25 W. Va. 716 | W. Va. | 1885
The only question arising in this case, which has been argued by counsel in this Court, is, whether the assignment executed by H. E. Earles to A. D. Neal dated September 29, 1882, transferring to him a stock of goods in the town of Milton to pay two preferred creditors and then to distribute the proceeds pro rata amongst all the creditors of the grantor was fraudulent on its face. Our statute of frauds provides, that “every assignment given with intent to delay, hinder or defraud creditors shall as to such creditors be void.” Code .chapter 74, section 1. To make an assignment void as to creditors under this statute, it is not sufficient that the effect of it is to delay or hinder creditors; for every assignment of a man’s property however good and honest the consideration must necessarily hinder and delay his other creditors, for it diminishes the fund, out of which his creditors may obtain satisfaction of their debts. But, to render it void against them, it must be made with intent to delay, hinder or defraud them. (Meux v. Howell, 4 East 13; Dance v. Seaman, 11 Grat. 778.) But as the law presumes every man to intend the legal consequences, which must naturally flow from his voluntary acts, if on the face of an assignment there are provisions, which are contary to the public policy of the State established »by statute-law or by the decisions of the court for the protection of creditors, and the effect of which is at the same time to hinder and delay creditors in a manner declared illegal by statute-law or by the decisions of the court, the law will conclusively presume, that the maker of such an assignment intended to hinder and delay his creditors by the insertion of such provisions in the assignment; and therefore the courts as a matter of law declare such assignments fraudulent on their face or as it is generally expressed, they are fraudulent per se.
The courts of the State of New York have probably gone further than those of any other State in the Union in holding such assignments and deeds of trust fraudulent on their face because of provisions inserted in them with reference to the management and sale by the assignee or trustee of the property assigned. They appear to have reached the conclusion, that any provision inserted in such an assignment or deed of trust with reference to the management or sale of the property, which would delay the creditors of the grantor beyond the time, which they woidd. necessarily be delayed, by the mere fact that the property was placed in the hands of an assignee or trustee to sell for the benefit of the creditors secured, woidd make the assignment or deed of trust fraudulent per se. As stated in Dunham v. Waterman, 17 N. Y. 9, the conclusion reached is,“that a debtor, who makes a voluntary assignment for the benefit of creditors, may direct in general terms a sale of the property and may also direct upon what debts and in what order the proceeds shall be applied; but beyond this he can prescribe no conditions whatever as to the management or disposition of the assigned property.” See also Jessup v. Hulse, 21 N. Y. 168.
In accordance with this conclusion it is held in New York, that a power granted, to the assignee or trustee to sell on credit made the assignment fraudulent per se; for this of course did delay creditors beyond the time for which they were necessarily delayed by putting their property in the hands of the assignee or trustee to be sold for the benefit of creditors. It is apparently now settled in New York accordingly, that an express power conferred on the assignee or trustee to sell the property on credit will render the assignment or deed of trust fraudulent per se. (Barney v. Griffin, 2 N. Y. 365, 371; Nicholson v. Leavitt, 6 N. Y. 510; Burdick v. Post, 6 N. Y. 522;
But the court of appeals of New York and the Supreme Court of this State being, as it seems to me, unwilling to carry out to their full extent the views, which they had expressed, that any discretion expressly conferred on the assignee as to the mode or terms of sale would render an assignment fraudulent and void on its face, have held, that such a clause, as we have quoted above, did not authorize the assignee or trustee to sell on credit. (See Whitney v. Krows, 11 Barb. 198; Southworth v. Sheldon, 7 How Pr. 414; Kellog v. Slawson, 15 Barb. 56; Same Case, 11 N. Y. 302; Nichols v. McEwen, 21 Barb. 65; Same Case, 17 N. Y. 22.) In Clark v. Fuller, 21 Barb. 128, words empowering the assignee to sell and providing the sale might be made “ in such manner as he shall deem best and most for the interest of the parties concerned,” were held not to render the assignment fraudulent per se because they did not authorize a sale on credit. And in Bellows v. Patridge, 19 Barb. 176, the court, as if to avoid the consequences ot holding every deed or assignment void and fraudulent on its face, which authorized a sale on credit, actually held, that when the assignment authorized the as-signee “ to convert the assigned property into money by sale either public or private as soon as practicable with due regard to the rightful interest of all the parties concerned, and in such a manner as might in the judgment of the assignee be for the best interest of the estate,” it was not void and fraudulent per se, because the power, which was intended to be given was only a “ rightful ” or “ lawful ” power, and that if a power to sell on credit was not lawful, no such power was given. In Brigham v. Tillinghurst, 13 N. Y. 220, the court concludes its opinion thus: “ The true rule tobe observed is this: An insolvent debtor may make an assignment of all his estate to trustees to pay his debts with or without preferences; but such assignees are bound to make an immediate application of the property, and any provision contained in the assignment, which shows that the debtor at the time of the execution intended to prevent the immediate application, will avoid the
The objection to this reasoning, which at once presents itself, is, that every assignment or deed of trust necessarily hinders and delays creditors' and is made generally with the avowed intent of delaying and hindering them, and yet neither in New York nor anywhere else is such an assignment or deed of trust fraudulent and void if made with an honest purpose, such as preferring creditors, and if it contains no provisions deemed contrary to publicpolicy. The reasons here assigned for holding an assignment fraudulent and void as to creditors would render every assignment for the benefit of creditors fraudulent; and this is not sustained by any decisions either American or English.
