Mayer v. Shields, 59 Miss. 107

Mayer v. Shields

59 Miss. 107 | Miss. | 1881

Chalmers, C. J.,

delivered the opinion of the court.

The deed of assignment in this case exacts from the creditors a release in full of their demands, as a condition of receiving any dividend under it. There are some States which sustain assignments of this character, while others denounce them as fraudulent and void on their face. The authorities are conflicting, and perhaps quite equally divided. Bump Fraud. Con. (2d ed.) 421-435; Burrill on Assignments (3d ed.), §§ 182-198. If we concede that such a stipulation is admissible by one who in *110professing to transfer his property to his creditors puts it temporarily beyond their reach by the ordinary process of law, the assignment in the present ease cannot even then be sustained. It violates one of the essential requirements of such instruments according to the views of those courts which admit the validity of stipulations for releases. It specifies no time within which the several creditors must signify their assent to or dissent from the proposition to surrender their debts; and yet it provides for a pro rata distribution of the assets among such as shall accept it. The consequence is, that the assignee can never know when to begin to make distribution. He can never determine what any creditor’s share is to be, until he knows what creditors are coming in, and as the period within which they may do this is unlimited, so also must be the delay in the collection of any and all the debts. In States which permit the insertion of provisions like this, it is held that there must be a reasonable time limited within which creditors must make their election and signify their acceptance or rejection of the proposition. What is a reasonable time will depend upon the circumstances of each case. It must not be so short as to deprive creditors of fair opportunity to investigate and determine the question, nor yet so long as to produce unreasonable delay in the application of the property to the liquidation of the debts. But if no time whatever is specified the deed necessarily and inevitably works a fraud on creditors. None of them can receive anything until all have made up their minds, and as no time is fixed within which they must do this the trust can never be wound up, save by the interposition of a court of equity. No court will permit a man to place his property even temporarily beyond the reach of legal process, burdened and incumbered by such conditions as this. The deed with such stipulations necessarily causes not only that ordinary delay unavoidable in all assignments, and which is therefore tolerated by the law, but a delay which cannot be ended by any provision contained in the instrument itself. This thwarts and defeats the objects which it professes to have in view. It is on this account void on its face, and should have been so declared by the court.

As it was not necessary to a decision of this case that we *111should decide whether stipulations in a deed of assignment exacting releases of their demands in full from all creditors as a condition of sharing in its benefits are admissible under any circumstances, we express no opinion on that subject. The court below should have instructed the jury that the assignment here was void on its face, and should have directed them to return a verdict for the plaintiff's in attachment.

Reversed and remanded.