Baum v. A. Pearce & Co.

• Citation: 67 Miss. 700,7 So. 548
• Parties: JOSEPH BAUM v. A. PEARCE & CO
• Decision Date: 02 June 1890
• Court: United States State Supreme Court of Mississippi

7 So. 548

67 Miss. 700

JOSEPH BAUM v. A. PEARCE & CO

Supreme Court of Mississippi

June 2, 1890

FROM the circuit court of Covington county, HON. A. G. MAYERS Judge.

Appellant Baum, sued out an attachment against Pearce & Co., who traversed the grounds of attachment. On the trial of this issue, the plaintiff introduced an assignment for the benefit of creditors made by the defendants shortly before the suing out of the attachment, and he relied on the provisions of this instrument and certain facts proved in connection therewith to sustain the attachment. The court refused to instruct the jury for plaintiff that the assignment was on its face fraudulent and void.

The following instruction asked by plaintiff was also refused:--

"If the jury believe from the evidence that said defendants stated in their assignment that certain notes were held by A J. Weems, and by J. T. Hardie & Co., and Meridian Fertilizer Factory, when at that time the parties did not so hold said claims, and that these facts, with the circumstances detailed before the jury, were such as to reasonably convince the plaintiff or any of the creditors that the transactions of defendants were fraudulent, and that they intended to defraud their, creditors or any of them, or to hinder or delay their creditors, or any of them, in the collection of their just debts, then plaintiff had a right to sue out the attachment and the jury will find the attachment rightfully sued out."

Among others, the court gave the following instructions for defendants:--

"The fact that Albert Pearce, of A. Pearce & Co., secured the debt of Jack Fairly to Pearce & Co. after the date of the assignment; the fact that he lost or mislaid what is known as the fertilizer notes before the assignment, and after finding them returned them to the assignee after the assignment; the fact that he delivered to witness, Austin, notes collaterally to secure A. J. Weems in his debt, and the fact that A Pearce & Co. may have misstated the amount of their indebtedness to John T. Hardie & Co. do not establish fraud, if the jury believe from the testimony that there was no actual intent on the part of Albert Pearce to defraud his creditors."

"The actual intent to defraud some creditor must be proven by the testimony to have existed in the minds of Albert Pearce or Ben Leonard before the jury under the law can find that the attachment was rightfully sued out."

Verdict and judgment for defendants. Motion for new trial overruled: plaintiff appeals. A further statement of the case is contained in the opinion.

Reversed and remanded.

Nugent & McWillie, for appellant.

1. An assignment which tends to hinder or delay creditors is void. Where the delay is by the will of the grantor, and the obstruction to creditors is stipulated for in the deed, it is fraudulent. The provision in this assignment giving the assignee power "to dispose of for cash or otherwise as is customary, or according as the law directs, or shall be agreed upon by a majority of said creditors of all said property," etc., renders it void. Polkinghorne v. Martinez, 65 Miss. 272. An assignor cannot impress his will upon the future management of the trust estate to the injury of creditors. Richardson v. Stapleton, 60 Ib. 112.

The assignment further directs the assignee, after paying expenses and compensation for his services in settling said business, and otherwise on account of said business, then to pay the balance of the proceeds of said property, evidence of debt, etc., of every description as heretofore and hereafter described, to the creditors in just proportion according to the amounts of their claims pro rata. We contend that the operative effect of these provisions would necessarily be to hinder and delay creditors. In addition to the above authorities, see Mattison v. Judd, 59 Miss. 99.

The trustee takes the assigned property with all the limitations appearing on the face of the deed. It is the measure of his right and power in dealing with the estate. No court can relieve him from compliance with it, or substitute its judgment for his own.

The assignment here does not give the right of control to the majority in number and amount, but simply to a majority of the creditors, and, too, there may be a majority in this case representing only about one-twentieth of the secured indebtedness. By their direction the trust estate can be disposed of "for cash or otherwise, as is customary." These creditors have it in their power to postpone indefinitely the settlement of the estate, and so to delay the other creditors as to necessitate such settlement or...