Case Name: Bancroft and Caffee, Assignees of Neilson and Wilson, v. Reuben J. Blizzard
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1844-12
Citations: 13 Ohio 30
Docket Number: 
Parties: *Bancroft and Caffee, Assignees of Neilson and Wilson, v. Reuben J. Blizzard.
Judges: Birchard, J., dissented on the last point.
Reporter: Cases decided in the supreme court of ohio : upon the circuit at the special sessions in Columbus
Volume: 13
Pages: 26–36

Head Matter:
*Bancroft and Caffee, Assignees of Neilson and Wilson, v. Reuben J. Blizzard.
No demand is necessary to sustain roplevin against a constable who levies on goods in possession of tho debtor.
An assignment by a failing debtor to a trustee, for the equal benefit of all his creditors, is valid, although the intentions of the assignor were fraudulent.
This is an action of replevin from the county of Licking.
The cause was tried on the circuit; verdict for defendant; and a motion for new trial having been made by tho plaintiff, the following statement is agreed by counsel:
“A jury being impaneled and sworn to try the issue joined in this case, the plaintiffs gave in evidenco to tho jury a deed of assignment executed by Neilson and Wilson to them of all their property and effects, including the property which was tho subject of the replevin in this case, conveying said property and effects to the plaintiffs in trust, to bo applied for the equal benefit of all tho creditors of tho said firm of Neilson and Wilson, and for any residue thereof that might remain, in trust lor the use of the said Neilson and Wilson. And further, the plaintiffs gave evidenco to the jury tending to prove that tho plaintiffs, after tho delivery of said deed of trust, took part of the property and effects so assigned, not including the property in question in this suit, into their actual possession, for the purpose specified in said trust. And further, the plaintiffs gave evidence to the jury tending to prove that, after the delivery of said deed of trust, and after tho acts of possession aforesaid, and whilst the plaintiffs, and the said Neilson and "Wilson, were in the possession of said property, and the same remained in the same situation as before the assignment, without being removed to any other place than that in which it had been kept by Neilson and Wilson before the assignment, the defendant, in his capacity of constable, having in his hands an execution in favor of Converse and Birkey, against Neilson *and Wilson, upon a judgment recovered in an action commenced after said assignment, levied said execution upon the property in question, as the property of Neilson and Wilson, and took and de tained the possession thereof, for which detention this action is', brought; and that before the levy by the defendant, other creditors of the said Neilson and Wilson had presented their claims to the plaintiffs as assignees.
“ And the defendant gave evidence to the jury, tending to prove that the said Neilson and Wilson, before and at the time of making said assignment in trust, and in that behalf, without tho knowledge, concurrence or consent of the plaintiffs, acted fraudulently, and made said assignment with intent, notwithstanding said assignment, and contrary to the terms thereof, to control the disposition of their effects, and to defraud their creditors.
“ And, the evidence being closed, tho court instructed the jury that, if they should find that the said assignment was made by said Neilson and Wilson with the purpose of defrauding their creditors, and not for the purpose of the distribution’thereof, according to the terms of said assignment, the same is fraudulent, and void in law, although tho assignees may not have been aware of said fraud. It further appeared that the defendant, as a constable, levied upon the property specified in the declaration, in virtue of an execution against Neilson and Wilson, after the execution of said assignment; that the said property, at the time of tho levy, was in the possession of said Neilson and Wilson, and that this suit was brought on the same day tho levy was made, and without any demand or claim made upon the constable by tho plaintiffs.'
“ And the plaintiffs further gave evidence, tending fi show that the plaintiffs in execution, at the time of the making said levy, had knowledge of the said assignment.”
“ And now comes the said plaintiffs and move tho court to set aside the verdict and grant a now trial, because the court erred in instructing the jury that if they should find that the said assignment was made by said Neilson and Wilson, with the purpose of defrauding their creditors, and not for the purpose *of distribution thereof according to the terms of said assignment, the same is fraudulent and void in law, although the assignees may not have been aware of said fraud.”
