leitch v. Hollister, the assigment was given ^expressly to secure the demands of several creditors of the assignor, who were his assignees, and provided for the return to the assignor of any surplus which might remain after the payment of those debts. In the present case, the assignment does no more; it expressly states that it is made to secure the debt which Hare & Pugh owed Whitehead, and provides for the return of 'any surplus to Hare & Pugh. In neither case, did the assignment create a trust, within the meaning of the statute, which declares, “ that all conveyances, transfers or assignments of goods or things in action, made in trust for the use of the person making the same, shall be void against creditors existing or subsequent. (2 R. S. 135, § 1.) Whatever idea of trust the nature of the transaction necessarily implied, such trust was incidental, and no part of the object of the instrument.

The distinction, in such cases, is between a conveyance in trust, in the strict and proper sense of the term, where the trustee acquires the entire title to the subject-matter of the trust, and where the trust can only be enforced or controlled in equity, and a case where a creditor can at once proceed and sell the residuary interest or equity of redemption of the assignor, if the thing assigned be property which may be sold on execution, or,- if not, where he may reach that interest by a bill or action in equity in the nature of a creditor's bill—the same as if it never had been assigned—subject only to the lien created by the assignment.

A mortgage upon all of the debtors’ goods and things in action would be valid, beyond a doubt; this, in effect, was nothing more. The question presented to us is simply upon the validity of the instrument upon its face; and we think it free from the criticism applied to it.

There being nothing in the case to impeach the Iona fides of the transactions between the defendant, Whitehead, and his debtors, Hare & Pugh, we think the judgment of the supreme court should be affirmed.

Judgment affirmed. 
      
       That an assignment directly to the creditors beneficially interested, is not an assignment "in trust,” is abundantly settled by authority, both in this and other states. See Van Buskirk v. Warren, 2 Keyes 119; McClelland v. Remsen, 3 Ibid. 454; Wynkoop v. Shardlow, 44 Barb. 84; Chaffees v. Risk, 24 Penn. St. 432; Henderson’s Appeal, 31 Ibid. 502; Dubois’s Appeal, 38 Ibid. 231; York County Bank v. Carter, Ibid. 446; Vallance v. Miners’ Life Insurance Co., 42 Ibid. 441; McBroom’s Appeal, 44 Ibid. 92; Claflin v. Maglaughlin, 65 Ibid. 492.