Los Angeles herald., 1892-11-04
PREFERRED CREDITORS.

An Interesting Opinion by Judge Clark
Upon the Question.
Yesterday in the case of Wotkyns vs.
Elliott ct al, Judge Clark gave an opin-
ion in writing in sustaining a demurrer
to the complaint, which contains an in
teresting discussion of the law with ref
erence to preferred creditors. He says
From the complaint it appears that
the defendant, B. A. Breakey, was on
August 25, 1889, and ever since has been
indebted to plaintiff upon promissory
note in the sum of about $23OO; that in
the month OF May, 1892, the said Brea-
goods and merchandise of the value of
persons and corporations in various
28th of said month the defendant Brea-
key executed and delivered to the de-
tendant Elliott hill of sale of
eaid stock of goods, and the said
Elliott executed a declaration o. trust
in substance as follows, viz: II, j. M.
Elliott, grantee in that certain bill of
sale of the stock, fixtures, book &C.
counts, etc, of B. H. Breakey, hereby
declare that the said bill of sale is exc
cuted to me as trustee, to hold anG dis
pose of the same for the equal pro rata
benefit OF the creditors of said Breakey;
that he has submitted schedule OF his
creditors and the amounts owing to
them. which he represents includes all
his mercantile creditors, that is to say:
Here follows list of creditors and the
amount due to each, plaintiff not being
included therein
1T is further represented that the
bill of sale transfers all of the property
aforesaid, etc, and that 1 shall hate
power 10 dispose of said proper
ty, collect said claims and
demands; then to apply the
proceeds after paying all expenses,
costs, counsel fees and my own compen-
sation as trustee, agreed to be at the
came rates provided by law for assignees
OF insolvency arrangements, equally pro
rata to the satisfaction of the creditors
herefnbefore named, and the remainder
of said assets or the proceeds thereof, If
any, to be delivered to the said Breakey,"
etc. The complainant then alleges
that after the execution of said bill of
sale and declaration of trust the
plaintiff presented her claim to the
said trustee, the defendant Elliott, but
that he refused to recognize it spd rep
resented that the conveyance was made
for the benefit of the merdantile cred
itors only. The prayer of the complaint
is that the court combine said trust de.
claration and declare all creditors OF said
Breakey benefciaries Hereunder.
The demurrer was submitted without
argument on the part of the plaintiff,
and the only assistance rendered by de-
fendants' counsel is citation of Civil
Code, section 3432, which reads: "a
debtor may pay one creditor in prefer
ence to another, or may give to one
creditor security for the payment of his
demand in preference to another" and
citation of the case of Handley vs..
Pfester. 80 Cal, 1856.
think neither citation applicable,
but still am of opinion that the de-
murrer should be sustained. do not
think the facts alleged show a payment
to, or the giving of security to, one cred
itor in preference to another, within the
meaning of said section 3432, @ c., but
DO show an attempt at assignment for
the benefit of creditors, under the pro-
visions of title 8, part 2, of the fourth
division of the Civil Code.
Since the repeal of sections 3453-6 OF
said title an assignor for the benefit of
bis creditors can give no preference to
any creditor or class of creditors. Sec
tion 3457, g. O., provides: IAN assign
ment for the benefit of creditors is void
as against any creditor of the assignor
not asserting thereto if it gives prefer