I have reviewed these New York cases in reference to what provisions in an assignment for the benefit ot creditors with reference to the management and'sale of the property assigned would make a deed fraudulent as to creditors, because the New York eases have been the principal cases relied upon by the defendant in error, and because they have had great influence on the decisions in the various states of this Union, especially of many of the northern states, though, as we will presently see, they have not been so generally followed in the decisions in the southern states. These decisions in reference to the effect in rendering fraudulent on its face an assignment for the benefit of creditors of a provision authorizing the as-signee to sell the property on credit have been followed in Michigan, (Sutton v. Hanford, 14 Mich. 19); Minnesota, (Greenleaf v. Edes, 2 Minn. 264; Truit v. Caldwell, 3 Minn. 364); Illinois, (Pierce v. Brewster, 32 Ill. 268; Bowen v. Parkhurst, 24 Ill. 257); Vermont, (Redfield, J. in Mussey v. Noyes, 26 Vt. 462, 470; Bennett, J. in Page v. Olcott, 28 Vt. 465, 468, 469); and Wisconsin, (Hutchison v. Lord, 1 Wis. 286; Haines v. Campbell, 8 Wis. 187). The New York case of Dunham, v. Waterman, 17 N. Y. 9, receives, it may be supposed, some support from the ease of the Exchange Bank v. Inlon, 7 Md. 391, though, as we shall hereafter see, this case is really based upon different principles.
Now it has been very generally held even in States, which generally follow the New York decisions, that, when as in the case before us the property of the debtor is insufficient to pay bis debts, the desire to protect it from sacrifice and have it realize as much as possible is not inconsistent with fair dealing and honesty, and instead of violating the policy of the law or the rights of creditors is in harmony with both and exempt from the charge of fraud. (Angell v. Rosenburg, 12 Mich. 241, syllabus and page 264; Burt v. McKinstry, 4 Minn. 216; Guerin v. Hunt, 8 Minn. 490.) Even in New York I find no cases controverting these view's ; but on the contrary I find cases supporting them. Ely v. Cook, 18 Barb. 614; Ogden v. Peters, 15 Barb. 564. I have been able to find no expressions of opinion anywhere to the contrary of these views except in a single instance in Vernon et al. v. Martin & Smith, 8 Dana, 171, of first edition. Page 264 of sec- . ond edition, Judge Ewing says : “ When it appears on the face of a deed of trust the motive of making it was to prevent a sacrifice of the property, a bad motive is shown and a motive to obstruct the ordinary process of law in the subjection of property to the payment of debts, which vitiates the whole deed ; and so if the motive and intention be proved aliunde.” When however this is read in connection with the balance of Judge Ewing’s opinion, the fair inference is not, that the deed would • be necessarily vitiated by a provision, which was inserted to prevent the sacrifice of the property, for in that case he upheld
The decisions above cited are reconcilable with the fundamental basis of the New York cases which we have before cited. Eor if the principles laid down in them were followed, any provision in the assignment, which, in order to prevenía sacrifice of the property, provided any other mode of sale than a public sale for cash, would make the deed fraudulent on its face; but the reverse was held in these cases.
