McFarland v. Bate

45 Kan. 1 | Kan. | 1890

The opinion of the court was delivered by

Johnston, J.:

The deed of assignment is assailed upon two grounds: First, because of a reservation in the instrument, in these words: “Except such articles as may he exempt by law from levy and sale on execution;” and,-second, the failure to include in the deed the individual property of Anna Bate, one of the assignors.

As to the first objection, it may be said that only partnership property was conveyed or intended to be conveyed by the deed of assignment, and as none of it was or is exempt, there was no reservation for the benefit of the assignors, and it does not appear that any portion of the partnership property was set apart or reserved for the benefit of the assignors. It has already been decided that such an exception is nugatory and will not invalidate the assignment. (Dodd v. Hills, 21 Kas. 707; Guptil v. McFee, 9 id. 30.)

As to the second objection, it appears that the assignment covered only the partnership property, and that one of the partners had individual property beyond what was exempt from the process of creditors. It is contended that the exclusion of individual property from the assignment was sufficient to invalidate it. There is nothing deceptive or misleading in the terms of the instrument, nor do we find anything indicating an intentional fraud upon any of the creditors. The whole partnership property was surrendered without reservation or preference. All the creditors of the assignors were free to participate in the assigned assets, and no releases were exacted from those who did participate, nor any conditions imposed which would debar or hamper them from proceeding against the individual or other property not included in the assignment. It is true, it is only a partial assignment, but such a transfer is not necessarily invalid. Its validity depends upon the statute regulating assignments, and it is well settled that unless prohibited by statute, the debtor may assign a por- . tion of his property for the benefit of his creditors, if all may unconditionally participate in that which is assigned, and if that which is not assigned is open and available to the remedies of all creditors. (Estabrook v. Messersmith, 18 Wis. 572; Carpenter v. Underwood, 19 N. Y. 520; Bates v. Ableman, 13 Wis. 644; Burrill, Assignm., 203, 232, 272; Bump, Fraud. Conv., 369, 391.) The same principle has been sustained where it was held that the assignment of all partnership property for the benefit of creditors is not invalid by reason of the fact that the individual property was not also assigned. (Auley v. Ostermann, 25 N. W. Rep. 657; Blair v. Black, 9 S. E. Rep. 1033; Trumbo v. Hamel, 8 id. 83; Blake v. Faulkner, 18 Ind. 47; Ex parte Hopkins, 2 N. E. Rep. 587.)

We are cited to several cases holding against the validity of partial assignments, but these authorities are based on statutes requiring that all the property or estate of the creditor shall be conveyed, or where one of the conditions of the deed making a partial assignment was that the creditors accepting its terms should give releases in full of their several debts. It may now be considered to be established by the weight of authority that a partial assignment which exacts releases from accepting creditors and deprives them from access to the residue not assigned is invalid. In this case, however, no releases were required, no preferences given, nor any reservations made, and our statutes do not prohibit partial assignments ; and hence the cases cited do not apply here. Although our statute relating to assignments requires that such property as is conveyed shall be for the benefit of all the creditors of the assignor in proportion to their respective claims, it does not require that all the estate of the debtor shall be assigned. (Gen. Stat. of 1889, ¶342.) The legislative purpose is further indicated in the subsequent paragraphs of that act, wherein it is provided that only an inventory of the property assigned shall be filed, and not an inventory of all the debtor’s estate, and also that the affidavit attached to the inventory shall be likewise limited. The court proceeded upon this theory when it held that in the absence of any statute prescribing the manner of closing up partnership estates, a surviving partner might make an assignment of partnership property for the benefit of the creditors of the firm. (Shattuck v. Chandler, 40 Kas. 516.) It is certain that the surviving partner could not assign the individual assets of his deceased partner, and equally certain that the individual property is subject to the payment of the unsatisfied claims of the firm’s creditors. We conclude that partial assignments are not prohibited by our statutes, and that the assignment of a firm need not necessarily include the individual estates of the partners. So far as the record shows, the action of the assignors was fair and honest; the assignment was openly made by them, and it purported to convey partnership property only. There was nothing in the instrument which tended to show that it included the individual property; nor does it appear that the individual property not assigned was concealed or placed beyond the reach of the plaintiff or any other creditor. The unassigned residue was accessible to all the creditors, and the record shows that all of this residue has been taken to satisfy the claims of the individual creditors of Mrs. Bates. The assignment upon its face is valid, and we find nothing in the record which renders it void.

The judgment of the district court is affirmed.

All the Justices concurring.