180 Iowa 354 | Iowa | 1916
The deed of general assignment bears date of May 15, 1914, and was acknoAvledged on the same date; and it is alleged in the anSAver that the lumber company, having made the deed of assignment, filed the same in the recorder’s office on May 15, 1914, and that, on or about the same date, said assignees orally accepted the trust. On the trial,
“Arthur Hoffman asked if I was willing to accept as one of the assignees. I told him I would think it over, and I did not tell him or anyone that I would accept prior to the tizzze I made the Avritten acceptance on Monday, and I did zzot take possession of any of the property until after I had signed the acceptance.”
Concerning his co-plaintiff, the witness testified that Sclienck was the bookkeeper and secretary of the company, and- had the key's to the office. He came into Hoffman’s office after the Avitness did. As they Avere leaving, Hoffman called them back and propounded the inquiry Avhetlier they wozzld accept the trust. One of them asked Hoffman Avliat there Avas to it, and he replied, “There is quite a bit to it;” -and, after some further words of conversation, Avitness said, “I don’t know whether I can accept it or not, but I will see.” On the next day, he went over the plant, looking into its condition, to aid him, he says, in coming to a conclusion upon the question of his acceptance, because he had no experience of that kind, azzd Avanted to knoAv pretty near what he was expected to do. Mr. Schenck, as a Avitness, says that he signed the acceptance on Monday, and that they did not take possession or,assume control until after the Avriting was sigzied. He did zzot signify his acceptance before that time, except to say' that he would ac
The motion for a directed verdict, filed at the close of the evidence, was on the following grounds:
1. The evidence shows -without dispute that the policies had become void before the fire.
2. The policy was avoided on May 15, 1914, by the change made by the assignment of the company’s title to the property.
3. The assignment, or change in the title to the property, was made without the insurer’s consent.
4. There is no sufficient evidence to sustain -a verdict for plaintiffs, if one should be returned.
This motion having been sustained, and a directed verdict for defendants returned, plaintiffs thereafter, and in due time, moved for a new trial, because of the trial court’s alleged error in holding as a matter of law that the conditions of the policy had been violated by plaintiff before the fire, and because the question whether the assignment had been accepted before the loss was one of fact for the jury alone to determine. This motion Avas denied, and judgment entered against the plaintiffs for costs.
The propositions AAdrich the seA'eral appeals bring up for consideration are as follows:
1. Was a delivery of the deed or an acceptance of the trust by the plaintiffs necessary to effect a change of title to the property, Avithin the meaning of the contract betAveen the parties; and
Generally speaking, a policy of insurance upon the property to be conveyed, providing for forfeiture of indemnity upon change of title or interest in the thing insured, does not become void until the sale and transfer is complete. Acceptance of the deed by the grantee is, as a rule, sufficiently shown by his act in receiving and retaining it, and under some circumstances, it will be presumed from the beneficial character of the conveyance. If, however, the deed is not of a beneficial character to the grantee, but imposes a duty to be performed by him, and there is no other evidence of delivery, the presumption of acceptance does not arise. A transfer of title to real estate to a trustee for the benefit of creditors is effected by deed expressing, in apt words, its character and purpose. It is primarily intended to vest the legal title in the named trustee for the use of the beneficiaries, the grantor’s creditors. Until such conveyance is effective to pass the title and possession, there is no apparent reason why it should operate to avoid a policy of insurance upon the property, any more than any other sale or transfer which is not yet complete. To hold it not complete, it is not necessary to say that the contract for the conveyance, in the one case, or the initiatory steps already taken, in the other case, for a general assignment for the benefit of creditors, are void or of no effect, but rather that, if the transaction in either case has not pro-
“Nothing less than the absolute sale or conveyance of the property, with -all the usual legal ingredients to constitute the transaction as such, ’* * can be considered as sufficient to avoid the policy on that account. * * * To constitute a sale Avithin the meaning and terms of the proviso, the right to the property sold and to the possession thereof must pass from the vendor to the vendee.”
