Court Opinion

ID: 8000932
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:49:13.541429+00
Date Added: 2024-06-11T16:35:43.205516
License: Public Domain

Scott, Judge,
delivered the opinion of the court.
Samuel W. Riggs made a deed of assignment to John Logan for the benefit of certain preferred creditors, dated January 30, 1858. The deed, after describing the property conveyed, specifying the preferred debts and creditors, and directing the manner in which the assigned effects shall be sold, and after providing that the costs and expenses of the deed of assignment and the preferred debts shall be paid in their order, contains the following clause: “ When all said debts are paid in full, then hold the residue for the benefit of all my creditors, to be apportioned pro rata among them by the said trustee; and the remainder, if any, shall be paid to the party of the first part.” The question is whether the clause above cited, providing that the residue, after satisfying the preferred creditors, shall be distributed among all the creditors, brings the debts and liabilities of the creditors not named “within the provisions of the assignment,” so that those debts and liabilities shall be paid pro rata with the debts named and preferred in the deed of assignment. The assigned effects were insufficient to pay the preferred debts by a large amount.
The thirty-ninth section of the act concerning assignments enacts that “ every provision in any assignment hereafter made in this state providing for one debt or liability in preference to another shall be void ; and all debts and liabilities, within the provisions of this assignment, shall be paid pro rata from the assets thereof.” The case of Shapleigh v. Baird, 26 Mo. 323, decided that the act concerning voluntary assignments did not take away from the debtor the common law right of making an assignment by which some creditors *94were preferred, notwithstanding the thirty-ninth section of that act; that, taking the whole act together, the thirty-ninth section was only designed to prevent preferences among those creditors who are provided for in the deed of assignment.
We do not consider that the clause in the deed, providing that, after the satisfaction of the preferred debts, the residue shall be distributed pro rata amongst the other creditors, can be termed a provision for them in the sense in which that word is used in the case to which reference has been made. If the debtor still has the right to prefer some creditors to others, making no discrimination among those preferred, the debtor would be misled and deceived, by giving to a clause, which merely disposed of a residue, which might or might not happen, to the use of the unpreferred creditors, the effect of converting the assignment into one for the benefit of all the creditors. Such a provision may be inserted with a view to prevent the question arising whether or not the assignment is fraudulent as a mere matter of precaution. Oases have occurred in which it was litigated whether a provision, in a deed of assignment for some of the creditors, requiring that the residue, after satisfying the preferred debts, should be paid to the debtor, did hot avoid the deed for fraud as containing a reservation of use for the grantor. The property conveyed fell far short of satisfying the preferred debts, and to hold that a clause, which provided for a contingency which did not and could not happen, [should be construed] into a provision for creditors, would make the case of Shapleigh v. Baird a snare to the debtor who felt himself under a moral obligation to give a preference to some of his creditors. There are but few deeds giving a preference to some creditors which do not from prudential motives contain a provision similar to that found in the deed under consideration.
The other judges concurring,
the judgment will be reversed and the cause remanded.