Court Opinion

ID: 6544175
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:18:13.623377+00
Date Added: 2024-06-11T15:55:54.936099
License: Public Domain

On Motion por Rehearing. (April 14, 1900.) Battle, J. Appellees earnestly insist that the deed of assignment in question should be declared void, because the assignor, in pursuance of a collateral agreement entered into by him and the assignee contemporaneously with the execution of the deed, retained possession of the property assigned until after the assignee filed an inventory and executed a bond in the manner provided by the statute. Is this contention correct? Prior to the enactment of the act entitled “An act to regulate assignments for the benefit of creditors,” approved April 19, 1895, the statutes of this state provided that “in all cases in which any person shall make an assignment of any property *' * * for the payment of debts, before the assignee thereof shall be entitled to take possession, sell or in any way manage or control any property so assigned, he shall be required to file in the office of the clerk of the court exercising equity jurisdiction a full and complete inventory and description of such property, and also make and execute a bond to the state of Arkansas in double the estimated value of the property in said assignment, with good and sufficient security, to be approved by the clerk of said court, conditioned that such assignee shall execute the trust confided to him, sell the property to the best advantage and pay the proceeds thereof to the creditors mentioned in the assignment according to the terms thereof, and faithfully perform the duties according to law.” Under this provision of the statute it was held that “where, in pursuance of a collateral agreement of the assignor and assignee, entered into contemporaneously with the execution of a deed of assignment for the benefit of creditors, the assignor delivers possession of the property assigned to the assignee before the bond and inventory required by law are filed, the assignment is void as to creditors.” This was so held because the assignee was required to file the inventory and execute the bond before taking possesion of the property for the purpose of protecting creditors. The theory was that the interest of the assignor in the preservation of the property assigned would make it safer in his hands than it would be in the possession of the assignee before the filing of the inventory and bond. Gilkerson-Sloss Commission Co. v. London, 53 Ark. 88, 13 S. W. 513, 7 L. R. A. 403. Under the act of April 19, 1895, the title to the property assigned vests in the assignee upon the delivery and acceptance of the deed of assignment. No other act of the assignor is necessary to complete the title. The assignee is then required to take immediate possession of the property, and to file an inventory of the same and a bond with the clerk of the court having equity jurisdiction within ten days thereafter. He is impliedly authorized to enforce such right by legal proceedings, if necessary. In the event the assignment shall be declared void, the title and right to possession still remain in him in his fiduciary capacity, and the assignment becomes a general assignment for the benefit of all the creditors of the assignor pro rata, and the assignee becomes subject to the control and direction of the ehanoery court in the same manner he would be had he been appointed a receiver to take charge of the property. No creditor can defeat his title. He cannot, in the discharge of his duties, remain passive, and wait until the assignor delivers possession, but he is required to assert bis right to the same immediately, and he is liable for the damages occasioned by his failure to do so. Any neglect to discharge this duty cannot affect the validity of the assignment, and any agreement with the assignor that he will not take such possession is void. Under former statutes it was not the agreement made contemporaneously with the execution of the deed of assignment which made the assignment void, but the delivery of the property assigned in pursuance thereof. Such agreement, unless incorporated in the deed of assignment, was of nó effect; but the delivexy in pursuance thereof affected the security of the rights of creditors. The interest which the assignor had in taking care of his own property was considered some protection to his creditors. When possession was delivered to the assignee, that protection was gone, and the security of the rights of the creditors was impaired. Hence this court held that the provision of former statutes which forbade the delivery of possession to the assignee before he had filed an inventory and executed a bond was mandatory. But the retention by the assignor of the possession of the property assigned until the assignee files his bond and inventory cannot impair the security of creditor’s rights. They are just as safe after the assignment as they were before. The same interest which makes them so still exists. How can it injure creditors? There is no obligation or duty upon the part of the assignor to execute a deed of assignment, and creditors lose nothing by the retention of possession by the assignor until the assignee files his bond and inventory, because until then the latter cannot sell or dispose of the property. The continuance, thex’efox'e, of the assignor in possession for such time, in good faith, under an agreement with the assignee, after the execution of the deed, will not, under the act of Api’il 19, 1895, render the assignment void, but, in case the property be personal, it is, as in other cases, prima facie, axxd not conclusive, evidence of fraud, which may be explained so as to show that the assignment was made in good faith; and, if the property be real estate, it may be shown, in connectioxx with other facts, for the purpose of proving a secret trust, and that the assignment was, consequently, void. The deed of assignment in this case did not authorize the assignor to hold possesssion of the property assigned. The evidence shows that possession was not delivered to the assignee until he filed his inventory and executed a bond, and that the assignor remained in possession uxxtil that time. When the inventoxy and bond were filed, all the property assigned was delivered to the assignee. The evidence shows that the property was assigned and delivered in good faith. As to the other grounds upon which appellees rely in their motion for reconsideration, sufficient has been said in the first opinion. The motion is denied. Bunn, C. J., and Hughes, J., concur. Wood and Riddick, JJ., dissent.