Court Opinion

ID: 7091569
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:06:38.104004+00
Date Added: 2024-06-11T16:13:06.625900
License: Public Domain

Woodward, J.
We desire to confine ourselves to the points, decided by the court below, but it is not clear whether that court based its ruling upon one or two grounds, of objection.. .The second assignment of causes of objection, embraces two grounds — the authority- to sell on credit, and that to compound. But immediately following this, the record says the court sustained the objection upon the last point above stated. This, properly,.is the power to compound, only. • As an error in this, on our part, in looking at but one of the objections, wrould send the case back, if we should differ from that court, merely to be returned here upon the other question, we shall consider the decision made upon both the causes named in the second head.
The question, then, is whether the assignment is void, as against a dissenting creditor, for giving an authority to sell on credit, and to compound with the debtors. of the firm.
In other respects, at least, this instrument, seems to fulfill the-conditions of a valid assignment, mentioned by Sutherland, J., in Grover v. Wakeman, 11 Wend., 187, namely, the conveyance of the property, absolutely, tor . the payment of creditors, unconditionally;. and it is for the payment of all the creditors, rateably, as required by chapter 62jof the Code.
On the question whether an expressed authority to sell on credit, will render the assignment void, there-has been a difference of view in the States. In Alabama, it was recently held that it does not have that effect. Abercrombie v. Bradford, 16 Ala., 560. And in a preceding case *472in the same state, it was even held necessary ; and it was said, that the power to sell for cash, or on credit, did not differ, in legal effect, from one to sell on such terms as the assignee may deem expedient. Ashurst v. Martin, 9 Porter, 566. In New York, it was for some time, and in several cases, held unobjectionable, and in many instances beneficial, and even necessary to the due execution of the trust. Rogers v. De Forest, 7 Paige, 272; Nicholson v. Leavitt, 4 Sandf., 252. But, at length, after much discussion, it was settled in New York, on appeal, in the last case named, that an expressed power to sell on credit, rendered the deed invalid. Barney v. Griffin, 2 Comst., 365. This power is sustained in England, where we should suppose assignments would*bc regarded with even more suspicion than in this country. James v. Whitbread, 5 Eng. Law & Eq., 431; 20 Law J. Rep., 217. And the same view of it is expressed in the books of forms by recognized writers. Curtis’ Conveyance, 44; Angell on Ass., app., 216; Burrill on Ass., 196 to 206.
But it is only when the power is expressly given, that it has been held fatal. It seems to be usual to confer some discretionary authority upon assignees; as, “to sell in such manner as they may consider expedient, and most for the interest of all parties.” Hart v. Crane, 7 Paige, 37; Brock V. Headen, 13 Ala., 370; Neally v. Ambrose, 21 Pick., 185; Hopkins v. Ray, 1 Met., 79. So, also, “ to sell upon such terms as they think most expedient.” The circumstance that a general authority, may embrace within the range of its terms, something which is not permissible, will not be considered fatal to it — the question being, not whether fraud maybe committed by the asssignee under the authority given, but whether the provisions of the assignment are such, that, when executed in their fair and reasonable sense and intendment, they will be fraudulent in their operation. Ward v. Tingley, 4 Sandf. Ch., 476; Burrill on Ass., 399, 402.
The leading consideration seems to be, not whether the assignee can do a wrong under the power •conferred, but *473•whether the assignor intended it. And this is probably the ground upon which a difference has been held, between the case where the grant of the power is express, and that where it is involved in a more general, and a lawful, grant of authority. In this view, it is worthy of notice, that whilst it is held in New York, that the authority in question cannot be given expressly, in the same state it has been considered dangerous-to prohibit it, as, in connection with other circumstances, it might be evidence to show that a forced sale was intended, to the injury of creditors. Van Rosseau v. Walker, 11 Barb., 237.
The provision in the present case, to sell upon such terms and conditions as in his judgment may appear best, does not seem to go beyond those which are recognized and sus-, tained in the books and cases above referred to, so thatj without undertaking to determine the controversy whether such a power, expressly given, would-render the instrument void, we may safely hold that this general gift of discretion, will not, per se, have this effect.
The other question is, whether the power to compound with debtors, renders the instrument invalid. The fact that little or nothing is found in the books upon this subject, is an argument in its favor. Even a'professed treatise upon assignments, does not allude to this question. The doctrine that the assignor may not . give authority to compound with creditors, may have led the minds of some to draw the same conclusion in regard to a composition with debtors. But the two cases do not stand'upon the same or similár reasons. In relation to creditors, it was considered that the effect of the provision would be, to perpetuate the right of giving preferences, by vesting in the assignees an arbitrary power in relation to the several classes of creditors,, and of. compounding with any one upon such terms as they may think proper. Wakeman v. Grover, 4 Paige, 41, and same casé in 11, Wend., 393.
But no such reasoning can exist in relation to the com-' pounding with the'debtors.- And'probably the authority is no more than the law would give : and to deny it would *474have the tendency to compel the trustee into useless suits and litigation, which would serve no good purpose, but would consume the funds in his hands. No case has come within our observation which holds it objectionable, and being able to perceive no reason against it ourselves, we are of the opinion that the court erred in. the decision made upon it.
The judgment is reversed, and the cause remanded.