23 S.E. 316 | N.C. | 1895
This matter is presented under section 567 of The Code. L. E. Wright made a general assignment of all his property for the benefit of all his creditors to the defendant, Biggs, as trustee. Wright was indebted to the plaintiff in the sum of (207) $3,200, and to the other creditors named in the assignment to the amount of about $6,000, all of which was secured in the deed without preference. The plaintiff's debt is, and was at the time of the execution *148 of the assignment, partly secured by a lien on Wright's interest in a brick storehouse in Oxford of the value of about $2,800. The defendant, trustee, has on hand for distribution among the creditors about $1,000. The plaintiff has demanded of defendant, trustee, his share of the fund, which, he insists, is 3200-9200 of the amount on hand, but the trustee has refused to settle on that basis, but is willing to pay to the plaintiff in the proportion of 400-6400 (four hundred dollars being the estimated amount which will still be due to the plaintiff after he shall have exhausted his lien on the storehouse and applied the same to his debt pro tanto). The question, then, is this: Is the assignee under a general assignment for the benefit of creditors required upon demand to pay a dividend out of funds in his hands for distribution upon the basis of the entire debt of one of the creditors secured in the deed, who has, and who had at the time of the execution of the assignment, a prior security upon a piece of property also conveyed in the assignment, or is the trustee to pay such creditor a dividend only on the balance due after the creditor has exhausted his prior security and applied the same to his debt? Or, to state it more concisely, does the doctrine of marshalling apply where one of the creditors, secured in a general deed of assignment for the whole amount of his debt, has a prior security on a piece of property which was also conveyed in the deed of assignment?
We have no decision in our own reports directly in point. The facts in Brown v. Bank,
As we have said, we have no direct authority on the matter before the Court. There are, however, decisions in many of the courts of sister States holding that a creditor under a general assignment, having also another security, is entitled to a dividend from the assignee upon the whole amount of his debt at the date of the assignment. A leading case is Patton's Appeal, 45 Pa. St., 151. In that case one of the creditors secured in the deed of assignment, the firm of S. W. Welch, had sold the assignor debtor a large quantity of sugar and had delivered to him only a part thereof, when, hearing of the failure and assignment of the debtor, the creditor detained the balance of the undelivered sugar, sold it and applied it to their debt, and claimed afterwards a dividend from the assignee upon the whole of their debt secured in the deed. The Court decided: "When the assignment was made there was due from the assignor to S. W. Welch the sum of $23,420. Of this, $21,026 was paid out of the proceeds of sale of that part of the sugar which was retained after the failure of the assignor, leaving unpaid (210) the sum of $2,394. If the beneficial ownership of property assigned in trust for creditors is not in the creditors for whose benefit the trust was made, it can be nowhere; for clearly it is not in the *150
assignor, nor is it in the trustee. Surely it cannot be maintained that, when an assignment has been made in trust for creditors, it does not operate as much for the benefit of a creditor who holds a collateral security for the debt due him as for the benefit of a creditor who holds no collateral. The appellees were holders of collaterals. When the assignment was made they had two securities, the trust created by it and their lien upon the sugar. Had they retained the sugar until the present time, no one would doubt their title to a dividend out of the trust fund upon the whole amount of the debt due them." The law is decided to be the same as inPatton's Appeal in People v. Remington,
His Honor below gave judgment that the plaintiff is entitled to receive from the trustee and to recover of him upon the basis of his entire indebtedness, and that it is the duty of the trustee to make payment to the plaintiff upon the basis of his debt against said Wright on the day of assignment, and not on the basis of said indebtedness reduced by the amount that the property, upon which plaintiff has a separate lien, will bring upon the sale thereof. There is no error in the ruling, and the judgment is
Affirmed.
Cited: Davenport v. Gannon,
(211)