Court Opinion

ID: 5404005
Source: CourtListenerOpinion
Date Created: 2022-01-08 15:57:35.029598+00
Date Added: 2024-06-11T08:30:30.771014
License: Public Domain

Russell, J.
By motion submitted upon agreed facts the assignee and the attaching creditors request the ruling of the court upon the claim of lien and preference upon the assets of the High Falls Company. That company undertook to make an assignment on the 25th day of January, 1897, which was regular in form and perfect in execution, delivery and possession by the assignee except that the acknowledgment was not substantially sufficient as required by law in the case of a corporation. On the 27th day of January, the 1 mistake in acknowledgment was corrected by a reacknowledgment in due form, a redelivery and rerecording,. a delivery of possession not being necessary as the assignee was already in possession.
Intermediate, however, in point of time between.the two acknowledgments^ the attaching, creditors, upon attachments duly issued upon judgments, made a levy upon the personalty in the -possession of the assignee for more than sufficient to satisfy' the judgments, and, therefore, the question arises as to' whether the legal title of the assignee dates from the time of the second acknowledgment or relates back to the original delivery of the assignment in defective form.
*627It is undoubtedly true that at the common law a corporation might make an assignment for the benefit of creditors, where no preferences are given, but full equality is shown, and that were it not for some statute modifying and controlling the right of the corporation in this state, the original delivery of the assignment might have been given without any acknowledgment whatever,. ■ But, for reasons of public policy, our statutes require a perfect acknowledgment of the instrument where a corporation commits an act of bankruptcy and disposes of all of its property, in order to vest in the assignee a perfect title so that the instrument may be properly recorded and notice publicly given to all of the change of situation. This is so, not alone in the case of a corporation but of private individuals, and the proceedings under the assignment are regulated by general statutory provisions. The statute has been regarded by the courts as an indispensable requirement to the validity of the assignment ab initio, and that such a substantial requisite cannot be supplied afterwards in order that the validity of the assignment might take effect from the original execution. Hardmann v. Bowen, 39 N. Y. 196; Rennie v. Bean, 24 Hun, 123.
I do not think the cases cited by the counsel for the company construing other provisions of the General Assignment Act as directory only, militate against the authority of the cases cited or undertake to criticise their effect. - The proper execution by a corporation of a general assignment and its recording so as to give public notice are so surely matters of grave substance that we must infer that the legislature designed them to be mandatory. I am, therefore, constrained to hold that the attaching creditors obtained the preferential lien bv authority of their legal proceedings and must be first paid out of the assets of the company by the assignee.
Ordered accordingly.