Court Opinion

ID: 8653826
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:13:50.580469+00
Date Added: 2024-06-11T16:56:30.790519
License: Public Domain

Baetoh, J.

(dissenting):

It is shown by the record that the appellant Child was director and president of the Consolidated Lumber & Milling Company; that the company was insolvent, and on the 31st day of December, 1891, made an assignment' of' its property for the benefit of its creditors, which assignment Child executed, was a party to it, and was made a. preferred creditor therein; that the Ogden State Bank, also. *487a preferred creditor, held a note against the said company for $4,000, on which note Child was surety; that certain money received by the assignee, because of the assignment, was applied to the payment of his note, with the-knowledge and consent of Child. The plaintiff refused to-acquiesce in or receive any benefit under the assignment, and in June, 1892, brought suit, and afterwards obtained judgment against the said company; but, although several executions were issued, the judgment remained unsatisfied on the 1st day of March, 1894, when in two certain suits, in which W. J. Stephens, as assignee, was plaintiff, and' Gilbert R. Belnap and Joseph Belnap were defendants, the court rendered judgment to the effect that the assignment of the Consolidated Lumber & Milling Company was void as to the creditors Curtis Bros. & Co. and Ainsly Lumber Company. The next day, March 2, 1894, Child, after having acquiesced in the assignment, so far as appears from the record, for a period of more than two years, brought suit against the company to recover the amount, of the same 'claims which had been preferred in the deed of assignment. On the same day summons was served on-one Solomon C. Stephens, who was the general manager of the company, but had not acted as such since the-assignment was made. Stephens, through a law firm, after-having arranged that the attorneys should appear for the-company, filed an answer admitting each and every allegation contained in the complaint. On the next day, the 3d of March, service of notice of motion for judgment on the pleadings having been waived by the attorneys for the company, judgment was entered in favor of Child; and, on the same day, under his direction, execution was levied upon the property of the company, which had been included in the deed of assignment, and the property advertised for sale.
It will be observed that within two days after the ren*488dition of judgment in favor of tbe two creditors, declaring the assignment void as to them, Child brought his ■action against the company, obtained judgment, had execution levied, and the property advertised for sale. It is not necessary to comment on the mode and manner of obtaining this judgment, nor on the conduct and acts of the appellant Child, as revealed by the record. It is sufficient to say that the facts and circumstances of this case are such as to convince me that Child ought not to be permitted, for the apparent purpose of gaining an advantage over other creditors, to thus repudiate an assignment to which he was a party, in which he was preferred as a creditor, under which he had accepted a benefit, in which he had acquiesced for a long period of time, and which was presumably made under his own management and direction. While it does not appear from the record that Child received money on his preferred claim from the .assignee, yet it is shown that a certain sum of money, which came into the hands of the assignee by virtue of the assignment, was applied, with the knowledge and consent of Child, in part payment of the note for which he was responsible as surety, and which he was liable to pay, because the maker was insolvent. In this way he received :a substantial benefit, and, when taken in connection with his other acts and conduct revealed by the record, he was .as effectually concluded from taking any action which would impeach the assignment as if he had actually accepted a dividend under it in payment of his own preferred claim. The assignment was declared void only as -to those creditors who refused to come in under it, and brought their suits to sgt it aside. This did not include the appellant Child, for it appears that he acquiesced in it until the order was made setting it aside as to the two ■creditors.
