Parker v. Brown

Citation85 F. 595
Decision Date07 February 1898
Docket Number946.
PartiesPARKER v. BROWN.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

Prior to January, 1883, J. Engle was engaged in general merchandisee business at Hamburg, Iowa. His son, John R Engle, who had recently attained his majority, was engaged as a clerk in 1892 in a business house at St. Joseph, Mo. According to the testimony of J. H. Engle, he concluded to admit his son into a general partnership in his business at Hamburg. Whether or not the son was in fact admitted into co-partnership in the business at Hamburg is by no means clear, in view of the attending circumstances, and a want of any overt act of the parties evidencing such association. About March, 1893, the son was sent to Gaylord, Kan., with a stock of goods selected out of the Hamburg store, and opened a house at Gaylord under the firm name of J. H. Engle & Son. The son thereafter resided at Gaylord, and had personal charge of the conduct of the business there. J. H. Engle continued his residence and business at Hamburg as theretofore under the name of J. H. Engle, occasionally visiting Gaylord for a few days. This adventure at Gaylord proved unsuccessful, so that by July, 1893, the concern was in a failing condition. On the 15th day of July, 1893, the concern owed the plaintiff in error, a banker at Gaylord, for borrowed money, the sum of $438.70. About that time J. H Engle visited the house at Gaylord, to look into the condition of its affairs. Their creditors were becoming restive and urgent. Plans of relief were discussed between the Engles. Among other things, it was agreed that J. R Engle should see Parker, and try to secure an additional loan. J. H. Engle returned to Hamburg, Iowa, about the 16th day of July with the understanding that he would see what he could accomplish in the way of raising sufficient money there to tide over the business. On the 17th day of July, J. R Engle, failing to obtain a further loan from Parker, telegraphed J. H. Engle, at Hamburg, of this failure, and suggested to him to try to secure a loan from the bank there. On the same day the son, under the pretense that he had bought out the interest of his father in the business at Gaylord for the sum of $3,000, executed to his father a chattel mortgage on the entire stock of goods at Gaylord to secure the payment of said alleged purchase money 90 days after date, and placed this mortgage on record in Smith county, where he resided, and the goods were located. On learning of this conveyance, Parker and other creditors demanded of J. R. Engle security for their claims against the firm. One of the creditors brought an attachment suit. On the 19th of July, J. R. Engle, for himself and the firm, executed to Parker and other creditors separate chattel mortgages on said goods at Gaylord to secure debts of the firm, which mortgages were duly recorded in said Smith county on said day, the Parker mortgage having priority in point of time over the other mortgages. Pursuant to the provisions of the mortgage, Parker took immediate possession of the property. On the evening of July 17th, J. H. Engle, at Hamburg, Iowa, executed in the name of J. H. Engle & Son a general assignment of all property for the benefit of all the creditors. This deed was recorded in Fremont county, Iowa, the county in which J. H. Engle resided, on the 18th day of July. On the 22d day of July, Edward Sudendorf, the assignee, appeared in Kansas, and placed on record in Smith county this deed of assignment. Sudendorf failing to qualify as such assignee, by giving bond as required by the statutes of Iowa, the defendant in error, George H. Brown, was appointed and qualified as such assignee in Fremont county, Iowa. On October 10, 1893, this action was instituted by said Brown, assignee, against Parker, in the United States circuit court, to recover damages amounting to $10,000 for the wrongful taking and conversion of said stock of goods at Gaylord. On trial to a jury the plaintiff therein recovered judgment, to reverse which Parker sued out a writ of error to this court. Other special facts were sufficiently noted in the following opinion.

Webb McNall, for plaintiff in error.

George E. Stoker (Charles J. Dobbs, on the brief), for defendant in error.

Before SANBORN and THAYER, Circuit Judges, and PHILIPS, District Judge.

PHILIPS District Judge, after stating the case as above, .

