Court Opinion

ID: 6668966
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:08:06.023323+00
Date Added: 2024-06-11T16:00:26.230037
License: Public Domain

The opinion of the Court was delivered by
Greene, C. J.
The assignment in the present case contains a provision by which the dividends of the -creditors who do not, within three -months from the date thereof, release the assignor, shall be paid over to the assignor or such persons as he shall appoint. The question is, whether this provision avoids the assignment, under the circumstances of this case; the assignor having made a full surrender and assignment of all his property for the payment of his creditors, and this provision being inserted, *556not with any fraudulent purpose of securing the property for the benefit of the debtor, to the exclusion of the creditors, under cover of the assignment, but for the purpose of obtaining a discharge from his creditors, as an equivalent for the surrender and assignment of all his property for the payment of his debts.
We do not consider the validity of such an assignment, under such circumstances, as an open question in this State.
By our law, if 'the debtor make a full and honest surrender of all his property for the payment of his creditors, and assigns it that it may be so applied, he has a right to require of them a release as the condition of payment, and to reserve to himself the dividends of those who refuse to release, such requirement and reservation not being made with the fraudulent design of securing the property for the benefit of the debtor to the exclusion of the creditors, but to obtain from them a discharge of their claims.
We do not mean to say such a provision in a debtor’s assignment, even under such circumstances, is regarded by our law with favor, but it is nevertheless valid.
The decision in Burgess v. Boone, as far back as 1830, was understood by the profession to establish the validity of such an assignment, and the practice of the bar has conformed to it as settled law ever since.
Indeed, the decision of that case was in conformity to •the previous practice, and what was before considered as the settled law of the State.
The counsel for the plaintiff considers the assignment in that case as reserving to the assignor only what remained after payment in full to all the releasing creditors, and therefore, he contends, the decision is inapplicable to ■the case at bar.
*557The opinion of the Court was delivered by the late Chief Justice Eddy; it ivas never published, and the manuscript, after much search, cannot now be found; but it has always been understood and acted upon as establishing the validity of an assignment like the present.:
To reverse this decision, as understood and acted upon for so long a time, might disturb titles to a large amount of real estate.
The language of the assignment in that case is not free from ambiguity, and whatever may be the construction, we feel ourselves bound by the decision, as understood and acted upon ever since it was made.
But, assuming the assignment in that case to be as the plaintiff’s counsel contends, we think the difference in principle between such an assignment and the one before us is not material.
Both exact from the creditor a release as the condition on which he can come in ; the difference is in the reservation, the one reserves after payment in full to the releasing creditors, thereby creating a preference in their favor, the other after paying such creditors their pro rata dividend.
Under one form the dividends of the refusing creditors remain the property of the debtor, and a fund for the payment of the refusing creditors. And if the circumstances of the case are fair on the part of the debtor in making the assignment, we see no reason to suppose the fund will not be so applied.
Under the other form a preference is created in favor of the releasing creditor, who may take all, and thus the refusal to release by the other creditors may work a forfeiture of all claim to the debtor’s property.
In Andrews v. Ludlow, (5 Pick. 28,) the assignment *558was like the one under consideration; the Court said, such a reservation may be some evidence of fraud, but it is not conclusive, and may be capable of satisfactory explanation, and held the assignment, under the circumstances in that case,-valid.
But we wish to be understood as putting the decision of this case upon the practice and decisions of our own State.