Clapp v. Nordmeyer
25 F. 71
U.S. Circuit Court for the Dis...
1885
Check Treatment
Brewer, J.,

(orally.) This is a creditors’ bill. It alleges that the debtors, on January 30,1885, being indebted to complainants and divers other parties, confessed judgments in favor of other creditors. On the same day executions were issued on those judgments and levied on the property of the debtors. Thereafter, and on the same day, a general assignment was made by the debtors. The bill alleges that both the confession and the assignment were part and parcel of the same scheme, and made by the debtors conscious of their insolvency, and with a view of making a total disposition of their property. It alleges further that, after the sales under these executions, the proceeds passed into the hands of one of the defendants, whom the complainants seek to charge as trustee.

As will be seen, this brings the case very clearly within the principle of the cases of Clapp v. Dittman1 and Perry v. Corby 2 decided a few months ago. In those cases I felt constrained to follow the ruling which had been laid down by my predecessor, at the same time saying that I did not believe that the ruling was right. The question was subsequently presented to Mr. Justice Miller, presiding justice of this circuit, and he agreed with my predecessor. Of course, that settles the law in this circuit, so far as this court is concerned, until either the supreme court of the state or the supreme court of the United States rule differently, and I am happy to say that in the Western district of this state a case was decided at the spring term involving this question, which has been taken to the supreme court for its ruling. The principle laid down in the cases referred to was that where a debtor, being insolvent, by any instrument disposes of all his property, such instrument must be treated- as tantamount to a voluntary assignment for the benefit of his creditors, and all share alike in the proceeds of the property conveyed. As I said then, and say now, I do not believe this is the right construction of the statutes of this state. Your supreme court has held that a debtor may pre*73fer one creditor to another. That right existed at common law. It is part of they us disponendi that follows from the ownership of property, and, except as expressly limited by statute, ought always to be recognized. I do not think the legislature of this state has attempted to restrict that right except in what are technically volmltary assignments. This case is a little stronger than those cited, because the bill alleges that the confession and the assignment were part and parcel of the same transaction, all done on the same day, all done by a debtor consciously insolvent, with the purpose of disposing of all of his property. So they may fairly be regarded as parts of one instrument, and as together making one voluntary assignment for the benefit of creditors, and in which all the creditors are entitled to share alike.

It is further urged in support of this demurrer that ample remedy is at law and in the state courts, through the assignee, and under the provisions of the assignment statute. I think not. The assignee takes that which the assignor gives him,—no more, no less. Unless expressly authorized by statute, as lie’ was in the bankrupt act, as he is in some states, though not in this, he may not challenge any conveyance or disposition of the property by his assignor. He does not represent the creditors. He is the voluntarily appointed agent of the assignor to take the property put in his hands and dispose of it. So he cannot say: “My assignor has fraudulently disposed of property; he has given it away; he has done something to wrong the creditors;” because that is none of his business. Any one who feels any interest in this question will find, in a recent decision of Judge Suihas, reported in one of the late volumes of the Reporter, a full discussion thereof. Sandwich Manuf’g Co. v. Wright, 22 Fed. Rep. 631.1 The assignee cannot challenge these confessions. He cannot say they were fraudulent. He cannot recover the property, and no remedy is afforded under the assignment act to creditors. Their only remedy is in a court of equity.

The demurrer will be overruled, and leave given to answer by November rules.

. 2 Fed. Rep. 15.

Id. 737.

See, also, Rumsey v. Town, 20 Fed. Rep. 558.