Campbell v. Colorado Coal & Iron Co.

• Decision Date: 01 March 1886
• Parties: CAMPBELL, Intervenor, and others v. COLORADO COAL & IRON CO.
• Court: Colorado Supreme Court

10 P. 248

9 Colo. 60

CAMPBELL, Intervenor, and others v. COLORADO COAL & IRON CO.

Supreme Court of Colorado

March 1, 1886

Error to superior court, city of Denver. On petition for rehearing. See S.C. 7 P. 291.

The cause was tried upon an agreed statement of facts. This statement is, in brief, as follows:

Ferdinand Jensen and William M. Bliss were engaged as partners in mercantile business at Denver, Colorado, and Deadwood Dakota. The firm name, at the former place, was Jensen, Bliss & Co.; at the latter, it was Jensen & Bliss. At the hour of 7 o'clock P. M., October 1, 1884, Jensen, Bliss & Co. made an assignment of certain claims, demands, notes, and accounts, aggregating in value about $13,500, to one Metcalf for the purpose of paying or securing a bona fide firm indebtedness of $20,000. At the same time, and for a like purpose, Bliss also executed to Metcalf a trust deed upon certain realty, the title of which was in the former's name alone. At the hour of 9 P. M. of the said October 1st the firm executed and delivered to R. A Campbell, as assignee, an assignment of all the partnership property, 'of every name and nature within the state of Colorado,' for the equal benefit 'of each and every of our creditors in both branches of our said business and everywhere.' Prior to this, and about September 20, 1884 the attorney of the firm was directed to draw both of said assignments. The one to Metcalf was prepared by said attorney on said September 20th, and the other four days later, to-wit, September 24th. On the twenty-ninth day of September, without the knowledge of Metcalf, an entry was made upon the books of the firm of the transfer to him of the choses in action mentioned in the written assignment made for his benefit. At the time of the assignment to him, Metcalf knew that the assignment to Campbell was about to be made; but the assignee, Campbell, was ignorant, when he accepted the trust, of the Metcalf transaction. On the second and fourth days of October, 1884, the firm of Jensen & Bliss executed and delivered mortgages to certain of their Deadwood creditors upon their Deadwood property. Though the nature of this property is not specifically stated in the record, yet we are sufficiently advised to say that a large part of it was personalty. During all of the preceding transactions, both nominal firms were insolvent. November 8th following, plaintiff, the Colorado Coal & Iron Company, being a bona fide creditor of Jensen, Bliss & Co., brought an action against the firm for the amount of its claim, and caused a writ of attachment to be levied upon the property in the hands of Campbell as assignee. The latter intervened in this attachment proceeding, claiming the property by virtue of the assignment aforesaid.

Judgment was rendered against the intervenor, and in favor of plaintiff, whereupon the former sued out this writ of error. The principal question presented for determination related to the validity, under all the foregoing circumstances, of the assignment to Campbell.

E. O. Wolcott, A. E. Pattison, and J. F. Vaile, for plaintiffs in error.

J. D. Thompson and J. M. Waldron, for defendant in error.

HELM J.

We are now satisfied that upon one of the material questions considered in the opinion of the court, written by myself, and filed in this cause, an erroneous conclusion was reached. That opinion is accordingly withdrawn. The views therein expressed which are still adhered to, as well as those resulting from our further investigation upon this rehearing, are embodied in the following opinion, which will be substituted therefor.

1. Since the persons constituting both the firms mentioned in the agreed statement were the same, and they were engaged in carrying on the same business in both places, there was in law but a single partnership. The fact that there were two partnership names is of no importance, and 'the assets of both nominal firms are equally applicable to the payment of all the creditors.' In re Williams, 3 Woods, 493, and authorities there cited. We shall, therefore, in the discussion of this case, adopt the theory that there was but a single partnership, which was engaged in business at the two places mentioned; and that the Colorado creditors and the Dakota creditors were equally interested in the partnership assets, whether at Denver or Deadwood.