George B. Smythe, for plaintiff:
It is not necessary to the validity of this class of conveyances of property, that any beneficial interest should vest in tho trustees, or that the general creditors should have assented to the trust. The acceptance of tho trust by tho trustees forms an adequate consideration, if the trust is based on laudable objects Hardin v. Baird’s Heirs, 2 Pirtle’s Dig. 448. Tho trustees become the agents of the general creditors, as well as of' their assignors, If the conveyance be direct to the creditors, their assent is necessary to its validity ; but when made to trustees for their benefit, the acceptance of the trustees vests a beneficiary interest in the creditors whigh can not bo defeated by tho dissent of any portion of them, to tho injury or prejudice of others, and any one or more may enforce it. 4 Johns. Ch. 529; 9 Ohio, 92. It is tho-right and duty of the debtor in insolvent circumstances, to appropriate his effects equally by means of trustees, for the benefit of all his creditors; and on general principles, as well as under the statute, courts of justice carry the trust into effect. 7 Ohio, 247, pt. 2; 8 Ohio, 390. The statute of 1838 was intended to prevent any undue preference among creditors, and secures to them an equal distribution, in cases of assignments in contemplation of insolvency whether they be fraudulent or not. 8 Ohio, 390.
The case of Harsham et al. v. Lowe et al., 9 Ohio, 92, is relie'd upon to establish the proposition of the defendant. I understand the remarks in that case to apply only to the statute, which expressly declares the conveyance void, as to the preference created by the assignment. It was a fraud against the statute, and it matters not by whom the act was done; whether by the assignor or assignee, or both of' them combined. The trust is made the subject of equity, and must *bo enforced according to the prin ciples of equality prescribed by the statute. The remedy of tho creditors is a resort to the trust fund — they may compel security for the faithful performance of the trust, or procure a removal of tho trustees, and the appointment of others. The principio contended for by the defendant would produce the very result which, tho statute was made to prevent.
As to the second point, a judicial officer is not distinguished from any other wrong-doer. It is said that the officer is the agent of tho law, and only performs a duty imposed upon him ; and having levied on property in tho possession of tho debtor, ho is to be protected until a formal demand is made upon him. It is his duty to levy on the property of the debtor, whether found in bis possession or not. If he seize the property of another, the taking itself is a wrongful act, and his possession is tortious.
It is claimed that the statute providing for tho trial of the right of property by a claimant, before a justice of the peace, was framed for the protection of constables, and furnishes the only remedy against tho officer. But this court has already decided that the remedy is cumulative. Tho statute regulating writs of replevin makes no exception, but allows the remedy in all eases of wrongful detainer.
Henry Stanbery, for defendant:
Is this sort of assignment within the rule, that, the mala fides must be common to both the partios? I apprehend not. Tho assignees hero are not purchasers or creditors; they are individuals selected by the assignors ; they neither gain nor lose by the assignment.
Tho general rule is, that whore the assignment or conveyance is voluntary, and not founded on a valuable consideration passing between the parties, it is void as against a creditor or purchaser, if tainted with fraud in tho assignor.
Several cases are cited by plaintiff, in which it has been held that assignments for tho equal benefit of creditors have been *sustained, notwithstanding a particular intent to delay or defeat a recovery in full by one creditor.
As to those cases, it is to be considered :
1. That the only question which is made, is as to the fraud of the assignor; and that tho idea of sustaining them upon the bona fides of the trustee, seems not to have been entertained.
2. In all of them the general intent of the assignor was not fraudulent, but honest. So that the courts were put to say that they could not impute fraud to an act which was designed to insure an equal and fair distribution, because of a particular intent to disappoint one creditor of a priority, and place him on the same level with the others.
