Court Opinion

ID: 6238194
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:37:42.857536+00
Date Added: 2024-06-11T08:58:06.899698
License: Public Domain

Mr. Justice Sterrett
delivered the opinion of the court, October 26th, 1885.
Voluntary assignments for the benefit of creditors are so regulated by statute and governed by principles of equity that when duly executed and delivered neither the assignor nor his assignee, nor both together, can defeat the trust thereby created in favor of creditors. A failure to record the assignment within thirty days after its execution places it in the power of any creditor to proceed in the collection of his claim as though no assignment had been made; but even that neglect does not extinguish the trust as to other property than that taken in execution, or as to other creditors who choose to recognize the assignment, and insist on its execution : Read v. Robinson, 6 W. & S., 332; Seal v. Duffy, 4 Barr, 274. These cases are also authority for the proposition that, immediately upon the delivery of a voluntary assignment, the legal title to all the property, intended to be conveyed by it, passes from the assignor to the assignee, and a trust in favor of creditors of the former takes effect immediately. Equity will not suffer the trust thus created to fail by reason of the misfeasance or non-feasance of the trustee named in the deed, *586because a trust, unlike a naked power, is ever imperative and binding on the conscience of the agent appointed to execute it; and, if he refuses or neglects to do his duty, a chancellor will either compel him to perform it, or substitute another hand to uphold the trust and carry it into effect.
In the case before us, the deed of assignment was executed and delivered to the assignee November 16th, 1881, and recorded hy him next day. Without having done anything in the meantime towards the execution of the trust, the assignee on April 12th, 1882, for a nominal consideration, reconveyed all the assigned property to his assignor. In the deed of reassignment, he recites the execution, delivering and recording of the assingment, and “that no action or proceeding has ever been had or taken under or pursuant to said assignment, but upon further consideration the said E. S. Golden has discovered that the said assignment was wholly unnecessary, and that he is abundantly able to meet all his financial engagements and pay all his debts without the sale or sacrifice of any of his property, real or personal.” The re-assignment was without either notice to the creditors or authority from the court having jurisdiction of the trust.
The second section of the Act May 4th, 1864, Purd. 128, pi. 24, provides: “Whenever it shall be made to appear to the satisfaction of the court having jurisdiction of the accounts of an assignee under any assignment in trust for creditors, either upon the report of an Auditor or otherwise, after notice by advertisement for such length of time as may be ordered by the court, that all the undisputed claims upon the assigned fund or estate have been paid or released, and security to the satisfaction of said court, as hereinafter set forth, shall be given for the payment of any and all claims in dispute, the said court may order and direct the assignee to re-convey to the assignor, all the assigned estate remaining in his hands and possession, and all outstanding interest in the assigned estate; and the deed of reconveyance shall be acknowledged in open court, and entered among the records thereof; and thereupon the said estate shall be holden free and discharged from any and all of the trusts of said assignment.”
This is the only statutory provision for reconveyance of the assigned estate, and it cannot be legally done in any other way, certainly not without the assent of all the cestuis que trüstent. It is not pretended that such assent was given in this case. We do not mean to say, however, that the execution of a trust and re-investiture of title in the assignor, as to residue of the trust property, may not be presumed from long lapse of time, but that is not an element of the case under consideration.
*587In June, 1888, on petition of Rumberger and wife, creditors, etc., tbe assignee was cited to appear and show cause why he should not be discharged. In answer to the citation, he denied that petitioners were creditors of the assignor, or entitled to any benefit under the assignment, and alleged in substance that the deed of assignment was never delivered for execution, that it was recorded by mistake, and shortly thereafter was cancelled by the reconveyance duly recorded and acquiesced in by all the creditors and especially by the petitioners who wholly ignored the alleged assignment and proceeded by adversary process to secure their alleged claim. The court found, very properly, that petitioners were creditors of the assignor and, as such, interested in the execution of the trust; that the assignee had wholly neglected his duty in the premises to the prejudice of petitioners and other creditors. The logical result of this findiug was the decree dismissing the assignee and appointing another trustee in his stead. There was no error in this conclusion nor in the proceedings by which it was reached. The assignee did not deny the execution, delivery and recording of the assignment. lie merely alleged it was not delivered for execution, that it was recorded by mistake, and was afterwards cancelled by reconveyance of all the assigned property. If it was not delivered for execution, for what legitimate purpose was it delivered? Was it for the purpose of being held during ail or part of the thirty days allowed for recording, and then treated as valid, if circumstances required that it should be so regarded, or was it to be cancelled or destroyed if, in the meantime, it was-deemed unnecessary to use it ?' Such a purpose is manifestly illegal, and furnishes no excuse for non-performance of duties imposed by law on the assignee. If it be true that the assignment was not delivered for the purpose of being executed, or that it was recorded by mistake, it is somewhat singular that neither of these facts is recited in the deed of reconveyance made when the transaction must have been fresh in the memories of the parties thereto. As we have seen, the recitals in the paper referred to declare that a general assignment for the benefit of creditors was duly executed, delivered and recorded. There is not even an intimation of mistake in recording or of delivery for any other purpose than execution. In fact, there could he no legitimate delivery for any other purpose; and public policy forbids that either of the parties to such a deed should be permitted to prove a secret purpose so contrary to that expressed in the deed itself.
Under the circumstances disclosed by the record, the issuing and service of the execution attachment on the administrators of James E. Brown cannot be considered a waiver by *588the appellees of their right to insist on the enforcement of the trust. It was doubtless prompted by the unauthorized reconveyance of the trust property, and resorted to for the purpose of acquiring a lien on the fund in case the reassignment should be adjudged effective for the purpose of reinvesting the assignor with title.to the trust property.
We are clearly of opinion the court was right in dismissing the assignee, and appointing another trustee in his stead.
Decree affirmed, and appeal dismissed at the costs of the appellants.