In Moore v. St. Paul F. & M. Ins. Co., 176 Iowa 549 we approved the same rule, where the forfeiture clause was identical with the one in this case. The transfer in that case, as we have already noted, was complete except the de
The attitude of the appellees, as indicated by the language of the petition and by the course pursued upon the trial, makes it fairly evident that, at the outset, they were disposed to concede appellants’ proposition that an acceptance of the trust by the assignees was essential to accomplish a change of title and bring the provision for forfeiture of the insurance into operation. The fact of such acceptance and the date thereof was affirmatively alleged in the answer, as having been made prior to the loss, and evidence was offered in support of such allegation. In this court, counsel for appellee largely rely upon the proposition that an acceptance by the assignees was unnecessary, and that, in the absence thereof, the title of the lumber company was divested by operation of law. But counsel will doubtless concede that a mere intent to make such an assignment would not be effective to change the title to the property. To have the effect, the intent must have been followed or accompanied by appropriate and efficient action. The entire ownership and right of possession must have been conveyed by the assignor and acquired by the assignee before the insurable interest of the former could be eliminated by the forfeiture clause in the policy. The right of an owner to make an assignment for the benefit of his cred-, itors had long been recognized before the enactment of our statute. Such right is an incident of or an element in,the right of absolute ownership by which every man holds dominion over his own property. Brashear v. West, 32 U. S.
“That there must be an acceptance of the trust by the trustee before the assignment can take effect, is unquestionable.”
In the Fuller case, the owner of insured property was adjudged a bankrupt upon his own petition, and a receiver of his estate was appointed thereafter, but, before a trustee was appointed, a loss by fire occurred. Action on the policies being brought by the trustee, the insurers, as in the case at bar, pleaded a breach of condition against a change of title. The court ruled against the defense, saying that the title to the property had not changed within the meaning of the contract; that, as a result of the loss, the as
“Cnder the common law a deed is not executed so as to be of any efficacy until the same is delivered and accepted by the grantee or assignee named therein. This rule is not disputed by * * counsel, but it is said that the rule should not be applied to an assignment under the statute. We think there is not only the same reason for applying the rule to such an assignment, but a much stronger reason, because the assignment cannot be executed so as to affect any of the creditors of the assignor Avithout the active assent of the assignor mentioned in the assignment.”
In the Hcllhwrgy case, from Neiv York, Avhere the statute requires a Avritten acceptance from the assignee,, the deed was written and the acceptance signed by the assignee before its execution by the assignor. The paper was left with the scrivener. Later in the same day, the debtor AA’ent to the place where the paper had been left, .and signed and acknowledged it and left it Avitk his attorney. Some days later, he made a formal delivery of' the deed to the assignee. In an action betAveen the assignee and a judgment creditor, it was held that, although the deed was made and was assented to by the assignee in writing as the statute required, it did not become effective until it Avas delivered to the assignee. The court says:
“Delivery is as essential since the statute of assignments as before its passage, * * and, until that eA’ent, the assignment could not become operative. * * * The mere taking of an instrument into his hands by the grantee, even if he retained it, would amount to nothing if the circumstances showed that he did not receive or hold it as an effective conveyance. * * * We have no doubt that, under the provisions of that act, as before,, it is essential to the operation of such an instrument that the*368 assignor should part with it by actual delivery either to the assignee or to his agent. Delivery is a constituent part of the act of execution. It is its consummation, and the estate of the assignor cannot be affected until the act has been performed.”
Turning more particularly to our own precedents, we find that, from the beginning of the judicial history of the state, in every case where the subject has been mentioned, the law has been interpreted and applied as requiring a delivery of the deed and an acceptance of the trust, to effect a completed assignment or change of title. In Cowles v. Ricketts, 1 Iowa 582, it is said that the statute on this subject clearly “implies a trust and contemplates the intervention of a trustee.” We might add that this is not merely implied, but is expressed by the statute in the specific requirement that the assignment must be in writing, and must name' an assignee or trustee. Code Section 3072. The case of Burrows v. Lehndorff, 8 Iowa 96, sometimes mistakenly cited as overruling or modifying the Cowles case, is not at all inconsistent therewith. The decision there made goes no further than to hold that, where a debtor, in an evident attempt to avoid the statute, disposes of all his property by a series of mortgages having the effect of a general assignment preferring some creditors over others, the mortgagees will be held to account as trustees or assignees.
“Assignments for the benefit of creditors are voluntary on the part of the debtor * * * and when made they partake of the nature of a private contract. The assignee derives his authority entirely from the grantor, and the appointment carries with it an actual and not an imaginary or theoretical trust and confidence.”
Applying this principle, it was held that the trial court erred in assuming to appoint a new assignee because ’ of an alleged irregularity in filing an inventory of the assignor’s property, and that there must be “a total failure to accept or fulfill the trust * * * before the will of the assignor should be suspended by the appointment of a new trustee.”