A wide distinction is obvious between those cases and this case. Hero there was no general, honest purpose, to overcome a particular intent prejudicial to one creditor, but the fraud was against all the creditors. It stands upon the finding of the jury, that this assignment was a device of the assignors to place their property beyond the reach of their creditors, that they might afterward control it for their own uses and purposes.
The statute in force at the time of this assignment (Swan’s Stat. 717) contains the following provisions:
“ Sec. 3. All assignments of property in trust, which shall be made by debtors to trustees, in contemplation of insolvency, with the design to prefer one or more creditors to the exclusion of others, shall be held to inure to the benefit of all the creditors, in proportion to their respective demands; and such trusts shall be subject 1o the control of chancery, as in other cases; and the court, if need be, may require security of the trustees for the faithful execution of the trusts, or remove them and appoint others, as justice may íequire.”
This section has no application to the' case at bar. It is made specially to apply to assignments containing preferences; assignments in which there is not even a particular intent to defraud. At common law such preferences, so far from being considered fraudulent, are sustained. This section does nothing *more than change the law, in that respect, in order to an equal disti-ibution.
If the court is with the defendant on this point, and concurs with the court on the circuit as to the law, the motion must be overruled; but if not, then we claim, in behalf of the defendant, that the verdict is right, and ought to stand on other grounds:
1. Because the assignors had such an interest in this property as was subject to execution.
2. That, under the circumstances, replevin will not lie against the defendant.
Upon the first point, this court hold the equity of the mortgagor in real estate subject to execution at law. I do not see why an equity, or resulting trust in personalty, does not stand on the same footing. Randall v. Cooke, 17 Wend. 53.
As to the second: At the common law if a sheriff, having an execution against A., levies upon and takes into his possession the goods of B., he is a trespasser.
But whenever a sheriff acts in good faith, and with reasonable diligence, in endeavoring to ascertain the true state of tho ownership of goods levied on, ho is protected from an action.
The mode of proceeding at common law, is very similar to the proceedings, under a claim of property in goods levied upon, under our statute. The sheriff impanels a jury to inquire as to the validity of the claim. It was for a long time held that the finding of the jury would protect the officer; but the later decisions are the other way. Watson’s Sheriff, 6 Law Library, 142.
The court, however, always takes care to protect the officer, where he acts in good faith.
It is said by Watson, at page 132: “ Tho sheriff is bound, at all ¿vents, to levy whatever goods tho defendant has in his county. In this manner tho sheriff would be, but for tho protection of the court, often placed in an awkward dilemma; for, if the sheriff fail to levy goods of tho defendant in his bailiwick, ho is responsible to the plaintiff in an action for a false return; if, on the other hand, he should seize goods which belong to a stranger, although they apparently arc the property of the ^defendant, tho sheriff is liable in an action of trespass; but the court will, whenever the property in the goods is disputed, give time to the sheriff to return the writ, until he is indemnified by one of tho claimants ; and, therefore, the sheriff should not return the writ whore there is a dispute.”
In Now York they have no statutory provisions, as to the trial of the right of property levied upon, but the proceedings of the sheriff in taking an inquisition are at common law.
In Curtis v. Patterson, 8 Cowen, 67, it is said by Sutherland, J., delivering the opinion of the court: “ I understand the law to be this; that if a sheriff has reasonable grounds of doubt on the question of property, he is bound, if no indemnity is offered to him by the plaintiff, to call a jury to try the title to the property. If they find it not to be in the defendant in the execution, he is justified in returning the execution nulla bona, unless an indemnity is then tendered to him. If it is, he is bound to proceed, not withstanding the finding of the jury. . But a plaintiff is never bound to tender an indemnity until a jury have passed upon the question of property. A sheriff acts at his peril in making a return of nulla bona under any other circumstances.”
The case of Williams v. Lowndes, 1 Hall’s N. Y. 579, very strongly resembles the case at bar.
In that case the sheriff was sued by the judgment creditor for a false return of nulla bona. It appeared that the judgment debtor had in his possession goods, which he had assigned to one Stewart, with power to sell them and ajjply the proceeds, first, to a debt due to Stewart, and to retain the residue “ for the benefit of his (the judgment debtor’s) creditors.”
