Court Opinion

ID: 8185017
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:07:22.666775+00
Date Added: 2024-06-11T16:40:23.052027
License: Public Domain

Maeshall, J.
Tbe sole question presented by tbe record in tbis case is, Did tbe written agreement, under tbe circumstances, constitute an assignment for tbe benefit of creditors?
Tbe principles involved bave been so often applied in tbis •court, and the law in respect thereto reduced to such a degree of certainty, that there ought to be no serious difficulty in any given case in arriving at tbe right conclusion.
If an insolvent debtor makes- a conveyance to, or by any arrangement places bis property under thé control of, another, for tbe benefit of all or a portion of bis creditors, in determining whether it amounts to an assignment for tbe benefit of creditors tbe transaction must be subjected to the test of whether it combines tbe elements of assignor, trustee, 'trust, creditors, and cestui que. trust, who can compel an •enforcement of tbe trust. Bishop, Insolvent Debtors (1st ed.), § 130; Ingram v. Osborn, 70 Wis. 184; Cribb v. Hib-bard, S., B. & Co. 77 Wis. 199; Maxwell v. Simonton, 81 Wis. 635; Strong v. Kalk, ante, p. 29. It is not essential that tbe trustee should be named as such in tbe instrument. Cribb v. Hibbard, S., B. & Co. If a trustee is agreed upon or appointed in fact to control and administer tbe property as such, that is sufficient. Strong v. Kalk. Neither is it essential that tbe assignment be an actual conveyance of the legal title, or cover all of tbe debtor’s property. As said in Cribb v. Hibbard, S., B. & Co., by way of quoting from •standard text writers: “Voluntary assignments for the benefit of creditors are transfers, without compulsion of law, by debtors, of som,e or all of their property, to an assignee or assignees in trust, to apply tbe same or tbe proceeds thereof to tbe payment of some or all of their debts, and to return tbe surplus, if any, to tbe debtor. There must be a trust, a trustee, creditors, -and cestui que trust, who can compel an enforcement of tbe trust, in order to constitute an assignment for tbe benefit of or in trust for creditors.” If *568the property is placed under the control of a trustee, so that the cestui que trust can compel the enforcement of the trust,, such trustee becomes, to all intents and purposes, an assignee,, the same as if the title was formally or actually made over to him as such.
It follows from the foregoing that if an insolvent debtor, either by actual conveyance or transfer in any manner, by agreement with a portion or all of his creditors, places the whole or a part of his property under the control of a, third person or one of the creditors, as trustee, to administer for the benefit of the creditors who are parties to the agreement, so that such creditors can compel the enforcement of the trust, the transaction constitutes an assignment for the benefit of creditors, and is void if it violates the provisions-of the statutes of this state prescribing the conditions and restrictions to be observed requisite to the validity of such assignment.
The rule above stated is decisive of this case. The money admitted to be in the possession of the garnishee, Maxcy, was placed there under an agreement constituting him a trustee "of the fund for the benefit of the creditors who signed the agreement. Defendant Conover was insolvent at the time of the transaction. The creditors, as against Con-over and Maxcy, could compel the enforcement of the trust. The provisions of the statutes of this state on the subject of assignments for the benefit of creditors were not complied with. Hence the assignment was void at the suit of plaintiffs, and the respondent Maxcy is liable as garnishee.
By the Cov/rt.— The judgment of the circuit court is re versed, and the cause remanded for further proceedings in accordance with this opinion.