2. It may be considered a settled doctrine that voluntary assignments for the benefit of creditors which are valid in the state where the owners reside, will be held to pass personal property included, the situs of which is in other states. The assignees take title thereto unembarrassed by the claims of creditors, residing where the property is situate, who have not obtained a prior lien by levy of attachment or other process. We are not here concerned with the qualification of this doctrine recognized by some of the decisions, where the 'foreign assignment is repugnant to the policy or laws of the state in which domestic creditors have attached property located therein.' It follows from the foregoing propositions of law that Jensen, Bliss & Co. might have included in the assignment to Campbell their Dakota personal property also. In view of this fact, and of the matters set forth in the agreed statement, we proceed to briefly examine the law governing assignments for the benefit of creditors in Colorado.

3. Section 68, Gen. St., reads as follows:

'Whenever any person or corporation shall hereafter make an assignment of his or its estate for the benefit of creditors, the assignee named in the deed of assignment, appointed or selected, shall be required to pay in full, from the proceeds of the estate, all moneys bona fide due to the servants, laborers, and employes of such assignor for their wages accruing during the six months next preceding the date of such assignment, but to exceed, in no event, the sum of fifty dollars to any one person then remaining unpaid. All the residue of the proceeds of such estate shall be distributed ratably among all creditors, and any preference of one creditor over another, except as above allowed, shall be entirely null and void, anything in the deed of assignment to the contrary notwithstanding.'

We think that the word 'estate,' used in this statute, means all of the debtor's property, both real and personal, not exempt from execution, and hence that the statute was designed by the legislature to cover general assignments. We are satisfied that in this respect no distinction can fairly be drawn between section 68 and the statutes of other states on the subject, wherein the expression 'general assignment' occurs. Therefore, in our judgment, an important question presented is, are partial assignments prohibited or interfered with by this provision? To satisfactorily answer the foregoing question it is necessary for us to look beyond the statute, and consider the common law. We use the term 'common law' in its broader sense, as including those doctrines of equity jurisprudence which have not been expressed in legislative enactments.

4. A fundamental principle underlying this subject is, that, so long as the debtor retains dominion over his property, in the absence of statute and of fraud, he may do with it as he pleases. He may transfer the whole of his estate in payment or in security of a single bona fide debt. He may assign, mortgage, or otherwise incumber his estate, or a part thereof, in favor of some of his creditors, excluding the rest; or he may make an assignment for the benefit of all his creditors, and therein give preferences to a selected few. It is only when, either by a general assignment or otherwise, the debtor has parted with the dominion over his property, that, in the absence of statute or fraud, the foregoing privilege is forfeited. Bur. Assign. (3d Ed.) §§ 160, 161, and cases cited; Lampson v. Arnold, 19 Iowa 479, and cases cited; Worman v. Wolfersberger's Ex'rs, 19 Pa. St. 59; 2 Kent, Comm. (12th Ed.) 532, and cases cited, as to assignments. While, at first, this common-law doctrine may seem somewhat inequitable, yet upon reflection it clearly appears to be supported by at least one consideration of the most weighty import. To hold that debtors may not give preferences among their bona fide creditors, so long as they control their property, would greatly embarrass the transaction of nearly all kinds of business. Some of the authorities go so far as to say that such a rule would prevent the carrying on of business altogether. 'While a man retains dominion of his property, he may incumber and convey it as he pleases, if not directly forbidden by law, and prefer such creditors, by payment or transfer, as he chooses; and if it were not so, an individual could not get along in his business.' Blakey's Appeal, 7 Pa. St. 449. 'If, while a man retains his property in his own hands, the right of giving preferences should be denied, he would so far lose the dominion over his own that he could not pay anybody, because whoever he paid would receive a preference.' Tillou v. Britton, 9 N. J. Law, 120. 'Any enactment which takes away the right of a debtor to prefer them [creditors] would produce a sudden change, so extensive in all business transactions that its policy is somewhat questionable.' Worman v. Wolfersberger's Ex'rs, supra.

Recurring to the question already propounded: Does the statute under consideration so far change the foregoing common-law principle as to prohibit preferences in favor of chosen creditors by means of partial assignments? If the expression 'his or its estate,' therein contained means, as we have concluded it does, all of the debtor's property not exempt from execution, then the statute may read: 'Whenever any person or corporation shall hereafter make a general...