Court Opinion

ID: 4926443
Source: CourtListenerOpinion
Date Created: 2021-09-24 00:57:26.857668+00
Date Added: 2024-06-11T08:14:21.498051
License: Public Domain

Weston J.
delivered the opinion of the Court.
A debtor has .a right to prefer one or more creditors to others ; and for that purpose may, in good faith, transfer or make over any property he has, for their payment or security. It was competent for the principal defendants to have called together their creditors, named in the receipt given by the trustee, and to have placed in their hands the notes therein described, which they might have received, either in payment, by way of collateral security; or under a promise to allow to the defendants, whatever they might be able to collect. Such an arrangement is lawful in itself; and being once made, could not be defeated, either by the defendants, or by any of their other creditors. And the creditors, to whom such notes might have been passed, might depute one ol their own number to make the collection, or appoint an agent for that purpose. Any direct transfer or assignment, thus accepted, could not be disturbed. But the law does not permit a debtor to put his property into the hands of his friends, or of persons of his own appointment, even for the benefit of his creditors, without their assent. His property is by law subject to their' attachment ; and cannot be put out of their reach, without their privity. *195If it were not so, a debtor might defeat altogether the policy of the attachment laws, and prescribe his own terms to his creditors. In Widgery v. Haskell, 5 Mass. 144, the assent of creditors was required, to give validity to an assignment, so that it could not be defeated by attachment; and this requirement has been since enforced, both in Massachusetts and in this State. The instrument of assignment sometimes requires that assent to be given in a certain maimer, and with certain limitations and conditions. If these conditions are reasonable, and such as a debtor may lawfully impose, whenever a sufficient number of the creditors to exhaust the fund, have assented in the manner prescribed, other creditors cannot affect the assignment.
In the case before us, the notes received by the supposed trustee, were put into his hands for the use of certain specified creditors of the defendants. They were indebted to them in the whole amount of the notes, all of which were to be applied for their benefit. To this arrangement these creditors assented, before the service of the trustee process; as appears more distinctly by the additional disclosure. They wmre willing that the business should be confided to the trustee, as the common agent of the parties. We are not aware of any legal principle, requiring this assent to be in writing. It might even be given prospectively. No conditions were imposed, except what the law would imply. The money, when received, would discharge the defendants’ debts, to which it was to be applied if sufficient; if not, it would discharge them pro tanto. There is substantially no difference, whether the notes were put into the hands of the creditors themselves, or whether they w'ere passed over to a third person for their benefit, with their assent. The arrangement would be as effectual before the money was received, as afterwards.
In the case of Curtis v. Norris & trustee, 8 Pick. 280, Haven, the trustee, had received a quantity of molasses belonging to Norris, for sale, on which he had made advances, lie was requested by Norris to inform Swett Co. who had accepted a bill for his honor, that they should be indemnified out of the proceeds of the molasses when sold, and he did so. This assignment was sustained; although neither the direction of Norris nor the notice and promise in pursuance of it, were in writing.
*196When the property of a debtor is agreed to be applied, according to its just value, to bona fide creditors, whose claims equal its amount, and all this is done to their acceptance, it is a transaction free from fraud, actual or constructive. The policy of the law is answered and promoted, when the funds of the debtor are fairly applied to the payment of his debts.

Trustee discharged.