Court Opinion

ID: 6549488
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:22:50.994738+00
Date Added: 2024-06-11T15:56:04.148456
License: Public Domain

Wood, J., (after stating the facts). 1. The prevailing rule is that “Neither the assignee nor the creditors whom he represents are purchasers for a valuable consideration, Avithout notice, as against prior equitable liens. There must be some consideration passing at the time of the assignment, some new responsibility incurred, or some rights given up, to invest an assignee Avith this character.” Burrill on Assignments, page 482 (6 ed.). The appellees contend that the case at bar is taken out of the operation of this rule, because the purported assignment here was made under an agreement with the creditors, that in consideration of the receipt of their pro rata parts of the proceeds of the sale of the land they would execute a release in full to E. M. Ross and the Southern Pole & Piling Company. But there was no new consideration passing at the time of the assignment. No new liability or responsibility, on the faith of the alleged assignment, was incurred by the creditors. It was not shown that the creditors would have refused to accept the assignment if they had known of the mortgage. The rule of innocent purchasers for value does not apply where property is assigned simply in payment of pre-existing debts, for in such case it can not be said that tbe creditors gave any new or additional consideration therefor. In Clark v. Flint, 22 Pick. 231 (Mass.), it is held: “That assignees in trust for creditors, are not bona fide purchasers for value, who will be protected against an equity of which they had no notice, though the assignment contains a release of claims of creditors, where the assignees have incurred no new liability on the credit of the property.” Clark v. Flint, 33 Am. Dec. 733, note. Such is the case here, conceding that this was an executed assignment. J3ut the contract under which the purported deed of assignment was made shows that there was, in fact, no completed assignment for the benefit of the creditors of the Southern Pole & Piling Company. It is clear from the provisions of this contract that the deed was not to take effect as an assignment until the assignee had procured from “each and every creditor” an agreement to accept said lands in full and complete settlement of all sums due to said creditors. The uncontroverted evidence shows that there were three of the creditors, with claims amounting in the aggregate to $294.81, who had not signed the release of their claims. Furthermore, there was a provision in the contract to the effect “that all lawsuits now pending in the court of B. C. Hays, justice of the peace for Lake Township, in favor of the creditors for said Southern Pole & Piling Company and E. M. Boss, should be continued from time to time, until it can be ascertained whether the said settlement can be perfected, and all further proceedings held in abeyance until said time.” These provisions of the contract, in pursuance of which the deed was executed, show that there was to be no completed assignment of the property until all the creditors had released their claims in full, and the assignee, in endeavoring to have this done, was representing primarily the debtor instead of the creditors. It was in evidence that Boss had four hundred (400) acres of land in Missouri. Yet the alleged assignment was to effect a complete settlement, if possible, out of the proceeds of tbe sale of tlie land in controversy before the deed of assignment could take effect. We are of the opinion that the evidence shows that there was no assignment, such as to entitle the creditors of the Southern Pole & Piling Company to claim as innocent purchasers. They had not, in fact, acquired any rights under the purported deed, as against one holding prior equity in the land in, controversy. 2. The contention of the appellants that the claim of appellees should be reduced by $272.50, the amount of the mortgage held by E. H. Grady, one of the appellees, against Boss, can not be sustained, for the reason that this alleged agreement between Boss and Grady was a transaction concerning the mortgage of real estate and was void, because it was not in writing. When the debt of Boss to Grady was paid, the mortgage had performed its function and could not thereafter be held as security for another debt. Any promise upon the part of Boss to this effect was wholly without consideration and performance of which could not be demanded by Grady. A contract of this kind to be binding would have to be in writing and based upon consideration. There was no element of estoppel in the transaction. It follows that the decree of the court was correct, and the same is in all things affirmed.