Court Opinion

ID: 7159901
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:15:20.944507+00
Date Added: 2024-06-11T16:15:20.598431
License: Public Domain

Eustis, J.,

delivered the opinion of the court.
This case comes before us on an appeal from a judgment of the court below, rendered on an intervention of Walter De Lacy, residing in Virginia, claiming, as a trustee, one half the, ship Rob Roy, which had been attached in this suit as the property of the defendant. The judgment was in favor of the trustee, and the attaching creditors have appealed.
The instrument under which the. interest in the ship was conveyed, was executed at Norfolk, in Virginia, on the 20th of May, 1837. The parties to the instrument we shall consider as domiciliated in that state at the date of its execu*457tion the ship was at sea: no question can arise in relation to the possession ; and our inquiries are necessarily confined to the validity of the instrument, according to the laws of Virginia. • '
A principle which enables a debtor to put his creditors at defiance and dictate to them the terms on which they are to receive a portion of their claim, is repudiated by our law.
So, where a debtor residing in Virginia, made an assignment of half his interest in a ship then at sea, for the benefit of certain of his creditors, and excluded those who dissent and refuse to release him: Held, that such assignment is null and void as against the dissenting creditors.
The intervening party claims under a deed of trust which gives to the trustee the half interest in the ship Rob Roy, and the interests of Roy in various shipments of cotton and tobacco, and, generally, all the debts due, or which may become due prior to the date of the deed, for the benefit of certain creditors, excluding those who may have demands against him arising from what is called in the deed, country damage to the tobacco shipped by him, or which may have been sustained in the warehouses before shipment. He divides his creditors into two classes: those of the first are to be paid in full; those of the second are deprived of any benefit arising from the property in trust who shall refuse to release or discharge the said Roy from the debt of the creditor thus provided for.
A principle like this, which enables a debtor to put his creditors at defiance, and dictate to them the terms on which they are to receive a portion of what is due to them, is repudiated by our laws, and we think the counsel of the plaintiffs has successfully shown that a condition like this would render an assignment of an insolvent’s property void as against dissenting creditors, according to the principles of the common law, which prevails in the other states of the Union. 16 American Jurist, 285; Opinion of Judge Ware, in the case of Lord vs. The Brig Watchman; 2 Kent’s Commentaries, 536, and Notes.
The counsel for the intervening party has called out-attention to a case decided in the Court of Appeals of Virginia, in April, 1837, the case of Skipwith's Executor vs. Cunningham, in which this question is fully investigated by the learned presiding judge of that court, and in which the opinion of, the court is, that a condition for a release of the debtor would not render a deed of trust like this invalid, provided the debtor conveyed the whole of his property to the trustees for the benefit of his creditors ; but, adds judge *458Tucker, “ On this subject a distinction has been made in the cases, between the conveyance of the whole and the conveyance of part only of the debtor’s property, upon condition that the creditors should compound and accept a part of their debts, and give a release for the residue.” The former is considered admissible and valid, the latter as oppressive upon the creditors, and as fraudulent and pernicious in its tendencies. In this case the trust was to accrue to the benefit of any creditor who should release the debtor.
It has been decided in. Virginia, that an assignment, with a condition for a release of the debtor, would not render a deed of trust invalid, provided the debtor conveyed the whole of his property for the benefit of his creditors.
The deed under consideration did not purport to convey the whole of the debtor’s property, and only operated upon the property mentioned in it. He conveyed half the ship Rob Roy, his interest in certain shipments, and the debts due to him, at the same time excluding certain claims from the benefit of the deed, which he did not pretend were fraudulent, or in any respect unfounded. He may have had other property, and there is nothing in the deed from which the contrary is inferred. See 5 Johnson’s Chancery Reports, 330; United States vs. Howland, 4 Wheaton, 108. We therefore consider, that there is nothing before us from which we can pronounce that the assignment under consideration conveyed the whole of the debtor’s property to the trustee ; and, according to the principles laid down in the case which is the most favorable to the claims of the intervening party, we must declare the instrument void and without effect, as to the plaintiffs, who are dissenting creditors.
The judgment of the'District Court is, therefore, reversed, and judgment is entered against the intervening party, Walter De Lacy, with costs in both courts, and the case is remanded for further proceedings.