The sheriff omitted to call an inquest.
The court say: “ It was the duty of the sheriff to make the levy without any indemnity whatever, as he found the goods in the hands of the defendant in the execution; and he would not have been liable to an action as a trespasser, if he had made such levy. The goods were pointed out to him as the goods of the defendant in the execution; he was exercising acts of ownership over them; they were in his exclusive custody *and possession, and the sheriff would have incurred no peril from the act of levying. If, after the officer’s first duty was performed, a claim to the property had been interposed, then a jury would have been called to determine the right of property. If, by the inquisition, it should be determined that the property was in the claimant, then the return upon the execution should be nulla bona; and such a finding, although it would not be conclusive upon the question of property, would nevertheless justify such return. Should the jury declare the property to be in a third person, then the sheriff could not be compelled to proceed further, without a full indemnity. But, in the first instance, he was bound to make the levy, and there is nothing in this case to excuse his neglect in that particular.”
Is there any difference, in the state of the law, in the two states ? None whatever.
1. As to the trial of the right of property. In New York, it is according to the common law, and the verdict of the jury justifies the officer. In Ohio, it is by statute, and results in the same protection.
But it is said our remedy by replevin is very extensive, and, inasmuch as the legislature take it away, or do not allow it to the judgment debtor, where goods are taken in execution, it is to be intended that they allow it to all others than the judgment debtor; undoubtedly, where there is a wrongful taking or detention.
In New York the writ of replevin does not lie for the judgment debtor, but is expressly given to any other person, for goods taken in execution, if that other person has a present right to reduce them to possession. 2 N. Y. Rev. Stat. 522, sec. 5.
Unquestionably there are circumstances which, either in New York or Ohio, would authorize this proceeding in the first instance, as where the officer, under an execution against A., levies upon B.’s goods, in the possession of B., without any sufficient ground to question B.’s title.
Again, after a trial of the right of property, and a finding for the claimant, and refusal to deliver by the officer, the detention would be wrongful.
*It is the laches of these plaintiffs that led the officer into the belief that the goods continued to be the property of the judgment debtor. The assignment was absolute, and contained no provision that any part of the goods was to remain in the possession of the assignors. In fact, that continuing possession is not only a proper indicium to third persons of ownership, but gives & prima facie character of fraud to the assignment. So that if the constable had known of the assignment he was bound to consider it void.
In Patty v. Mansfield, 8 Ohio, 369, it is said the chief object was to afford protection to the officer. There is, however, an obiter dictum in the same case to the effect, that a claimant has his election, in all cases, whether to proceed under the statute, or sue tho officer at once.
H. H. Hunter, in reply:
The legal effect of the assignment is, that it shall be executed according to its terms, and not according to a secret, fraudulent intent of the grantors, contrary to its terms. Having delivered the assignment, all legal power on the part of the grantors over it, is determined, and any subsequent act of theirs in fraud of it, should, on principle, be deemed as ineffectual to defeat either the title of the assignees or the rights of the general creditors under it, as'any other fraudulent act of any party should be to defeat the just rights of another.
Oases like the present, relating to the assignments for the bene fit of creditors, stand upon a very different footing in regard to the effect of a particular fraudulent intent of the grantors upon the transaction, than would be the case in, perhaps, any other transaction. It is almost universally true that any act of a debtor, the object of which is to defeat his creditors in the recovery of their demands, is void, being fraudulent. The intent to defeat creditors, or prevent them from recovering their rights, is always a fraudulent intent.
