96 Tenn. 1 | Tenn. | 1896
Jo. D. Martin, on November 18, 1893, made a general assignment for the benefit of his creditors. 'Among these were the complainants in the above entitled causes. They, however, repudiated the trust created by this instrument,, and filed their respective bills, attacking it on several grounds as fraudulent in law. On demurrer, the Chancellor entered a decree sustaining the assignment. On appeal, the Court of Chancery Appeals reversed this decree, and remanded the causes to the Court below for further proceedings. The cases are before us on assignment of error to this last decree.
The Court of Chancery Appeals held that this was a general assignment, distinguishable in important features from a mortgage, or a deed of trust in the nature of a mortgage, and that, whatever might be the effect of ■ this extension of time in winding up the trust created by one of these latter instruments, it was a fatal vice in the former.
It is true that Mr. Burrill, in his very valuable work on Assignments, draws a distinct line of separation between an assignment, whether general or special, and a mortgage or a tmst-deed in the na-*-ture of a mortgage. By the two latter instruments, while the legal title is conveyed to the mortgagee or trustee, it is only in the nature of a security;
The distinction made by this author rests upon the authority of a number of reported cases emanating from Courts of the highest character,' and it is adopted by Mr. Pingrey in his late work on Mortgages, Vol. I., Sec. 69. This Court, however, if it has not heretofore declined, at least has not undertaken to follow Mr. Burrill or the cases relied upon by him, ■ in thus sharply distinguishing these instruments. Yet it has noted a common law assignment as possessing virtues peculiar to itself (Young v. Haile, 6 Lea, 175), and especially has it recognized a general assignment, executed under Chapter 121, Acts of 1881, as being, to a great extent, sui generis. Scheibler v. Mundinger, 86 Tenn., 674; Stedman v. Dobbins, 93 Tenn., 397.
But if this Court was disposed to adopt the definition of an assignment given by these text writers, the case at bar would not be a proper one in which to announce it. For, though the deed in question is none the less a general assignment, still,
It is true that, in regard to conveyances such as the one in hand, executed under Chapter 121, Acts of 1881, this Court has uniformly held that, by reason of their new and extensive effects, they must strictly conform to the requirements of the statute (Stedman, Steere & Co. v. Dobbins, supra), yet when such conformity is found, then these instruments, like a general assignment at common law, are entitled to a fair and reasonable construction, so that, if consistent with sound legal principles, they may be made to effectuate the purpose of their execution. Burrill, Sec. 285; Wait on Fr. Con., Sec.
In view of these settled rules of construction, the question recurs, does the delay in the sale and distribution of the proceeds of this realty bring this assignment within the statute against fraudulent conveyances ? While every assignment of a failing debtor has the effect to place his property beyond the reach of the ordinary process of the law, and thus puts some hindrances in the way of a speedy realization of his debt by the creditor, yet it is well settled that this does not necessarily make the instrument null and void. A reasonable time for the execution of the trust and the distribution of its proceeds is recognized as proper by all the authorities. If the period for doing this is fixed in the assignment, and the same is reasonable, such a stipulation will be valid. But “ postponing to an unreasonable time the period of sale and payment will’ avoid the in
No fixed or inflexible rule has been announced by this Court, and, in the nature of things, possibly none could be. The nearest approach to such a rule is found in Young v. Haile, supra, where it was said,* with regard to time given in a general assignment, “that the probable law’s- delay is all that can fairly be stipulated for.” This, of itself, is indefinite, yet it sufficiently approximates certainty to furnish an intelligent guide in each case as it presents itself.
Applying these general considerations to the case at bar, in the words of the Court of Chancery Appeals, “it cannot be denied that the postponement of the sale and payment fixed in this deed is unusual; nor can it be denied that the delay is greater than would have ordinarily occurred in the collection by the creditors of their debts by due process of law. It would have been no more than his creditors were entitled to if Martin had allowed his property to be sold, and the proceeds distributed with as little delay as possible; but to postpone the payment of his debts three or four years, by tying up his property, ’ ’ is certainly unreasonable delay. And this delay is imptísed on all his creditors. No one of them, however urgent his needs may be, or however he may doubt the in
We think the true rule is that “a debtor in failing circumstances is only allowed to place his property beyond the reach of his creditors by making a general assignment of it, when he does so for the benefit of the creditors by devoting it unreservedly to the payment of his debts, and not with a view to his advantage, in delaying, until a favorable time, the appropriation of the property for such purposes.” Phelps v. Curts, 80 Ill., 109.
Satisfied that this rule has been violated in this instrument, we agree with the Court of Chancery Appeals in its conclusion that it was fraudulent and
It is proper to say that, upon an examination of Bennett v. Union Bank, 5 Hum., 612; Roane v. Bank, 1 Head, 526, and other cases of like character, cited by defendants in error, we do not regard them as being in conflict with the conclusion reached in this case. '