Court Opinion

ID: 6964792
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:51:54.293429+00
Date Added: 2024-06-11T16:08:34.170861
License: Public Domain

Mr. Justice Wilkin, also dissenting: In my opinion the decision in this case gives the assignment statute of this State the effect of an involuntary assignment law, and vests county courts with the jurisdiction of .involuntary insolvency tribunals. That Silverman did not attempt or intend to make an assignment under the statute, and that the instrument executed by him is not such an assignment on its face, is, as I understand, conceded. It seems to me clear that the statute contemplates only a general assignment, viz., an assignment of all the debtor’s property for the benefit of all his creditors. I think the illustration given in the principal opinion, of a debtor owning a store, etc., and a farm, and making an assignment of the former and retaining control of the latter, if carried to its logical conclusion, will show that the construction placed upon the statute by that opinion would lead to endless confusion, and practically defeat the object of the statute. Besides, such an attempt on the part of a debtor would be unlawful. As I understand the act, an insolvent debtor can not make an assignment for the benefit of all his creditors, of only a part of his property not exempt by law, to be pro rated among them. Treating the instrument executed by Silverman to Cohen as an assignment for the benefit of creditors, it must, in my opinion, be given the effect of a general assignment, to bring it within the jurisdiction of the county court. I find no authority in the statute, or elsewhere, giving county courts of this State jurisdiction to bring before them debtors who have made conveyances of property to secure creditors, not purporting or intended to be assignments under the statute, and either with or without extraneous evidence construe such conveyance into a general assignment for the benefit of all creditors of the grantor, and thus compel him to surrender his entire estate, to be administered upon under the jurisdiction of such court,—in other words, to force him into insolvency. This court has frequently said, “until a debtor is ready and determines to yield the dominion of his property, and makes an assignment for the benefit of his creditors under the statute, his right to dispose of his estate as he chooses is unaffected by the statute.” Preston v. Spaulding, 120 Ill. 208; Schroeder v. Walsh, id. 403; Field et al. v. Geohegan, 125 id. 68; Hulse et al. v. Mershon, id. 52; Hanford Oil Co. et al. v. First Nat. Bank of Chicago, 126 id. 584; Home Nat. Bank v. Sanches et al. 131 id. 330; Farwell v. Nilsson, 133 id. 45. That intention, in my judgment, must be manifested by the voluntary execution of a general assignment for the benefit of creditors, in substantial conformity to the statute. I do .not hold that the validity of an assignment should be made to depend upon a strict compliance with the statute as to the form and manner of its execution. In this case, however, appellants attempt to bring the conveyance in question within the provisions of the statute, and the estate of Silverman within the jurisdiction of the county court, against his protest, without showing that the instrument upon which they rely for that purpose was executed or intended to be executed in conformity with the requirements of the law. If there is sufficient reason to be found in the statute for the construction of an instrument like the one in question into an assignment under the statute, it must be found in section 13, prohibiting preferences, etc., and that, I understand, to be the ground upon which this decision is based. This court has often held that section 13 does not prohibit preferences, except when provided for in the assignment itself, or where, as in Preston v. Spaulding, 120 Ill. 208, the preference is made by the debtor, after he has determined to make an assignment under the statute, for the purpose of evading that section, and does in fact afterwards attempt to avail himself of the provisions of the act by making an assignment under it. Had Silverman given preference to the creditors named in the conveyance in question, by transferring, pledging or mortgaging his effects to them, or if he had confessed judgments in their favor, thus creating liens upon such property, even though he had done so with the avowed purpose of giving preferences and to evade said section 13, neither the county court nor a court of equity could have interfered on behalf of petitioners or other creditors, the common law right of a debtor to prefer creditors in either of these ways having been sustained in many of our decisions above cited. But at common law a debtor might not only exercise his right to give preferences in any one of the above named modes, but he might also do so by a partial assignment, viz., by transferring property to a third person in trust, to hold, and dispose of for the benefit of the preferred creditors. Burrill on Assignments, sec. 161, p. 221; also, see. 