Like most other general rules, however, this is subject to exeeptions. For instance, if a creditor of a failing debtor, *more vigilant than other creditors, has recovered, or is about to recover a judgment, by reason of which he is likely to secure to himself, by the use of legal process, an advantage over other creditors, but has not yet perfected his proceedings so as to have acquired an actual lien, the debtor may, for the very purpose of defeating the advantage about to be acquired by the vigilant creditor*, dispose of his property, either in payment, or by way of security for the payment of a debt due to another creditor, or ho may, by a general assignment to the trustees for the equal benefit of all his creditors, do the same thing, and in either case, the title of the creditor thus paid or secured, or the title of the trustees, will be effectual in law and equity against the creditor in pursuit. Holland v. Andrews, 5 Term, 235; Pinckstock v. Lyster, 3 M. & S. 371; The King v. Watson, 3 Price, 6; Meux v. Howell 4 East, 1; Bowen v. Brambridge, 6 C. & P. 142.
Indeed, any disposition of his property made by a debtor, although made with the fraudulent intent on his jmrt of defeating his creditors, is valid, if made to a bona fide purchaser. But a purchase by a stranger, although for a full and valuable consideration, if made under a knowledge of such fraudulent intent of the vendor, is, of course, void as against the creditors. This principle has never, to my knowledge, in any adjudicated case, been applied to a purchase by a creditor in payment of his debt. Such •transactions are regarded in the light of a race between creditors, either having the right to the advantage- he may gain over the -other.
But where the alleged fraudulent act of the debtor consists, not in securing an advantage in favor of one creditor against another, but in securing absolute equality between all his creditors, and preventing any one from gaining an advantage over the others, which is the cáse in a general assignment for the benefit of all, the transaction, so far from being fraudulent, is j ust and meritorious.
Such is the case in the instance now before the court, unless the effect of the deed of assignment, its legal and proper effect, can be overcome by the secret purpose of the assignees to defeat its fair and proper execution.
*The question whether the resulting trust in favor of the grantors can be sold eo nomine, under execution at law, does not arise in the easo.^ Such a right is so essentially a matter of pure equity, that it is impossible to be a subject for common law jurisdiction in any form. Such is the case in regard to any equitable right in a chattel; in regard to which, the possession or right of possession, at law, is in any other person than the defendant in the execution.
It is a universal rule that the actual possession of goods must accompany a seizure of them under execution; they must be within the reasonable power of the officer ; and his right to possess or hold them, by virtue of the levy, is regulated by and never can be any greater than the right of the defendant in the execution. If, therefore, any one have a better right to the possession than the defendant in the execution, the seizure by the officer is a trespass.

Opinion:
Lane, C. J.
Two questions arise in this case :
1. As to the necessity of a demand upon a constable who levies upon goods in the possession of the debtor, before a suit is maintáinable against him. No such necessity is perceived. The writ authorizes a levy on the goods of the defendant debtor, and the officer must encounter the hazard of responsibility for taking other property, to preserve unimpaired the remedy of the true owner..
2. But a .majority of the court think an error was committed in instructing the jury that a conveyance to a trustee, made by a failing debtor, with fraudulent intentions, was void, although neither trustee nor creditor participated in the fraud. Naked justice between creditors consists in an equal distribution of the debtor's property among all, in the same proportion. The law sometimes protects preferences, either to encourage vigilance, or to leave the acts of parties uncontrolled, when not directly wrong; but the rule of equity is the rule of equality, wherever it can exert its power; and it is this rule-which the statute endeavors to follow, when it operates upon assignments. If a debtor appropriates his property in a 'manner most consistent with the statute law and the principles .of equity, and with the demands of pure justice, the validity of the transaction should not be impaired, although his intentions are fraudulent. The act is right, although the motive may be wrong. Conformably with this doctrine, it has been often held, that a purchase by an honest purchaser is not tainted by the fraudulent intention of the vendor. A conveyance to the trustee of a creditor appears to us entitled to equal protection; since, on his acceptance of the trust, ho assumes, and the statute imposes responsibilities, for his own cor rect administration, but which ought not to be extended into liabilities for the secret frauds or corrupt intention of others.
New trial granted, and cause remanded.
Birchard, J., dissented on the last point.