Burr v. Clement

• Decision Date: 11 January 1886
• Citation: 9 P. 633,9 Colo. 1
• Parties: BURR v. CLEMENT and others.
• Court: Colorado Supreme Court

9 P. 633

9 Colo. 1

BURR v. CLEMENT and others.

Supreme Court of Colorado

January 11, 1886

Error to county court, Arapahoe county.

John W. Horner, for plaintiff in error.

Benedict & Phelps, for defendants in error.

STONE J.

The principal question in this case involves the validity of an assignment made for the benefit of creditors. On the twenty-ninth of November, 1880, one David Cairns made an assignment of his effects to the plaintiff in error, Burr for the benefit of his creditors. The said assignee immediately took possession of the property assigned, the principal portion of which consisted of a stock of goods contained in a store in the city of Denver, and which merchandise is the subject of the contention in this case. After taking possession of the goods, the plaintiff in error put out his sign as assignee, took an invoice of the stock and proceeded to sell the goods both at private sale and at auction, and continued so to do from the date of the assignment until the eighth of December, 1880, being personally in charge of the goods and business most of the time each day. On the date last mentioned the defendants in error, claiming to be creditors of Cairns, the assignor, sued out of the county court an attachment against Cairns, placed it in the hands of the sheriff, which officer on the same day levied upon and took into his possession the goods then in the store, and in the possession of said assignee under the assignment. The plaintiff in error filed his interplea in said court, claiming the goods in question as assignee as aforesaid; and issue was joined upon the interplea. The goods so levied upon were inventoried by the sheriff at the time of the seizure at $1,880. The cause afterwards coming on for hearing, before a jury, empaneled to try the issues joined on the interplea, evidence was heard on the part of the assignee, as interpleader, of the facts relating to the assignment and what was done thereunder, and under the attachment as stated above; and it also appeared in testimony that Burr, the said assignee, was, at the time of the assignment, a clerk in the office of J. W. Horner, Esq., one of the attorneys of Cairns, the assignor.

The deed of assignment was offered in evidence on behalf of said interpleader, but was objected to by the other side, and the court, sustaining the objection, rejected the deed as evidence in the cause.

The defendants in error then moved to strike out all the testimony given in the case as to what was done under the assignment, which motion was granted, and the jury instructed to disregard said testimony. The defendants in error offered no evidence whatever in the case, whereupon the court directed the jury to find a verdict for said defendants in error, and to find the property in them, which verdict was accordingly given by the jury from their box, and judgment was rendered by the court in accordance therewith. Exceptions to these several rulings of the court were duly taken by plaintiff in error, motion for new trial made, and overruled, etc. The errors assigned go to these rulings of the court in the rejection and striking out of evidence, and in directing the verdict of the jury.

The first point made and discussed by counsel for plaintiff in error is that, since defendants in error offered no evidence in the case of any indebtedness of Cairns to them, they were not entitled to the judgment, irrespective of the character of the assignment; that possession of the goods in the assignee at the time of seizure under the attachment was prima facie evidence of right of possession, and this presumptive right was not overcome by any evidence of right in the attaching creditors; for that, until they had shown a debt existing from Cairns to them, they were not in a position to question the claim of the assignee. Several authorities are cited to this point, but, upon examination, we do not find that they sustain the position claimed here. The correct view, as it seems to us, is that the interpleader in such case by interpleading is deemed to admit, prima facie, the legal possession of the attaching creditor, and sets up a right in himself to overcome the presumptive or supposed right founded upon the legal process of the attachment proceeding. The burden of proof is upon the interpleading claimant to show a superior right in himself. If he fails in this, it leaves the possession and presumptive right thereof in the attaching creditor, as at the beginning of the contest upon the interplea. The first presumption of right founded upon the possession of the assignee prior to the attachment is shifted to the attaching creditor as soon as the property in controversy is, by the attachment process, taken into the custody of the law, and the burden of proof is therefore cast upon the interpleading claimant. Such interpleading claimant can have no interest in the contest, as to an indebtedness between the attaching creditor and the attachment debtor, other than the casual interest which by the statutory procedure, brings him in as a third party to try his individual right as a claimant of the property in controversy. In this case the attachment debtor, Cairns, filed no plea, and hence it is claimed that, if the interpleader failed to establish his right to the property in question, the attachment creditor was entitled to judgment as on a default. Whether in such a case judgment by default should have been regularly taken and entered is a question not pertinent to our present inquiry. For the reason of the rule that in such cases the interpleader by his interpleading is deemed to have admitted the facts of the relationship between the attachment creditor and his debtor, see Harrison v. Singleton, 2 Scam. 21; Dexter v. Parkins, 22 Ill. 144.

The objections made to the deed of assignment are that Burr, the assignee, was a clerk in the office of Mr. Horner, one of the attorneys of Cairns, the assignor, and also because of the following provisions contained in the assignment deed, to-wit:

'In trust, nevertheless, for the uses and purposes following; that is to say, to sell and dispose of, collect, recover, and receive the said properties, moneys and effects, and generally to convert the same into money, and after defraying all lawful costs, expenses, and charges for executing and carrying into effect the trust hereby created, then to apply the said moneys and proceeds as follows: First, to the payment of reasonable attorneys' fees, due and to become due, to J. W. Horner and G. C. Norris for professional services rendered, or to be rendered, for the benefit of the property assigned.'

It is contended by counsel for defendants in error that by reason of the foregoing provisions in the deed, and the relation of the assignee to the attorneys of the assignor, as above stated, the assignment was fraudulent and void upon its face; that the evidence as to the facts in the case was all on one side, admitted by the other side, and therefore presented no question of fact to be submitted to the jury; that it was a case of fraud in law and not of fact; that it was therefore a question of law for the court to determine; and that the instrument being held void the evidence of what was done under it went for nothing, and was properly stricken out.

As a reason for holding the deed of assignment void, it is insisted that the relations of the assignor and assignee to the attorneys named as preferred creditors, for services rendered, and to be rendered, in and about the matter of the property assigned, are a restriction upon the acts of such assignee, and authorities are cited to the effect that the assignment must be unconditional and unrestricted; that here the judgment and discretion of the assignee are not free from control by the attorneys of the assignor; that this provision as to the attorneys tends to hinder and delay creditors, since they cannot be paid until the fees are paid to said attorneys for services of future and indefinite extent and value, and in respect to litigation which the very terms of this assignment would tend to protract.

In support of the holding of the court below that the deed was void for the reasons stated, counsel for defendants in error rely chiefly upon the case of Mead v. Phillip, 1 Sandf. Ch. 83, where a deed of assignment was held fraudulent as against creditors, because, among other objectionable provisions, it contained a clause, succeeding the direction for the payment of the several classes of creditors, in the following words:

'* * * Excepting, nevertheless, in all cases, the right of payment, and deducting from the payments hereinbefore provided for to be made all the expenses necessarily incurred in the execution of this trust; and also to retain out of the proceeds of this assignment all costs and expenses necessarily incurred by me or my assigns, hereinbefore named, in defending any suits that may hereafter be instituted against me or them, or either of them, by any creditor or other person or persons, for any matter or thing growing out of, or in any way connected with this assignment.'

In commenting upon this provision of the deed the chancellor remarks:

'It is a standing notice to all creditors that any effort which they make to question the amount due to them, or to others, as stated in the assignment, to compel its execution, will be resisted by the debtor; that he will contest such efforts to the end of the law, and will then subtract the costs and expenses incurred by him in so doing from the fund to which they were looking for a dividend.'

An examination of that case shows, as the chancellor found, that the whole transaction was saturated with fraud; but that the chancellor did not...