164-, p. 226, (5th ed.) Section 13 does not purport to take away that right. As before stated, our statute was manifestly intended to regulate general assignments. It was designed, doubtless, to secure creditors in such assignments against an unequal distribution of a debtor’s estate. By availing himself of it the debtor also obtains important rights and privileges. A statute of New Hampshire, in force July 5, 1834, provided that no assignment made for the benefit of creditors should be valid unless it provided for an equal distribution of all the debtor’s property among his creditors, in proportion to their claims. It was held in Meridith Manf. Co. v. Smith, 8 N. H. 347, that that act did not apply to an assignment made by a debtor of some part of his property merely for the purpose of paying some particular debt, and Richabdson, C. J., rendering the opinion of the court, after stating abuses growing out of the making of general assignments prior to the passage of the statute, said: “And it is manifest that the statute of 1834 was intended to regulate those general assignments by debtors of all their property, and place in such cases all the creditors on equal footing, securing to each his just proportion, according to the amount of his debt, and to guard the creditors against the fraud of having only a part of the debtor’s property assigned for their benefit when contracted to assign the whole,—hence he is required to make oath that the assignment includes all his property not exempt from attachment. It never could have been the intention to prohibit a debtor from assigning any particular property he might possess, for the purpose of paying any particular debt or debts that he might owe.” In Grubbs et al. v. Morris, 103 Ind. 166, it was held that the Indiana statute concerning general assignments prohibited preferences, but Elliott, J., rendering the opinion, said: “Where there is only a partial transfer of property, as, when part, only, of the debtor’s property is conveyed or where only one creditor is preferred, and there is no general assignment, a conveyance to a trustee' will, according to our decisions, be sustained, as not in contravention of the statute.” And he quotes from Cushman v. Giphart, 97 Ind. 46, as follows: “This statute only provides for a general assignment of all the debt- or’s property for the benefit of all his creditors, and when that is attempted the statute must be complied with, or the assignment, without regard to actual fraud, will be held fraudulent and void; but an assignment by a debtor for the benefit of a part of his creditors, in order to be held void, must be actually fraudulent.” He also points out some of the benefits which accrue to a debtor by statutes governing general assignments. Section 1556 of the code of Alabama provided: “Every general assignment made by a debtor, by which a preference or priority of payment is given to one or more creditors over the remaining creditors of the grantor, shall be and inure to the benefit of all the creditors of the grantor, equally.” The Supreme Court of that State held in Holt et al. v. Bancroft et al. 30 Ala. 199, that the statute did not interfere with a debtor’s common law right to prefer creditors by a partial assignment, Walker, J., saying: “The object of the statute was to prohibit all discrimination by a debtor making a general assignment in favor of his creditors. It does not aim to deny, and does not deny, to a debtor the power of securing a creditor’s debt by a conveyance of a part of his property. The right of preferring creditors by partial assignments is untouched by the section of the code quoted. It is not the preference itself, but the preference as a feature of a general assignment, that the statute condemns.” The Iowa code of 1851 (see. 977) said: “No general assignment of property by an insolvent, or in contemplation oí insolvency, for the benefit of creditors of the assignor, shall be valid unless it be made for the benefit of all his creditors, in proportion to the amount of their respective claims.” It was held in Powers v. Arnold, 19 Iowa, 486, that this statute did not prohibit or interfere with the right of a debtor, as it existed prior to the statute, to make a partial assignment, holding that the statute only applied to general assignments. Other authorities to the same effect might be cited. These are, as I understand, in harmony with our former decisions construing section 13 of our statute. Our statute neither prohibits preferences, nor interferes with the mode of exercising the right, so long as a debtor does not seek to avail himself of its provisions. Until then he may exercise that right in any mode authorized by the common law, and hence may* make a partial assignment for that purpose. I have not attempted to elaborate the views indicated in the foregoing dissent. With deference to the opinion of my brethren, I am unable to concur in either the reasoning or conclusion presented in the opinion of Justice Baker. I think the judgment of the Appellate Court should have been affirmed.'