Court Opinion

ID: 6674778
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:14:54.535454+00
Date Added: 2024-06-11T16:00:27.355017
License: Public Domain

The opinion'of the court was delivered by
SimpsoN, C. J.
In this case the defendants, (respondents,) Stevens and Cureton, who had been partners, doing business at Lancaster Court House, in this state, under the name and style of Stevens & Cureton, on February 13th, 1878, made an assignment by deed of indenture to defendants, Miller and Cureton, of their entire partnership property, real and personal, for the benefit of their creditors, the property assigned being estimated at about $10,000.
In this assignment creditors to the amount of some $550 were preferred. No release was exacted of the creditors who might accept. Besides the property assigned, the partners had owned a small lot containing two acres in the village of Lancaster, upon which Stevens resided ; also, a tract of land — quantity not mentioned — in York county. The day before the execution of the assignment these parties each transferred to the other his interest in said lot and tract, so that Stevens became the sole owner of the lot in Lancaster, and Cureton of the tract of land in York, the consideration of the transfer in each case being the acquisition of the interest of the other in the lands which each, by the exchange, became entitled to in severalty.
In the deed the lot in Lancaster was reserved as the homestead of Stevens. There was nothing said as to the tract in York, acquired by Cureton. The remainder of the partnership *562property seems to have been embraced in the assignment. • This property was conveyed to Miller and T. G. Cureton, as trustees, for the benefit of the creditors, with directions to take immediate possession, and, after due notice, to collect the debts, and to sell the property for cash as speedily as possible, either at public or private sale, as in their judgment might be deemed best for the ■creditors. But, should the trustees find it impracticable to sell the real estate at fair prices, they were empowered to defer the sale for a period not exceeding two years, and in the meantime, in that event, to rent out the lands or farm them, as they thought best; all, however, to be conducted for the benefit of the creditors.
Shortly after the execution of this deed, defendant, Stevens, petitioned the United States District Court to become a bankrupt under the bankrupt laws of the United States, and was discharged on September 12th, 1879. To this proceeding his creditors, the appellants among the others, were made parties, by notice. Under the orders of the bankrupt court the lot in question, or a portion of it, which he had reserved in the deed, was set apart to him as a homestead. From this there was no appeal.
Under this state of facts this action was instituted in the Circuit Court by the appellants, judgment creditors of Stevens, for themselves and such other judgment creditors as might elect to come in and share the expenses, to set aside the general assignment, and also the conveyance of Cureton to Stevens of the small Lancaster lot as fraudulent and void as to them, and for other relief. The case was heard by Judge Hudson, who dismissed the complaint with costs.
From this order the plaintiffs have appealed, claiming that the Circuit judge should have held the assignment void — 1st. Because it was made with the intent to hinder, delay and defraud the plaintiffs and other creditors. 2d. Because Stevens reserved the two-acre lot in the town of Lancaster as a homestead ; and, 3d. Because the trustees were empowered to carry on the business for the space of two years. And, also, that he erred in not vacating, the conveyance of the two-acre lot in the village of Lancaster by Cureton to Stevens, because, as they alleged, it was *563without consideration, and therefore void; and, also, that he erred in holding that the plaintiffs were estopped from contesting the validity of the reservation of the two-acre lot by Stevens, on the ground that they were parties to the bankrupt proceedings when the lot was set apart to him as a homestead.
The first ground of attack upon the assignment involves a ■question of fact. Did the respondents, Cureton & Stevens, execute the assignment with the intent to hinder, delay and defraud the plaintiffs ? If so, this would certainly mark the assignment as fraudulent, and the Circuit judge, no doubt, would have decreed it void ; but upon this point Judge Hudson said: “We see nothing in the deed before us so calculated, nor is there anything revealed in the testimony going to show that such was the purpose and intent of the assignor's.”
We have carefully examined the deed of assignment and the facts agreed upon by counsel, contained in the “ case,” and we concur with Judge Hudson, that there is nothing on the face of the deed, or in the facts submitted, which evinces any intention on the part of respondents to hinder, delay and defraud the plaintiffs, or any other of their creditors.
A failing debtor has no right to stipulate for terms in any assignment which he may make for creditors, securing benefit or advantage to himself at the expense of his creditors; but this the respondents have not done. They seem to have surrendered their entire partnership property. It is true that the lot in Lancaster was not embraced in this surrender. This was reserved as a homestead for Stevens, and, as was said by Judge Hudson, need not have been mentioned in the deed, as it was the private property of Stevens. There seems to be no ground, therefore, to assail the deed on account of this reservation, certainly not in the absence of all proof showing a fraudulent intent on the part of these parties in the exchange which they ■made, and by which Stevens became the sole owner of this lot.
There is nothing on the face of the deed except a preference to some creditors over others. In the face of the decisions in this state it cannot be contended that this in itself is an evidence •of a fraudulent intent. On the contrary, whatever may be thought of the morality of permitting a debtor to give prefer-*564enees about which, if it was an open question, much might be-said, yet his legal right to do so is well established in this state; and the decisions have even gone further, holding that this preference may be accompanied with a condition that the creditors shall release ,the debtor, the only qualification being that the-preference shall be free from an intent to delay, hinder and defraud other creditors. It is needless to discuss the wisdom or soundness of this principle at this late day. The doctrine has. been long since established in this state, as well as elsewhere, and is now a well-settled principle in our jurisprudence. Niolon v. Douglass, 2 Hill’s Ch. *443; Maples v. Maples, Rice’s Eq., 300.
Is the deed vulnerable in the feature which authorizes the trustees to defer the sale for a period not exceeding two years ?' We think not. There was no advantage to the assignors in this on the contrary, it appears to have been intended for the benefit of the creditors. It was intended to prevent a sacrifice of the-property, and, besides, it was not a peremptory injunction. It was more in the nature of advice, and was left entirely to the-discretion of the trustees. It does not appear to us that there-was a single element of fraud in this.
Should the judge have decreed the conveyance of Cureton to-Stevens of the Lancaster lot void because without consideration ? He declined to do so, for two reasons. 1st. He-said “ the remedy against Cureton’s deed must be sought by different proceedings than the present action, which assails the assignment, not for matters dehors, but apparent on the face of the deed.” He further says that “ there was no evidence of' fraud on the part of Cureton, and the house and lot is, in fact, the separate property of Stevens.” 2d. He held that the plaintiffs were estopped by the bankrupt proceedings whereby this-lot was set apart to Stevens as a homestead, without objection by the plaintiffs. For these two reasons he declined to interfere. In our opinion he was not in error. The deed of Cureton to Stevens does not appear to have been before the court. There was no evidence that it was without consideration, or that its-purpose was to defraud creditors. These facts the judge could. *565aiot be expected to assume, and without these there was certainly no ground to set the deed aside.
And besides, the plaintiffs had full opportunity to raise the 'question as to the validity of this deed, and to claim that the lot was partnership property before the bankrupt court. They were parties to the proceeding in that court, and having failed to avail themselves there of the opportunity to assail this deed, we think, with the Circuit judge, that they have waived their rights in this respect, and that they are now estopped.
The judgment of this court is that the judgment of the Circuit Court be affirmed.
McIvee and McGowan, A. J.’s, concurred.