9 Utah 267 | Utah | 1893
A. F. Sipperley and H. S. Lee were, prior to January 13, 1892, partners doing business as merchants at Salt Lake City, and on the above date made an assignment for the benefit of their creditors of all of their property to F. W. Ross. The written assignment, which appears in the record, after creating a class of first preferred creditors, which is denominated “Schedule A.” contains the following clause: “And whereas, the said A. F. Sipperley is indebted to Mrs. A. F. Sipperley by note dated the 10th day of March, 1887, for $4,800.00, and to Mrs. E. 3: Walling of South Cambridge, New York, by note of fourteen hundred dollars ($1,400.00); and whereas the above said H. S. Lee is indebted to H. A. Lee by note in the sum of two thousand dollars ($2,000.00). ' These last-named three debts shall hereafter be known in this conveyance as 'Schedule B/” Then follows a long list of creditors .of the firm, who are classed as “ Schedule O.” The writing provides that the assignee shall pay the debts in the following order: First; Schedule A in full; next, Schedule B in full; next, Schedule C in full; and the surplus, if any, to the assignors. Schedule A amounts to about $3,000. Schedule B, as above shown, amounted to $8,200, without interest. Schedule C amounted to about $22,000. Only $11,000 was realized from the property assigned.
A number of the creditors named in Schedule C renounced the assignment so far as their claims were concerned, and attached the property of Sipperley & Co. in the hands of Ross, the assignee. Ross defended, and the creditors in Schedules A and B intervened. Ross was afterwards by agreement appointed receiver by the court, and as such ■sold the property, and holds the proceeds to be disposed of by the judgment of the court. The court found, among
The first question presented is: Was the assignment void because of the preference of the creditors of the individual partners as provided in Schedule B? The next and remaining one is: If the assignment is void as to the preference .given to the parties named in Schedule B, is it not valid for all other purposes?
As to the first question, it is conceded the firm was always insolvent, and that the members thereof were likewise -insolvent. The creditors in Schedule B knew this, and knowingly loaned the money, to be used as capital in this business. Is it a fraud upon the other creditors to provide for and prefer these parties? We think it is well •settled that such an act is fraudulent and void. In Webb
This brings us to the second question, can the assignment be upheld in any part? The supreme court of the United States in Peters v. Bain, 133 U. S., at page 670, 10 Sup. Ct. Rep. 354, say: “We agree that, as respects-fraud in law as contradistinguished from fraud in fact, where that which is valid can be separated from that-which is invalid without defeating the general intent, the-maxim ‘void in .part, void in toto’ does not necessarily apply;” and this rule is relied on by appellants to sustain the assignment notwithstanding the fraudulent preferences in Schedule B. At the, argument we were forcibly impressed with this suggestion, but the trouble is that in this case the assignment is fraudulent in fact. It was-made with a fraudulent design and purpose. This fact is expressly found. The rule in such a case is declared in Crawford v. Neal, 144 U. S., at page 598, 12 Sup. Ct. Rep. 759, as follows: “Undoubtedly the rule is that a transaction void in part for fraud in fact is entirely void.”