Court Opinion

ID: 7365741
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:51:27.290879+00
Date Added: 2024-06-11T16:20:45.368981
License: Public Domain

MAYFIELD, J.
In the bankruptcy proceeding instituted to adjudicate J. S. Oppenheimer (one of the respondents) a bankrupt, $1,000 in money was set apart to said bankrupt, as his exemption as to personal property, in accordance with exemptions in bankruptcy statutes. Subsequently, the bankrupt paid this $1,000 to five of his creditors, distributing it pro rata among them. The debts due these five creditors were secured by waive notes signed by the bankrupt. Shortly thereafter, appellant, another creditor of the bankrupt, whose debt was secured by waive notes, filed this bill in behalf of itself and all the other creditors whose debts were evidenced or secured by waiver of the debtor’s right to claim exemption as to personal property; and sought to have the payment of this $1,000 by the bankrupt to the five preferred creditors, declared a general assignment for the exclusive benefit of those creditors, to secure whose debts the assignor or payor.had waived his right of exemption as to- personal property. The respondents demurred to this bill on the ground that it sought to have the $1,000. declared a general assignment or payment, for the benefit of only one class of creditors, and . not for the benefit of all. The trial court sustained the demurrer to the bill, and from that decree this appeal is prosecuted by the complainant.
*319The abstract question of law involved on the appeal is this: Can an assignment by a debtor of the personal property exempt to him, to some of his creditors, be declared a general assignment under section 4295 of the Code, for the benefit of those creditors only, against whose debts- the assignor had waived his right of exemption? The trial court answered this question in the negative, and we are inclined to the opinion that the answer was correct.
Our statute (section 4295 of the Code), which was intended to prevent a debtor from preferring some of his creditors to the exclusion of others, by conveyance, assignment or transfer of substantially all of his property to such preferred creditors, is in derogation of the common law, Avliich recognized the right of a debtor to prefer one or more of his creditors, even to the entire exclusion of others.
But for the statute in question, it is conceded that there would be no equity in this hill, there being no contention or suggestion that there was any actual fraud other than a violation of this statute. To be more exact, the only contention is that the transaction' falls within the provisions of the statute. The statute does not make such a transaction fraudulent, but merely converts it into a general assignment for the benefit of all creditors, instead of a special one for the benefit of preferred creditors.
The statute makes the assignment a general one for the benefit of all creditors — regardless of the kind, character, or extent of their debts, or of the security given for the payment; and we do not feel justified in limiting it to those creditors only, who could subject the property assigned to the payment of théir debts by attachment, execution, or other process. If the assignment or payment of the thousand dollars in question was a gen*320eral assignment, within the meaning of the statute (a question we do not decide), and it should be declared such under the statute in question, it would inure to the benefit of all the creditors by virtue of the statute, irrespective of class, or the character of security held by the creditors. The statute is not intended to destroy or otherwise affect any lien that any creditor or class of creditors had upon the property transferred or assigned by the debtor.
If a transfer or assignment of property be declared a general one for the benefit of all creditors, it in no manner destroys any existing lien which any creditor had upon the property at the time of the assignment.
It is not claimed, and cannot be plausibly contended, that the complainants had any lien upon this property by virtue of the fact that the debtor had waived his right of exemption as to his personal property against the payment of the complainant’s debts. The mere fact that the complainant could have subjected his property to the payment of its debt under an execution and that such property could not have been subjected by creditors as to whose debts the debtor had not waived his right of exemption, does not confer any greater right upon the complainant under the statute in question, than is conferred upon the other creditors. The statute in question makes no distinction between creditors on account of the character or class of the security for, or evidence of, their debts.
For the reasons pointed out in the demurrer, the bill was defective, and the trial court properly so decreed.
Affirmed.
Simpson, Anderson and McClellan, JJ., concur.