Court Opinion

ID: 6576509
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:34:48.465167+00
Date Added: 2024-06-11T15:57:04.123576
License: Public Domain

Waite, J.
The statute relating to the settlement of insolvent estates, assigned for the benefit of creditors, provides, that all assignments of property, made by any person, in failing circumstances, with a view to his insolvency, to any person or persons, in trust for his creditors, or any of them, shall, as against the person making such conveyance, be deemed and adjudged fraudulent and utterly void, unless made for the benefit of all the creditors, in proportion to their respective claims. Stat. 363. c. 4. § 66.
Was the assignment under which the defendant claimed a right to hold the property of the absconding debtors, made in violation of the provisions of this statute? It is found, that the assignors, on the day on which it was executed, failed in business, and in contemplation thereof, made the conveyance. Upon its face, it appears not to have been made for the benefit of all the creditors. And even among those that are named in the instrument, the conveyance is not made to them, in proportion to their respective claims. Some are to be paid in full, before others are entitled to any share; and there is no equality among them.
The conveyance therefore clearly falls within every provision of the statute, provided a trust was thereby created. *423Although the first part of the instrument purports to convey the property to the assignees, yet the latter part explains the manner in which they were to take. Nathan Williams, Jun., was authorized and empowered to take possession of all the property, sell and dispose of the same, and apply the avails in payment of the several claims of the creditors, in the order specified. They having assented to the conveyance, as made, could take only in the manner therein specified—that is, through Williams, as trustee, to sell the property and pay the avails to them.
When he received the property, he took it merely as trustee for the creditors named; and while it remained in his hands, and was attached by the plaintiffs, it was in his possession and under his controul, as such trustee.
The conveyance being declared, by the statute, to be void, as against the plaintiff's, the creditors of the assignors, it gave the defendant no right to hold the property, as against them, and placed him in the same situation as he would have been in, had no such conveyance ever been made.
But were the conveyance to be treated as one made directly to the assignees, and Williams merely constituted their agent to sell and dispose of the property for them; still the result would not be materially varied. Upon that construction, the conveyance would operate as creating a trust in them, to sell and dispose of the property, and apply the avails in payment of their several claims, in the order specified in the conveyance, and account with the assignor for the balance.
Clemens & Larned, the creditors last to be paid, although taking a legal title jointly with the other assignees, could have no beneficial interest, until all the other claims had been satisfied; and as trustees, all would be accountable for the faithful execution of the trust. In that view of the case, the assignment would be invalid, as against these plaintiffs, and furnish no protection for the property, while in their hands, or in the hands of their agents.
Another question is presented in the motion, and that is, was it unnecessary for the plaintiffs to shew a return of the execution before the commencement of the present suit? The opinion already expressed renders a consideration of this question unnecessary. We therefore merely observe, in *424relation to this matter, that we concur in the opinion expressed by the judge in the court below. But upon the other ground, we advise a new trial.
In this opinion the other judges concurred, except Ellsworth, J, who dissented.
New trial granted.