1 Paige Ch. 305 | New York Court of Chancery | 1829
*The Ghaucelloe:—The defendants deny all actual fraud in relation to the assignment, and there is no evidence from which it can be inferred; therefore, the only questions of any importance in this case are as to the right of the complainant to commence proceedings here, before the execution was returned by the sheriff; and whether the assignment is void, in consequence of the reservation of the surplus to the assignor, without making any provision for the payment of the complainant’s debt.
There are two classes of cases where a plaintiff is permitted to come into this court for relief, after he has proceeded to judgment and execution at law without obtaining satisfaction of his debt. In one case the issuing of the execution gives to the plaintiff a lien upon the property, but he is compelled to come here for the purpose of removing some obstruction, fraudulently or inequitably interposed to prevent a sale on the execution. In the other, the plaintiff comes here to obtain satisfaction of his debt out of property
The bill in this case contains the proper allegation that the execution had been returned unsatisfied. That fact is denied by the answer; and the evidence in the case supports that denial. The bill, therefore, was prematurely filed, and ho relief can be granted thereon, except as to the goods which remained unsold at the time the execution issued. If the assignment was fraudulent, they are hable to be seized and sold on the execution. J. Burdett has since sold those goods; and if he improperly covered them from a levy and sale by the sheriff, he must account to the plaintiff for their value. It, therefore, becomes necessary for the court to examine the other question in this cause.
If a debtor in failing circumstances makes an assignment of his property for the benefit of part of his creditors only, and the value of the property assigned is more than the parties could have reasonably supposed necessary to satisfy the claims of those creditors, fraud may be inferred from that *circumstance alone, unless a satisfactory excuse is shown for the transfer of the excess. But in this case it was, at the time of the assignment, and still is doubtful, whether the property assigned was sufficient to satisfy the claims of the creditors for whose benefit the assignment was made. Their debts were rising of $26,000, and the whole nominal amount of property and demands assigned, including $21,000 of outstanding claims, is short of $34,000. It was therefore not probable there would be any excess, after making due allowance for bad debts, and deducting the expenses of collection, and of executing the trust.
Does then a mere hypothetical reservation of the surplus, if any there should be, to the assignor, vitiate the assignment ? It certainly does not alter the legal liability of the
The case of Mackie v. Cairns, (5 Cowen, 547,) establishes the principle that an insolvent cannot legally make a provision for himself or family, even for a limited period, out of the property which belongs to his creditors; and that such a provision) contained in a general assignment of his property, rendered the assignment void as against creditors who had not assented thereto. But on a careful review of the cases on this subject, I am satisfied that the assignment complained of in this case was a valid instrument, and that it does not come within the principle of the decision in Mackie v. Cairns.
The bill in this cause being prematurely filed, the complainant is not in this suit entitled to an account and satisfaction of his debt, out of the surplus of the assigned property, if any there should be. His bill must therefore be dismissed with costs.
It has been repeatedly held, that an assignment of part, or all the debtor’s estate, providing for only a part of the creditors, and, without making provision for the rest, directing the assignee to pay back or re-assign to the assignor the surplus remaining after satisfying the debts provided for, is fraudulent and void. Goodrich v. Downs, 6 Hill, 438; Strong v. Skinner, 4 Barb. S. C. R. 546; Lansing v. Woodworth, 1 Sanf. Ch. 43; Barny v. Griffin, 4 id. 552; S. C., 2 Comst. 365; Leitch v. Hollister, 4 id. 211. The same principle prevails in Ohio. Suydam v. Martin, Wright Ch. R. 698.