When an assignment is declared fraudulent and void, it *489is because its effect is to hinder and delay creditors, or to defeat them, in the collection of their just claims. If, then, it is made with the intent that it shall produce snch an effect, it is void as to all creditors who < do not assent to its terms; but how can it be said that a creditor who was a party to the deed of assignment, gave his consent thereto, accepted benefits thereunder, and was in possession of all the facts which led to the making of it, was defrauded? He cannot predicate a fraud of facts to which he has assented, and of which he had full knowledge; and yet this is the ground upon which he must base his relief, when, as in this case, there is no question as to the instrument being regular and valid on its face. After giving his assent to the assignment, in order to avoid its effects, a creditor must show that such assent was given under a misapprehension of the facts, and that he was deceived and misled by those in whom he had a right to rely for a true statement of them. Where, however, parties interested mutually assent to the facts which lead to the assignment, and have full knowledge of them, there can be no fraud, because fraud cannot. ezist where the facts on which it is predicated are equally within the knowledge of all the parties to the transaction. A creditor has the right to assent to or disaffirm an assignment, but he cannot do both. He cannot acquiesce in it so long as it suits his purpose and he is benefited thereby, and then, when other adverse rights are being established in relation to the property in the hands of the assignee, by other creditors, repudiate it, and proceed to collect his claim, the'same as though no assignment had ever been made.
I think the law is well settled that where, as in this case, a creditor participates in an assignment, assents to it, and receives a benefit thereunder, with a full knowledge of all the facts which led to the making of the instrument, he is estopped from afterwards denying its *490validity. And it appears to be the general doctrine in regard to fraudulent conveyances, that they are valid as between the parties and privies, and can he avoided only by the creditor of the fraudulent grantor. In Burrill on Assignments (section 503), the author, after speaking of who may assail the assignment, says: “So creditors who have confirmed a fraudulent assignment, by receiving a benefit under it, or have become parties to it voluntarily, and with a full knowledge of all the circumstances, are estopped from afterwards impeaching it. * * * * And, in general, creditors cannot claim the benefit of an assignment, and at the same time attack It as invalid. Thus, if a complainant claim a beneficial interest in an assignment, he is not entitled to any relief on the ground that it is fraudulent, or was intended to defraud creditors.” See, also, Id. § 479. In Pratt v. Adams, 7 Paige, 615, Chancellor Walworth, speaking of voluntary assignments, said: “Creditor of the assignor, whether provided for by ■the assignment or not, who wishes to repudiate the trusts of the assignment on the ground that they are illegal and a fraud upon the honest creditors of the assignor, must apply to set aside the assignment as fraudulent and void against him as a creditor, instead of coming in under the assignment itself, as a preferred creditor or otherwise.”
. In Hone v. Henriquez, 13 Wend. 240, Chief Justice Savage said: “The assignment now before us was declared void as to the judgment creditors who filed their bill to set it aside. But suppose those creditors had assented to the assignment as appellant Hone did. Would not they have been estopped from alleging any fraud, when, with a full knowledge of its effects, they had assented to it ? It surely could not be said to have been executed with intent to delay and hinder them in the collection of -their demands, when they had agreed to its terms. It is universally held* and so are all the ca.ses, that deeds which are fraudulent *491and void as to creditors are valid as between the parties. It is their agreement, deliberately entered into, and, as between them, there is no fraud. They are not permitted to say that, because it is invalid as to others, it is so as between them." In Adlum v. Yard, 1 Rawle, 163, Chief Justice Gibson, speaking for the supreme court of Pennsylvania, said: “The plaintiff might originally have repudiated this assignment, but, having taken a dividend under it, he shall not now question -its validity. * * * Any one may waive the advantage of a law introduced for his own benefit, and I cannot imagine why creditors may not ratify a contract fraudulent only as to themselves, even in anticipation of a benefit. But where money is actually received, and' on an implied condition that the receiver shall not question the title, every principle of natural justice requires that the condition should be performed." Cavanagh v. Morrow, 67 How. Pr. 241; Ingram v. Hartz, 48 Pa. St. 380; Rapalee v. Stewart, 27 N. Y. 310; Scott v. Edes, 3 Minn. 377 (Gil. 271); Smith v. Espy, 9 N. J. Eq. 160; Therasson v. Hickok, 37 Vt. 454; Horsey v. Chew, 65 Md. 555, 5 Atl. 466; Richards v. White, 7 Minn. 345 (Gil. 271). I am of the opinion that the assignment was valid as to appellant Child, and that he is estopped by his own acts from impeaching it, and from claiming rights repugnant to those acquired under it. Therefore, I do not agree with my brethren in reversing this case.