In Lampson v. Arnold, 19 Iowa 479, is a somewhat elaborate discussion of the statute with respect to the preexisting common law, pointing out that the one material change effected was to render invalid general assignments with preferences between creditors. In speaking of the particular assignment then being considered, the court notes that the assignee was notified in advance of the purpose to make the conveyance to him, and it was accordingly “executed, delivered and accepted.” Where an assignment was made by a partner for his firm, the other partner being in another state, and the assignee took possession of the property, an attachment levied thereon after the delivery of the deed, but before it was ratified by the absent partner a few days later, was given priority over the assignment. Mills v. Miller, 109 Iowa 688. In a contest between an assignee under deed of
In a contest between an attaching creditor and an as- • signee for the benefit of creditors, the question arose as to the time when the assigned property could be said to be in custodia legis. The court, after pointing out that, in the case then under discussion, the assignor had surrenderee! her property to the assignee, who was in actual possession thereof before the levy of the attachment, held that no lien was acquired by the levy. After discussing the authorities bearing thereon, the opinion states its conclusion, that:
“Where an assignment is regularly made and the assignee is in possession of the property for the settlement of the estate, such property is in the custody of the law.” Hamilton-Brown v. Mercer, 84 Iowa 537, 541. See also Price v. Parker, 11 Iowa 144.
In Singer v. Armstrong, 77 Iowa 397, an action involving the question of priority between an assignee and an attaching creditor, the issue Avas made to turn on the question whether the assignment had been accepted by the assignee Avhen the attachment was levied, and it Avas held that the promise of the assignee in advance to accept, followed by the making of the deed and its delivery to another acting for the assignee, was sufficient. A similar holding is found in American Co. v. Frank, 62 Iowa 202. A similar contest
“It may be true that it was a valid instrument without the signature of both members of the partnership, but the signatures of both were thought to be necessary, and the parties acted in that belief, and there was no delivery of the assignment to the assignee as a completed instrument until sometime after the attachment was served, and the property in the possession of the sheriff.”
Other cases to the same general effect can be found, but those cited sufficiently indicate that the necessity of delivery and acceptance, or an actual assumption by the assignee of the possession of the assigned property, has been uniformly recognized in this jurisdiction as essential to a completed assignment. Many of the legal propositions laid down in argument for appellees are not at all inconsistent with this view. For example, it may be admitted, for the purposes of this case, that the “assent of the creditors” to an otherwise effective assignment for their benefit will be “conclusively presumed;” also that “the execution, delivery and recording of the deed transfers the property of the debtor into the custody of the law;” also that “an assignment for the benefit of creditors takes effect upon its exe-. cution and delivery;” and that “equity will not permit a trust to fail for want of a trustee.” The very statement of these- principles supports the proposition we have above announced, that, to an effective or completed assignment, a delivery or acceptance or change of possession is essential. It should be kept in mind that, as we have already pointed out, to entitle plaintiffs to go to the jury in this case, it is
Again, it is said to be shown without dispute that the deed was delivered to counsel for the assignees, and that his act in having it recorded was their act. But the record does not so show. There is nothing in the record to prove conclusively that Arthur Hoffman, who took the deed and placed it of record, was at that time in any manner representing the assignees, or acting under authority or instruction from them. It sufficiently appears that he or his-firm represented the insolvent corporation and drew or prepared the deed of assignment and took it to the recorder’s office. So far as appears, plaintiffs knew nothing of the recording until after it was done, and,- if they tell the truth (and their credibility Avas for the jury), neither of them ever consented to act as a trustee for the administration of the insolvent’s estate until tAvo days later.
It is argued by counsel that there "is a conclusive inference of consent on the part of the plaintiff Schenck, because he, as one of the directors of the corporation, attended a meeting of the board on Friday afternoon, and united in the action authorizing or ratifying the act of the officers in
As further bearing upon the question, we may say that there was evidence tending to show that, up to the close of business on Saturday evening before the Sunday on which the fire occurred, there was no visible or actual change in the management, control or possession of such business, or of the company’s shops or other property, and, if true, the fact so shown tended directly to corroborate the plaintiff’s claim that they did not act or consent to act in the premises until Monday morning, thus emphasizing our conclu
The necessary result of this discussion is the reversal of the judgment -of the district court in each of the cases mentioned in the caption, and they will each and all be remanded for a new trial. — Reversed and remanded.