7 Paige Ch. 568 | New York Court of Chancery | 1839
The first objection which is made to the validity of the assignment in this case is, that it contains a provision to pay to Lay, one of the assignees, for his future advances to and future liabilities for the assignors, in preference to, or to the exclusion of the debts which are due to creditors whose debts had been contracted by the assignors previous to the assignment. If I was satisfied that such was the fair construction of the instrument, I should not hesitate for a moment to declare it fraudulent and void, upon that ground alone; as such an attempt to secure a future credit and benefit to the assignors, by means of the assigned property, to the prejudice of their present creditors, could not be sustained in any court. I am inclined to think, however, that this clause of the assignment will bear the construction that the monies therein referred to, which Lay might thereafter pay or become liable to pay on account of the assignors, was only meant to include such as he might pay, or become liable to pay, by reason of endorsements or
The trust, so far at least as the real estate is concerned, appears however to be one which is not authorized by the existing laws of this state. The express trusts which are allowed by the revised statutes appear to be confined to the four classes specified in the fifty-fifth section of the article relative to uses and trusts. (1 R. S. 728.) And the statute is imperative, that where an express trust shall be created for any purpose not enumerated in the statute, no estate shall vest in the trustees. (Idem, 729, § 58.) . The only enumerated trusts, for the benefit of creditors, which can have the legal effect of transferring the estate to the trustees, are simple trusts to sell lands for the benefit of creditors; in which cases the equitable interests of the creditors in the property are such that the legal title, which is conveyed to the trustees, is not capable of being divided into several distinct estates, of which some may be valid although the others are invalid. Amd this court has already decided that if a conveyance in trust, for that purpose, is coupled with other express trusts not enumerated in the statute, and therefore not authorized by law, the title does not pass to the assignees by virtue of the conveyance in trust. An assignment in trust to mortgage or lease real estate, as well as to sell it, for the benefit of creditors, or as in this case to sell or encumber it for the benefit of creditors, cannot be sustained as a légal transfer of the estate, in trust. (Rogers & Sagary v. De Forest and others, In Chan. 4th Dec. 1838.)
Again; the provision, in this assignment, giving to the assignees a discretionary power to pay off or discharge a certain class of claims against the assignors, or certain small debts due from the latter, in preference to other debts provided for in the assignment, appears to be calculated necessarily to injure, delay and hinder creditors in the collection of their just debts. So long as debtors are permitted to make assignments of their property, in trust, for payment of
Ante, p. 172.