Court Opinion

ID: 5214908
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:20:52.581996+00
Date Added: 2024-06-11T08:27:25.380467
License: Public Domain

Miller, J. (dissenting):
I am unwilling to assent to the proposition that the contingent liability of a surety or guarantor is. not sufficient consideration to support an assignment as security by the principal debtor, or that a surety cannot take such an assignment from the principal debtor without being chargeable with notice" of such debtor’s intention to defraud creditors. The cases cited in the prevailing opinion do not support the. conclusion reached. Craft v. Schlag (61 N. J. Eq. 567) is an authority for, not against, the appellant Bolton. In that ease a surety took an absolute assignment of substantially all of his principal’s property but did not satisfy the debt nor in any way change his position to the liability. The court held that a contingent liability was not sufficient consideration to support an absolute conveyance of all of the principal’s property; but it was careful to point out that the conveyance would have been good if taken only as security. In this case the undisputed evidence is, and the court found, that the assignment was,taken as security. Paying or securing.an honest debt does not tend to hinder, delay or defraud creditors within the meaning of those terms as applied to fraudulent conveyances. Wood v. Hunt. (38 Barb. 302) decided what is *247undoubted law, that an assignment, void as to creditors in its inception, was not made valid by the subsequent voluntary payment by the assignee of the debts of the assignor. If the assignment to Bolton had not been given as security for a liability, contingent or otherwise, but had been wholly voluntary, the case cited would be in point. Greenwald v. Wales (174 N. Y. 140) decided that, even though an assignment was supported by a sufficient consideration, it was void as to creditors if made with intent to hinder, delay or defraud them, of which the assignee had notice. There was no evidence to show, and the court did not find, that the defendant Bolton participated in or had notice of any fraudulent intention of his assignor. The nearest to a finding on that head is the 29tli finding of fact to the effect that the defendants Janes, Martha It. "W eed and Bolton had reasonable cause to believe that the assignments in question were given with the intention to prefer them over other creditors. But we are all agreed that the question of unlawful preference under the Federal Bankruptcy Act is hot involved in this case. The evidence plainly shows that the defendant Bolton acted in entire good faith in accepting security, and his testimony bears the stamp of honesty. He did testify that the guaranty was not the consideration, and indeed that there was no consideration for the assignment, but what he meant is plain. He was referring to “ consideration ” in the popular, not legal, sense. He testified: “H. M. .Weed & Company made an assignment to me to cover me in order that the loan should be paid.” It is plain that the trial court decided the case upon the ground that the assignments were without consideration and, therefore, constructively fraudulent, and the judgment must he supported upon that ground if at all.
The 'case in a nutshell is this: Bolton guaranteed the payment of a pote, made by Mrs. H. M. Weed for the accommodation of H. M. Weed & Co., indorsed by H. M. Weed & Co., and discounted by a bank. Thereafter, without his having asked for it, the principal debtors sent him the assignment in question to secure him upon his guaranty. . In good faith he accepted that assignment. By that act of acceptance the assignment became a valid, binding instrument, and the liability which it was given to secure furnished ample consideration to support it. It is wholly immaterial that Bolton made the guaranty without exacting security or that the assignment was sent *248to him without a request from him for it. Weed & Co. had as ■much right to secure the contingent liability of a surety as they had to pay a debt. The consideration for the assignment was the contingent liability. Creditors were not hindered, delayed or defrauded by it. They could still reach the property assigned unless Bolton had to pay- on his guaranty. It is said that his payment of the note was voluntary. I am unable to understand how a payment, made by one who has guaranteed it, can be said to be voluntary. It was voluntary only in the sense that-he discharged' his obligation without being compelled by legal process to do so. It is of no concern to the plaintiff that he has not sought a recovery over from the accommodation maker. Should he do so, she would undoubtedly be, entitled to subrogation to his rights under the assignment. This is not a case between two creditors, one of whom has two funds to resort to.
I vote to reverse the judgment, in so far as it adjudges the assignment to the defendant Bolton void.
Ingraham, P. J., concurred.
Judgment affirmed, with costs. Settle order on notice.