Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-08-10
NO PREFERENCES ALLOWED.
All Creditors Given an Equal Chance in
Business Assignments
A Decision by Justice Cole of Import
The New Assignment Law.

ance to the Business Conn nifty
The New Assignment Law.
A case of much importance to the mer-
chants Of this District was decided this
week by Justice Cole.
1t was the case Of Dodge Brothers. ct al.
against Abraham i. Strasburger. ct al,
and involved the construction of the new
assignment law. recently passed by Con-
gress for the District Of Columbia.
This law abolished all preferences in as
signments in the District of Columbia.
Abraham /. Strasburger. a retail dealer in
shoes, being at the time indebted in the
neighborhood Of thirty thousand dollars.
and having assets of less than twenty
five thousand dollars. confessed three Judg-
ments. which amounted to over nine thou
sand dollars in all. On the same day that
these judgments were confessed executions
were issued and levies made by the mar
shall. who took possession of all Of the
stock belonging to Strasburger which was
all OF his visible property. The stock was
appraised by the marshal and the appraise-
ment amounted to $11 900. and the marshal
auvertised II Tor sale to pay these three
Judgments. Under these circumstances
the general creditors would have been left
entirely unpaid A number of these cred
LOIS LOIS whose debts amounted to the sum Of
eighteen or nineteen thousand dollars, filed
Dill against Strasburger and the judy
ment creditors. alleging that these judg-
m ih were intended as preferences to
tnoSe particular creditors. and the action
OF Strasburger was in violation Of the act
OF congress approved February 4, 1893 de-
caring .l void any preference to any credi-
tor IN voluntary assignment, and asking
Tor an injunction and receiver.
Inc compliments were represented by
M. Henry Wise Garrett and Mr.. Chaplin
The defendants were represented by Mr.
Leon fobriner and Mr.. Nordlinger. who
filed their answers. and the case was ar
gued before Justice Cole some ten DAYS
ago. Justice Cole delivered his opinion
tuesday, as stated In The Star. sustaining
ing the injunction and appointed receivers
The decision is regarded as OF much I'M
portance. as it gives effect and force to
the intention of Congress in abolishinz
assignments.
Justice Coles Opinion.
Justice Cole in his opinion cited the opin-
ion delivered by Justice Harlan of the
United States Supreme Court in the case
of White agt. Cotzhausen, In which he con-
strued a statute of Illinois. similar in pur-
port to the act Of Congress of February 4,
1893.
Justice Harlan said In this opinion: THE
main object of this legislation is manifest
II is to secure equality of right amon,, the
creditors Of debtor who makes a volun-
tary assignment Of his property. 1t annuls
every provision In any assignment giving q
preference of one creditor over another"
After stating that 1t was not the inten-
the general principle announced by the su-
preme court of Illinois in Preston agt
Spaniding and Field agt. Geohegan that a
debtor financially embarrassed or even
when fnsolvent. may give to particular
creditor a mortgage or other security for a
bona fide debt. II done in good faith. with
the intention OF remaining in and continu-
Ing business, Justice Harlan continues:
we only mean by what has been said
that when an insolvent debtor recognizes
the fact that he can no longer go on in
business and determines to yield the do
minion of his entire estate. and in execu-
tion or that purpose. or with an intent to
TALLY all. his property to a part of his
creditors. In order to provide for them in
preference to other creditors. the instru-
ment or instruments by which such trans
fers are made and that result Is reached
whatever their form, will be held to op-
crate as an assignment. the benefit Of
50 preferred who will take appropriate
steps in court OF equity to enforce the
equality contemplated by the statute Such
we think Is the necessary result of the de-
cisions In the highest court Of the state
Treated rs = General Assignment.
IF the decision IN White agt. Cotzhausen
is to govern the Interpretation of the
statute under consideration" Justice Cole
said, 1T Is too plain for argument that IL
the confessions Of judgment were given by
the defendant. Strasburger, when he was
insolvent and with the intent of going out
OF business, transferring all, or substan-
TALLY all. of his assets to the creditors in
whose favor these judgments are, with "A
view TO giving them a preference over his
other creditors in evasion of the second
section of this statute, it should be treated
by court Of equity. in proper case, as
an assignment for the benefit OF creditors
and administered as such, and the prefer
ences declared void. Whether that decision
Is binding and conclusive upon this court
fh0 rIo<l.
case the Supreme Court of the United
States. upon the point involved gave to
the statute its own Independent construc-
ton or simply followed the construction
Heretofore made by the supreme court of
Illinois. The counsel for the defendants
claim that 1t Is the latter. and that since
that decision the supreme court of Illinois
has held differently and announced that the
Supreme Court of the United States did
not correctly interpret their former de-
cisions upon this statute. That 1t is a rule
of decision in the Supreme Court of the
United States to follow the highest courts
Of the states in constituting statutes where
there has been construction by the state
court, although the Supreme Court upon its
own judgment might take different view
Is so well known that no cases need be
cited In support Of 1t. 1t is also a rule Of
decision in that court that where there has
been no construction Of a state statute by
state court that the Supreme Court will
give such statute its own construction In
the case of the Baltimore and Ohio Rail-
road Company agt Baugh. 149 L. s., 49,
Mr. Justice 6reWe-, quoting from the Opin-
ion Of Mr.. Justice Bradley in Burgess axt
Seligman, 10 U. g., 20. says:
But where the law has not thus been set
tied (viZ. by the decision of The highest court
OF the state) II Is the right and duty of the
federal courts TO exercise their own judR-
ment." $50
Construed Largely and Benefcially.
In White agt. Cotzhausen did the Supreme
Court adopt the construction of a statute
as IT had been settled" by the supreme
court of Illinois, or did it exercise its own
judgment in the construction thereof? This
question Is answered by a glance at the
only two cases referred to in the opinion in
White agt- Cotzhausen from the supreme
court of Illinois. The first Is Prestou agt
Spaulding. in which the only point deter
mined was chat where there was a formal
assignment all transfers executed prior
thereto. and in contemplation thereof with
view to giving preferences. would be held
to be part of the formal assignment and
void as preferences.
The other Is the case of Field agt Geog-
hogan. in which the only point decided was
that warrant to confess judgment given
thirty days before an assignment, in good
latin as a security, and without the in
tention OF giving a preference. the debtor
remaining and continuing In business, IS
not to be treated as a preference under the
statute. In neither of these cases was the
question determined in White agt. Cotz-
hansen considered decided or even limited
at. The question determined in the last