Applying these to the case before us, the property of the debtor, W. T. Earles, being as appeared on the face of the assignment of September 24, 1882, insufficient to pay his debts, the effort to protect it from sacrifice by the insertion of the provision, that the assignee, Neal, should sell the goods transferred at private sale, was not inconsistent with fair dealing and honesty, and instead of violating the policy of the law or the rights of creditors, it is in harmony with both and exempt from the charge of fraud. This is the only provision in this assignment, which, it is claimed by the counsel for the defendant in error, renders it fraudulent on its face. We have seen, that in several of the northern States it is held, that an express power to sell on credit on the face of an assignment is held to make the assignment void and fraudulent on its face; but such a power is very commonly inserted in
There can be no question, that a deed of trust in this State will not be fraudulent per se, because the trustee is authorized to sell on credit. The policy of Virginia in regarding such a power as not vitiating a deed of trust has not only been adopted in this State, but we have gone still further and by statute, chapter one hundred and forty, section six of the Acts of 1882, provided that, when the deed is silent as to the terms of sale, it shall be made by the trustee for one-third cash, and the residue in two equal payments to be paid in one and two years from the day of sale. Thus there is a marked contrast between our policy and the policy of many northern States with reference to the propriety of authorizing a trustee in a deed of trust to sell on credit. This diversity between our policy and that of certain northern States must to a greater or less extent lessen the weight, which we would otherwise attach to the decisions in such States as to what provisions in an assignment or deed of trust for the benefit of creditors render it fraudulent per se, that is, render it void because it is in violation of the public policy of the State. There are, as far as I have been able to find, comparatively few cases, where there has been any expression of opinion as to the effect of expressly authorizing a trustee in an assignment or deed of trust for the benefit of creditors to sell at private sale. There is no question, but that, if the assignment or deed of trust is silent as to the mode of sale, the trustee can sell for cash or on reasonable credit upon the ordinary principles, which form the duty of the trustee. (Hoffman v. Mackall,
In Doe Ex Dem., Shackleford v. The Planters and Merchants Bank of Mobile, 22 Ala, 238, syl. 2, and p. 244, it was held, that a provision in a deed of trust conferring upon trustees “a just and reasonable discretion as to selling at private or public sale for cash or upon time with ample security,” does not render the deed fraudulent on its face. In Benjamin Burgin v. James Burgin, 1 Ired. Law 453, syl. 3, it was held, that ' it was no ground for a court to pronounce a deed of trust fraudulent per se as against creditors, that the' property conveyed was to be sold at private sale.” So in Shipwith’s executor v. Cunningham, 8 Leigh, 273, 274, the deed of trust executed by Richard M. Cunningham to Richard ~W. Boadnax and Charles F. Osborne, trustees, dated October 13,1827, that the trustees might “ sell the property either publicly or pri
The case before us differs, it seems to me, most materially from this Maryland case. In that case the deed provided, that the trustee might sell the goods, wares'and merchandise at retail and on credit as the grantors, merchants, had pre
The assignment does not show accurately the character ot his stock of goods, except that it consisted of “dry goods, boots and shoes, hats and caps, clothing, notions, hardware, jewelry”, &c,; a general stock of merchandise excepting groceries and queensware, which had been sold to Parish & McKinney. It seems to me but a resouable expectation on the part of the grantor, that the assignee might in a short time find a purchaser of all this stock of goods — -might dispose of them to some merchant at a fair price, just as he himself had sold his groceries and queensware. Nor dp I see, that this was such a remote possibility, that we can fairly conclude, that it was intended, that this stock of goods should be sold by the assignee only at retail. The assignment does not so provide as it does in the numerous cases above referred to.
My conclusion therefore is, that the assignment made by H. L. Earles on September 29, 1882, is not fraudulent on its face. The court therefore erred in refusing to grant the instruction asked by the counsel of the plaintiff below. It should have been granted with a slight modification. The form, in which it should have been granted, is this: “The court instructs the jury, that the assignment of II. T. Earles to A. E. Neal dated September 29,1882 is not fraudulent on its face, and unless the jury believe from the evidence, that H. T. Earles, when he executed this assignment, did so with intent to delay, hinder or defraud his creditors, and that this intent on his part was known to A. H. Neal, when he took possession of these goods, wares and merchandise, then the
As the ease then must be tried over, I deem it improper for this Court to express any opinion as to the evidence, as a different case may be presented to the j ury at the next trial. I will only say, that, if on the evidence on the next trial the jury should believe, that II. T. Earles had the direction formerly in this assignment that A. I). Neal should sell these goods, wares and merchandise at public or at private sale altered so as to direct the goods to be sold at private sale only with the bona fide purpose on his part to prevent the' sacrifice of the goods and with the bona fide purpose of realizing the largest amount possible for the creditors, then the assignment is neither per se fraudulent nor fraudulent in fact, nor would the fact, that the jury might believe, that H. T. Earles was mistaken in his opinion, that the selling of these goods at private sale would be promotive of the interest of his creditors, vary the case or justify them in finding this deed to be fraudulent. But if on the other hand the jury from the evidence should find, that II. T. Earles in making this change in the assignment did so not with the intent or belief, that he
The judgment of the circuit court of Cabell county of March 22, 1883, must be set aside, reversed and annulled; the plaintiff in error must recover of the defendants in error his costs in this Court expended; and this Court must set aside the verdict of the jury and award the plaintiff a new trial, the costs of the former trial to abide the result of the suit; and this case must be remanded to the circuit court of Cabell county to be proceeded with according to the principles laid down in this opinion and further according to the principles governing courts of law.
Reversed. Remanded.