2 N.Y. 365 | NY | 1849
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *367
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *368 This was an assignment by an insolvent debtor of all his property, in trust to pay certain specified creditors, and *371 then, without making any provision for other creditors, in trust to reconvey the residue of the property to the debtor. We need go no further to see that this was a fraud upon the plaintiff, and the other creditors who were not provided for by the deed. The property was placed beyond the reach of their judgments and executions, in the hands of men who were not accountable to them, and upon a trust which was in part for the benefit of the debtor. The courts have very reluctantly upheld general assignments by an insolvent debtor, which give a preference among creditors (Boardman v. Halliday, 10 Paige, 229, 230,) and they can only be supported when they make a full and unconditional surrender of the property to the payment of debts. The debtor can neither make terms nor reserve any thing to himself, until after all the creditors have been satisfied. This question was considered upon authority in Goodrich v. Downs, (6 Hill, 238,) and we think the case was properly decided.
The deed was void upon its face; and it cannot be made good by showing that there will be no surplus for the debtor after paying the preferred creditors. The parties contemplated a surplus, and provided for it; and they are not now at liberty to say that this was a mere form which meant nothing. And although it should ultimately turn out that there is no surplus, still the illegal purpose which destroys the deed is plainly written on the face of the instrument, and there is no way of getting rid of it. The cases already cited of Goodrich v. Downs and Boardman v.Halliday are in point upon this question.
It is also an unanswerable objection to the deed, that the assignees are authorized to sell the property on credit. An insolvent debtor cannot, under color of providing for creditors, place his property beyond their reach, in the hands of trustees of his own selection, and take away the right of the creditors to have the property converted into money for their benefit without delay. They have the right to determine for themselves whether the property shall be sold on credit; and a conveyance which takes away that right and places it in the hands of the debtor, or in trustees of his own selection, comes within the very words of the statute; it is a conveyance to hinder and delay *372 creditors and cannot stand. This question was considered by the chancellor in Meacham v. Sternes, (9 Paige, 405, 6,) and his views fully accord with my own.
There is a third objection to the deed. The property is not only charged with the payment of "all costs, charges, disbursements and expenses" in executing the trust, but the trustees are also to have "a commission of six per cent. on the gross amount of the moneys received and paid by them." If the debtor can provide for any thing more than the necessary expenses of executing the trust, I think he cannot go beyond the commissions allowed by law to executors, administrators and guardians for similar services, (see Meacham v. Sternes, 9Paige, 398,) which, considering the magnitude of the estate, is much less than the trustees are to receive. (2 R.S. 93, § 58;p. 153, § 22.) It may be very true, as the answer alleges, that the commissions allowed by the deed are "no more than a just, fair and proper compensation" to three men "all actively engaged in professional pursuits." But unless something was to be done besides winding up the estate, without delay, for the benefit of creditors, it was not necessary to have three trustees; and a competent agent might have been found who would not have required a very large commission on account of the value of his time for professional pursuits. If an insolvent debtor should be allowed to give a large reward to the friends whom he selects and puts in the place of the process and officers of justice, it would not only divert a portion of the property from those who ought to have it, but it might induce the assignees to consult the interest of the debtor at the expense of the creditors.
This objection, standing alone, may not go beyond the excess of commissions. But we think the deed wholly void on the other grounds which have been mentioned.
Decree affirmed. *373