72 Miss. 701 | Miss. | 1895
delivered the opinion of the court.
On the tenth day of October, 1893, Charles Hiller, an insolvent merchant, made a general assignment of his property to the appellee, Ellis, for the benefit, of his creditors. Preferences were given to Messrs. Miller and Dodds, the attorneys by whom the instrument was prepared, for their fees, and, also, in the order named, to F. Dillard, for the sum of $250 and interest; to the Merchants & Planters’ Bank of Hazelhurst, for the sum of five thousand dollars, and interest; to Mrs. Hannah Klotz, tor the sum of five thousand five hundred dollars; to Hyman, Hiller & Co., for the sum of nine thousand one hundred dollars, and, after the payment of said sums, the assignee was directed to distribute any remaining funds to all other creditors pro rata. The assignee filed his petition in the chancery court of Copiah county, as required by law, and gave bond as receiver. Many creditors of Hiller, soon after the execution of "the assignment, exhibited cross petitions against the assignee, seeking to vacate the assignment as fraudulent and void, on the grounds that it was made for the purpose and with the intent of defrauding creditors; that some of the preferred debts were ¿simulated; that the debt to the Merchants & Planters’ Bank was composed in part' of usury, and upon other grounds not necessary to be stated. The firm of Marshall Field & Co., of Chicago, exhibited their cross petition, charging .that among the assigned property was a lot of goods bought from them by the assignor, and for which the purchase price had not been paid; that Hiller procured the sale of said goods to be made to him on credit by falsely and fraudulently representing himself to
In considering the questions presented for decision, it is only necessary to state such facts as are relevant to the points on which the cause turns. The record is voluminous, and contains much evidence not necessary to be stated in the view we take of the cause. One of the preferred debts, that due to the Merchants & Planters’ Bank, is evidenced by five promissory notes, each for one thousand dollars, dated at different times, and which, when executed, the bank discounted at the rate of 10 per cent, per annum — i. e., retained the interest as prepayment thereof at the full legal rate. Mr. Ellis, the cashier of the bank, and who is the assignee in the assignment, gives this explanation of the circumstances of the negotiation of the loan by Hiller and. the execution and discount of the notes. Some time in January or February Hiller applied to the bank and stated that he wanted to borrow four or five thousand dollars, and wanted to know when he could get it, and what security would be needed. I told him that he could get it. He said, however, he would not want it until later in the year ; and I told
There was no written contract entered into between the bank and Hiller with reference to the interest he was to pay when he first approached the bank to borrow money. I don’t remember that the rate of interest which he agreed to pay from that date was mentioned, though I suppose, of course, it was, and do not think it could have been less than 10 per cent. I did not lay aside any specific money at that time in separate packages to save for Hiller, but I promised to let him have it. In making our arrangements we loan so much money, and no more, and we have to know what we are going to do with it. I made the discounts on the notes with a view of charging him and covering the interest from the time I promised to let him have the money. Mrs. Klotz was in Texas, and we had to send the notes over there for her signature. ’ ’ These facts, stated by the officer of the bank by whom the money was negotiated' for by Hiller, are, in effect, agreed to be true by Hiller, who was examined as a witness in the cause, and they fix, beyond doubt, the usurious nature of the debt. As a matter of fact, interest was not charged on the amount Hiller applied to borrow from the date of the application, of which date
What effect does the fact that this' usurious interest was secured to be paid and preferred by the assignor have upon the deed of assignment? Is the assignment thereby annulled, or is the consequence only that the assignee shall withhold the payment of the forfeited interest ? In Wetter v. Dinkens, 70 Miss., 835, the assignor preferred a debt as to which usurious interest had been reserved, and attempted to fix the amount to be paid as that of the principal and legal interest, and this we held he might lawfully do; but by error in calculation, ten dollars in excess of legal interest was stated as the sum due. The assignor had, however, by the terms of the assignment, provided that of the debts stated to be due in the instrument, the assignee should only pay the amounts really found to be due, and this was held to preserve the assignment.
Throughout all our decisions there runs the controlling rule that, in assignments by insolvents, and especially in preferential assignments, the utmost good faith to creditors must be observed; that the insolvent, claiming to act under the law, which, notwithstanding his insolvency, recognizes his dominion over his property as owner, must keep himself within the law, which not only recognizes, but controls, his conduct; that, while the law will not obstruct the exercise of the legal right to prefer one creditor over others of equal merit, it will try his action by strict rules, confine him to travel along a narrow path, and lend him no assisting hand if he departs therefrom. The assignment, as written, is the law for the administration of the insolvent’s estate; neither the assignee nor the courts may add to or subtract therefrom, and, as written, it must be susceptible of complete execution, without depriving creditors of their legal rights, or it may not stand against their attack. Richardson v. Stapleton, 60 Miss., 97; Marks v. Bradley, 69 Ib., 1; Selleck v. Pollock, Ib., 870. Applying the principle of these cases, it follows that the preference given by the assignor to the usurious debt due to the bank annuls the deed. The assignee is, by the deed, directed and required to pay to the bank the debt and its usurious interest, and this he must do. ITe pays it, if at all, not as debtor, nor by virtue of the obligation springing from the contract between the assignor
At the time of the execution of the assignment, the Merchants & Planters’ Bank and Mrs. Klotz, two of the preferred creditors, indorsed thereon a release to Hiller of their demands against him personally, in consideration of the provision made in the deed for the payment of their debts. It is now urged that, whatever may have been the fraudulent purpose of Hil-ler in executing the deed, the assignee is a purchaser for value-
.But we do not think it can be said that Mrs. Klotz gave up anything for the conveyance. The assignor was her son-in-law, and hopelessly insolvent. Nothing could be hoped for in the present except to get what might be realized from the assigned estate, and the future promised nothing except by resorting to the earnings the assignor might thereafter accumu
The cross petitioners, Marshall Field & Co., should have had the relief they prayed. Whether Hiller, in fact, made all the statements to the representative of the reporting agency of K,. (J. Dun & Co. contained in the report made by the representative, Moorman, as testified to by Moorman, or made only a part of them, as testified to by Hiller, is immaterial in view of the fact, which we think is abundantly proved, that, when called on by the manager of the credit department of Marshall Field & Co. for a statement of his financial condition, Mr. Hil-ler referred them to the report then standing on the books of Dun & Co. as a true one of his then condition. Mr. McConnell, the manager of the credits of Marshall Field & Co., testifies distinctly that Hiller, when applied to for a statement of his financial condition, stated that he was not prepared to make a statement, but that the repdrts standing on the books of the commercial agencies correctly represented his condition. Hil-ler, in some manner, implies that this he did not do, but that his memory is not clear appears from his statement that he does not remember to have seen or talked with McConnell at
The decree on the cross petition of Kyle & Co. must be affirmed. They state that they sold to Hiller, on the faith of a report made by Bradstreet & Co., that, on August 1, 1893, Hiller had made a certain statement to them, and on the faith of a report by Dun & Co., that, on August 9, 1893, he had made certain statements to them of his financial condition, which reports showed to Kyle & Co. the statements purporting to have been made by Hiller. But there is nothing in the record tending to show that Hiller, at these times, made any statements to these agencies. The only occasion on which the evidence tends to prove a statement made by him to any agency was in February, 1893, to Dun & Co., and it is not pretended that on this statement any goods were purchased from these cross petitioners.
The decree is reversed., except on the appeal of Kyle & Co. as to them, it is affirmed.