Without taking up seriatim the many assignments of error in this record, the more important and decisive questions involved will be considered. At common law, a general assignment of all the property of the debtor for the benefit of all creditors operates as a transfer of the title of the assignor to the assignee of the entire assets of the debtor from the instant of the delivery of the instrument of conveyance and the possession of the property to the assignee. As personal property, at common law, has no situs separate from the domicile of the owner, such general assignment, valid by the law of the domicile, is, by comity, good in every other jurisdiction, and will be respected and enforced in the forum according to its effect under the law of the place of contract. But, as held by controlling authorities, this fiction of law is by no means of universal application. It yields whenever it is necessary for the purpose of justice that the actual situs of the thing should be examined. This fiction also yields 'when the policy and law of the state where the property is located have prescribed a different rule of transfer from that of the state where the owner resides, and to this are all the authorities. ' Green v. Van Buskirk, 7 Wall. 150; Warner v. Jaffray, 96 N.Y. 255. In Green v. Van Buskirk, supra, A., a citizen of New York, was indebted to B. and C., also citizens of New York. A., having certain personal property in the state of Illinois, gave B. a mortgage thereon to secure his debt. Before the mortgage was recorded in Illinois, or the property was taken possession of by B., such record and delivery of the property being necessary under the laws of Illinois, but not by the laws of New York, to the validity of the mortgage against third parties, C. brought an attachment suit in the state of Illinois, and seized the property there under writ of attachment, and prosecuting this proceeding to judgment, sold the property thereunder. Afterwards the mortgagee brought suit against C., in the state of New York, for conversion of this property, to which action C. pleaded in bar said proceedings in Illinois. The New York court held that, as the mortgage was valid under the laws of the state of New York, the domicile of the owner of the property, it was effectual to pass the title to the property in Illinois, and that B., by his attachment proceeding, acquired no greater right thereto than the mortgagor had, and gave judgment in favor of the mortgagee. On writ of error to the supreme court of the United States this judgment was reversed, the court holding that:

'The liability of property to be sold under legal process issuing from the courts of the state where it is situated must be determined by the laws there, rather than that of the jurisdiction where the owner lives. These decisions rest on the ground that every state has the right to regulate the transfer of property within its limits, and that whoever sends property to it impliedly submits to the regulations concerning its transfer in force there, although a different rule of transfer prevails in the jurisdiction where he resides. He has no absolute right to have the transfer of property lawful in that jurisdiction respected in the courts of the state where it is found, and it is only on a principle of comity that it is ever allowed. But this principle yields when the laws and policy of the latter state conflict with those of the former. ' Justice Davis in Hervey v. Locomotive Works, 93 U.S. 671.

In Warner v. Jaffray, supra, is an interesting and instructive discussion of this question. In that case there was a general assignment pursuant to the laws of New York by the owner domiciled there. The assignor owned property situated in the state of Pennsylvania, which, after the assignment, and before taking possession of the property by the assignee, and before the assignment was recorded, was levied upon under a writ of attachment by a creditor, a resident of the state of New York. It was held that the property passed to the assignee, subject to the lien thus acquired by the attachment, as by the law of Pennsylvania regulating assignments by nonresidents such instrument took effect at the time of its date, only in case no bona fide purchaser, mortgagee, or creditor had a lien thereon in the same county, and having no previous actual notice thereof. Earle, J., inter alia, said:

'The assignment was a mere voluntary conveyance, and can have no greater effect, so far as passing title to the property assigned, than any other conveyance. It did not operate upon the creditors of the assignor, nor place them under any obligation. It left them entirely free to act. They could utterly refuse to have anything to do with it, and retain their claims, and enforce them in their own time as best they could against their debtor. The assignee became a trustee for such creditors of the assignor only as chose to accept him as such, and without their assent the assignment did not bring the creditors into any relation with the assignee or with each other. The law did not take this insolvent's property for distribution among his creditors, but its distribution was his own act. Any one of his creditors could, notwithstanding the assignment, enforce his claim against any of the property of the assignor not conveyed by the assignment, without violating any rights or equities of the
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