Court Opinion

ID: 4888479
Source: CourtListenerOpinion
Date Created: 2021-09-02 23:46:34.55196+00
Date Added: 2024-06-11T08:06:32.724394
License: Public Domain

Wheeler, J.
The right of a debtor to prefer one creditor to another, has been repeatedly recognized by this Court as unquestionable. But the right to make such preference in an assignment by a debtor for the benefit of creditors, has not heretofore been contested on the ground of its incompatibility with the bankrupt law of the State. It is now insisted on behalf of the appellants, that such preference cannot be made, in a general assignment by a debtor in failing circumstances, because incompatible with the provisions and policy of the law upon that subject. The question has not been met, in argument, by counsel for the appellee. It is a question which, in the view now presented, has not been heretofore considered by this Court; and we are disinclined to decide it without full argument, when it is not necessary to the present disposition, and may not become so in the final decision of the case.
Assuming, then, for the present, the right to make such an. assignment, nothing is clearer or better settled, than that the debtor can make no assignment of any part of his property in trust for himself. (Burrill on Assignments, 171 ; 5 Cowen, 547-8.) If there be a secret trust, of this character, or an understanding that the assignment, in any degree, is for Ms benefit, it is a fraud upon creditors, and is, consequently, void. (Edrington v. Rogers et al., 15 Tex. R. 188.) “ The great and “ indispensable requisite, (it has been said,) in all voluntary as- “ signments by debtors, is good faith ;—the great and fatal objection,—fraud, or the intent to defraud creditors. It is not “ enough, that an assignment be for a valuable consideration ; “it must be tona fide also.” (Burrill on Assignments, 365; Edrington v. Rogers, before cited.) In order to determine the question of fraud, or good faith, the party impeaching the assignment as fraudulent, must, in most cases, have recourse to «circumstantial evidence; for it will seldom happen, that direct and positive proof of the fraudulent purpose can be obtained. And great latitude is allowed by the law, to the reception of «circumstantial evidence. In the absence of direct evidence, that wMch conduces, in any degree, to establish the point in. *43issue, is, in general, admissible. Upon such a question, any fact may be submitted to the jury, provided it can be established by competent means, which affords any fair presumption or inference, as to the real object and intention of the parties. The defendant objected to all evidence, not only of the declarations of the debtor, and alleged fraudulent assignor, unless made at the time of the assignment, and in the presence of the defendant; but also to all evidence offered by the plaintiffs to show that the defendant suffered the debtor to remain in possession of the goods, and that he was disposing of them for his own benefit, or, at least, in a manner wholly inconsistent with the expressed object of the assignment, on the ground that the defendant was not to be affected by the acts of the debtor, unless knowledge of those acts was brought home to him ; and his objections were sustained by the Court. The Court appears to have proceeded, in excluding evidence proposed by the plaintiffs, on the ground, that in order to affect the defendant by the fraud of his vendor, and avoid the conveyance, there must be proof positive of actual knowledge on the part of the former, of the fraudulent acts and intentions of the latter. Such proof could seldom be obtained ; and to require it would be to give an effectual cover and protection to frauds and fraudulent conveyances. On such a question, all the facts accessible to the party impeaching the conveyance, and conducing to prove a purpose to defraud creditors, should have been permitted to go to the jury ; and it would then have been for them to decide, under the direction of the Court upon the law, whether the assignment was, in fact, fraudulent; and whether' the defendant was party to and affected by the attempted fraud of his vendor, the debtor. His permitting the latter to remain in possession of the goods, was apparently inconsistent with the terms and intention of the deed. It was of itself, evidence of fraud, which required explanation. Having been permitted to retain the possession of the goods, when the deed imported that the possession, as well as the property *44in them, was transferred to the defendant and was to be retained by him, the presumption must be, that he was permitted so to retain the possession, in accordance with the understanding of the parties at the time of mating the assignment; that the manner in which he dealt with them, was in accordance with such understanding between himself and the defendant; and that the debtor was acting in pursuance of such understanding, and by authority of the defendant. If he had been constituted the agent of the latter, the legal and reasonable presumption undoubtedly is, that he was acting under the authority and advice of his principal. Prima facie, at least, the latter is to be held accountable for his acts ; and both parties are to be deemed to have contemplated and intended, at the time of mating the assignment, the course of conduct, in their transactions and dealings with the property conveyed, or pretended to be conveyed, which they afterwards adopted. If that has been inconsistent with the express terms and purpose of the conveyance, and such as to evidence an intention to hinder, delay and defraud creditors, it must be held to avoid the assignment, as to the defendant, and defeat his title as the assignee and beneficiary claiming under it.
It appears that the books kept by the parties, as well after as before the assignment, and as well those of the debtor, as those of the defendant, were excluded, on the ground, that it was not material what they disclosed as to the dealing of the parties, in respect to the goods ; upon the supposition, probably, that the character of the assignment was not affected by their subsequent acts; that their subsequent fraudulent or illegal acts would not invalidate it. That is true, in general: it would be so in reference to the present inquiry, if there were no question as to the fairness of intention in mating the assignment j if, indeed, that were not the very question at issue, and it were not proposed to prove, by the subsequent acts of the parties, what their intentions really were at the time. It would have been a sufficient ground for excluding the evidence, *45if none but direct and positive evidence could be received upon such a question; or, if the acts of parties were not the index to their intentions, and it were not the fair presumption and inference that they must have intended beforehand to do, what they are shown actually to have done. But as that is the legal as well as natural and reasonable presumption, the evidence ought to have been admitted. It was perfectly competent to introduce the evidence proposed, for the purpose of showing, that, while the deed imports one thing, the acts of the parties import another, and very different thing ; that, in a word, their acts had not been consistent with their deed; and hence that the latter did not contain a true exposition of their motives and purposes in making the conveyance.
We are of opinion, therefore, that the Court erred in excluding the evidence proposed by the plaintiff; and that the judgment, therefore, be reversed and the cause remanded.
Reversed and remanded.