Sutton v. Hanford

11 Mich. 513 | Mich. | 1863

Manning J.:

The first objection to the validity of the assignment is, that it authorizes the assignee to sell the assigned property on ciedit. We think this objection is well taken.

Assignments by insolvent debtors for the benefit of creditors, are binding on the latter, when made by the debtor for the purpose of converting his property into money to pay his creditors. When the assignee goes farther than this, and stipulates for, or authorizes, the assignee to do some act for his ■ personal gain, or unnecessarily postpones the payment of his creditors without their assent, the assignment can not be sustained as against them without encroaching on the statute against fraudulent conveyances.

In authorizing the assignee to sell on credit, the assignor not only exposes what he professes to give up to his creditors tó a loss — a hazard incident to credit — but, to the extent of the credit given, hinders and delays them in the collection of their just dues. If he may authorize a sale on credit, may he not also authorize the assignee not to sell, or to hold on to the property for a giveu period of time, unless it can be sold at a certain price? If he may make the assignee a trustee for any other purpose than the one above stated, what power may he not give him? and how long may the payment of creditors be delayed ?

There is some force, we admit, in the argument that real estate — for there is much of it embraced in the present assignment — will ordinarily bring a higher price when sold on credit than when sold for cash. But in law this is not a sufficient consideration to support the clause under discussion. Execution and mortgage sales are for cash, and not on credit, and the interest and relations of debtor and creditor are the same in those cases as in the one before us. We see no good reason why a credit should be given in one and not in the other.

What was the object of the assignor? If it was tho liquidation of a greater amount of his indebtedness, it was for a personal benefit to himself. If, on the other hand, it was to prevent a sacrifice of the property to the detriment of his creditors, it is a trust not necessary for that purpose, and depriving the creditors of the right of electing for themselves — forced upon them by their debtor — for there can he no doubt that without the credit clause in the assignment the assignee may sell on a credit with the assent of all the creditors. That all the creditors do not consider a sale on credit beneficial to them is evident from the present suit.

Conveyances made to hinder or delay creditors, as well as to defraud them, are declared void by the statute. The delay incident to an assignment made in good faith does not, however, come within the statute, as it is not the object, hut only an incident or property, of' the assignment, which credit is not. The length of the delay is immaterial. It might, under the present assignment, he for a few months only, or for one or two years. A credit of less than six months or a year would not materially affect the price of real estate. And the best security would be a mortgage on the land sold, which it would take fifteen months to foreclose, if not paid when due.

The question we have been considering has been decided differently in different states.

For the reasons stated we think the assignment void as to creditors, and that the judgment should he. affirmed, with costs.

Christiancy and Campbell JJ. concurred. Martin Ch. J. did not sit in the case.