Court Opinion

ID: 5189264
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:33:23.521227+00
Date Added: 2024-06-11T08:26:51.660457
License: Public Domain

Kellogg, J. (dissenting):
The 4th clause of the written assignment of Thomas Lape, fairly construed, has reference only to the promissory notes “ made or endorsed ” by Thomas Lape, the assignor.
The 5th clause refers only to the individual indebtedness of the assignor.
If the assignment should be otherwise construed and made to include copartnership debts, then the creditors of the copartnership are preferred to the individual creditors of the assignor. They take all the copartnership assets to the exclusion of the individual creditor and then share equally in the assets of the individual assignor. At common law this was permissible and solely on the ground that the assignor had a right to prefer one creditor over another, disregarding all equitable rules. It was only by the voluntary exercise of *390that common-law right that this could be done. By the exercise of this preferential power the individual creditor might be stripped of all individual assets which by the rules of equity he was entitled to. This power to prefer was, by the law of 1887 (Chap. 503), limited to one-third of the estate; as to the remainder the assignor was made powerless to defeat the existing laws as to equitable distribution. Any different construction would work great hardship to the individual creditor. If the individual creditor could be permitted to share with the copartnership creditor it would be different, but in favor of the copartnership creditor the equitable rule prevails and copartnership property must go to pay copartnership debts. The equitable rule that individual property shall go to pay individual debts is well understood and the trading world acts upon it in its dealings with the individual. This rule could not be defeated except by the debtor himself, and his power to defeat it as curtailed by the act of 1887 leaves the rule in force, as it properly and equitably should be,-as to that portion of the, assets of the individual set free from the debtor’s power to determine to what creditors it should go.
Decree modified as per opinion, and as so modified affirmed, with costs to appellant payable out of the fund. Order to be settled by Chase, J.