Bennett v. Ellison

• Decision Date: 15 December 1876
• Citation: 23 Minn. 242
• Court: Minnesota Supreme Court
• Parties: ELIHU M. BENNETT <I>vs.</I> JAMES A. ELLISON.

Page 242

23 Minn. 242

ELIHU M. BENNETTvs.

JAMES A. ELLISON.

Supreme Court of Minnesota.

December 15, 1876.

The plaintiff, as assignee of one James P. McClelland for the benefit of creditors, brought this action to recover the value of a large amount of personal property, taken from plaintiff's possession and sold by the defendant, as sheriff, by virtue of certain executions against the property of McClelland. In his answer the defendant assailed the assignment as made with intent to hinder, delay, and defraud the assignor's creditors.

At the trial in the district court for Olmsted county, before Mitchell, J., the defendant introduced evidence tending to prove that, shortly before the assignment, McClelland, being insolvent, and largely indebted to various persons — among others to the firm of E. M. & D. C. Bennett, of which the plaintiff was a member — arranged with plaintiff that he, McClelland, should, if possible, effect a compromise with all his creditors, upon the basis of 50 cents on the dollar, cash in hand, except the debt due E. M. & D. C. Bennett; that, if the compromise was effected, the plaintiff should furnish McClelland the money necessary to carry it out, which advances, together with the debt due E. M. & D. C. Bennett, were to be paid in full by McClelland; that, pursuant to the arrangement, McClelland attempted, through an agent, to effect the compromise; that a majority of his creditors agreed to accept it, but others refused; and that, on learning that the acceptance of the compromise had not been obtained, he made to plaintiff the assignment in question. The defendant also introduced evidence tending to

prove that McClelland made the assignment with intent thereby to bring about a consummation of the proposed compromise, and with expectation and intent that the execution of the assignment would and should induce and influence his creditors to accept the proposed compromise, and take 50 cents on the dollar in full satisfaction of their claims. The defendant also introduced evidence tending to prove that plaintiff knew all these facts at and prior to his acceptance of the assignment. The plaintiff introduced evidence tending to rebut that of defendant.

In the schedule, forming part of the assignment, McClelland's assets were stated at $13,675, and his liabilities at $19,982.40, the debt to E. M. & D. C. Bennett being $8,000, and the remainder being divided among nineteen different creditors.

The plaintiff requested the court to give the jury the following instructions, each of which was refused, and due exceptions taken:

"1. An assignment of property which will not actually have the effect of unlawfully hindering or delaying, or of defrauding, the creditors of him who makes the assignment, is a lawful and valid transaction as against such creditors, and the intentions of the person who makes such assignment, in making the same, are wholly immaterial.

"2. An assignment made by an insolvent debtor, of all his property, for the equal and ratable benefit of all his creditors, will not operate to unlawfully hinder or delay, or to defraud, any such creditor, unless there be an unreasonable delay in converting the property into money and dividing the same among the creditors, or unless some part of the assigned property be diverted to the use of the debtor, or to some other use which will prevent it being converted into money within a reasonable time, and divided among the creditors.

"3. An assignment by an insolvent debtor, of all his property, for the equal and ratable benefit of all his creditors will be valid unless made with the intent that there shall be unreasonable delay on the part of the assignee in converting the assigned property into money and dividing the same among the creditors, or unless made with the intent that some part of the assigned property shall be diverted to the use of the debtor, or to some other use which will prevent it being converted into money, without unreasonable delay, and divided among the creditors.

"4. An assignment made by an insolvent debtor, of all his property, for the equal and ratable benefit of all his creditors, is not invalid because made with the belief, on the part of the debtor and assignee, that it will influence the creditors to compromise with the debtor, and release him from their debts, unless it be further intended to make the right of creditors to share in the estate to depend upon their acceptance of the compromise and their release of the debtor.

"5. The assignment in question in this case is valid unless, when it was executed, it was intended, on the part of McClelland at least, that, in case no compromise with the creditors should result, there should be unreasonable delay in converting the property into money, and in dividing the same among the creditors; or that a part of the property should be diverted to the use of McClelland, or to some other use which should prevent it being converted into money without unreasonable delay, and divided among the creditors.

"6. If, when the assignment in question in this case was executed, McClelland and Bennett both believed that the creditors would be materially, or even strongly, or even effectually, influenced thereby to compromise with McClelland and release him from his debts, that fact did not affect the validity of the assignment.

"7. If the jury believe that the assignment was executed by McClelland with the intention and for the purpose sworn to by him upon the trial — that is to say, for the purpose of influencing his creditors to compromise with him — they must find for the plaintiff.

"8. If an assignment by an insolvent debtor of all his property, for the benefit, equally and ratably, of all his creditors, should be made with the intent to hinder, delay or defraud his creditors, that fact would not render the assignment invalid, unless the assignee, when he took the assignment, should have notice of such intent on the part of the assignor."

The plaintiff's counsel also requested the court to instruct the jury that the mere fact that, when the assignment was made, McClelland and Bennett believed that it would influence the creditors of McClelland to compromise with him would not render the assignment fraudulent; which instruction the court refused, and instructed the jury as follows, the plaintiff excepting:

"The mere fact that McClelland and Bennett, or McClelland alone, still entertained the hope or expectation that the proposed compromise would be consummated, notwithstanding the making the assignment, would not render the assignment void, provided McClelland's intent in making...