Collier v. Davis

• Citation: 1 S.W. 684,47 Ark. 367
• Parties: COLLIER v. DAVIS
• Decision Date: 16 October 1886
• Court: Supreme Court of Arkansas

1 S.W. 684

47 Ark. 367

COLLIER v. DAVIS

Supreme Court of Arkansas

October 16, 1886

APPEAL from Yell Circuit Court, Hon. G. S. CUNNINGHAM, Circuit Judge.

Judgment affirmed.

Jacoway & Jacoway for Appellant.

The deed is a copy of one held good in Clayton v Johnson, 36 Ark. 408, and we rely on that case and the authorities cited there.

Hall & Carter for Appellee.

The deed of assignment is void on its face, because, first, it provides that "this assignment shall be settled and closed up under the direction of the creditors assenting to the same." A majority of the assenting creditors can have the assignee to close up the trust against the remonstrance of the minority, if this deed is good. The provisions of the statute of assignments are mandatory. See Jaffray v. McGehee, 107 U.S. 363; Raleigh v Griffith, 37 Ark. 150; Dodd v. Martin, 5 McCray, 53.

Because it provides no time at which the creditors shall assent to or reject its terms. See Henderson v. Bliss, 8 Ind 100; Mayer v. Shields, 12 Reporter, 789, (Mississippi Case decided Nov., 1881); 2 Kent, top p. 533, 6 ed.; Burrill, pp. 254, 285; Bump., 433; 7 Ohio 2 pt. 246; Brashear v. West, 7 Peters, 589; Grover v. Wakeman, 11 Wend., 197.

We refer the court especially to the brief of Judge U. M. Rose, published on page 53, 5 McCrary, in the case of Dodd v. Martin.

OPINION

SMITH, J.

McGuire, in 1884, made an assignment for the benefit of his creditors. The deed, after reciting that the maker is indebted in a sum far beyond his ability to pay, conveys to the trustee certain goods, wares and merchandise, which are particularly described in an accompanying schedule, and all the debtor's choses in action. The trustee is empowered to sell the goods, on the best terms he can consistently with the statute, to collect the debts, and apply the proceeds ratably among the creditors. But no creditor is to participate in the distribution of the assets, unless he will accept his share in full satisfaction of his claim. And the assignment is to be settled and closed up under the directions of the creditors who assent to the same.

The assignee filed his inventory and bond in the proper court, took possession, and notified creditors of the date, terms and conditions of the assignment, as well as of assets and liabilities.

A majority in number and value of creditors promptly expressed their acquiescence in the arrangement; but four creditors sued out attachments. Under these writs the sheriff seized the goods. The assignee brought replevin, and on a trial before the court without a jury, the assignment was declared void and the defendant had judgment.

The only evidence introduced, besides the deed and schedule, was an agreed statement of facts. From this it appeared that McGuire was insolvent, at the time of the assignment, and in such confirmed ill health that he had despaired of his life. The assignment included all of his property which was subject to execution. The claims of assenting creditors aggregated $ 800.87, while those of attaching creditors were $ 779.19. The assignee had, by consent of all parties in interest sold the goods, and the net proceeds in his hands, after deducting all expenses, were $ 612.18; for which sum, it was agreed, judgment might be rendered against him and his sureties in the replevin bond, if the court should find that the defendant was entitled to a return of the goods.

As the deed is in all substantial respects, a copy of the one which is set out in Clayton v. Johnson, 36 Ark. 406, we are under the necessity of re-examining the grounds of that decision. It is always a misfortune for a court to change front on a question which may affect property rights acquired since the rule was announced. And it is sometimes doubtful whether more mischief will be produced by adhering to an error, or by retracting it. The case has stood for more than five years, although it was never satisfactory to the profession. It is, however, indefensible in principle, and it was decided against the clear weight of authority.

In that case the single objection that was raised below, or considered here, was to the provision that no creditor should participate in the assets unless he would accept his share in full satisfaction of his claim. No directions were given for the disposition of any surplus after satisfying the creditors who acceded to these terms. And it was held this did not vitiate the assignment.

It seems to be admitted, in the reasoning of the court, that if the debtors had expressly reserved to themselves the surplus this would have been fraudulent. It is said: "There being no statute in this state prohibiting it, there is nothing in the general statute against fraudulent conveyances which can be construed to prevent a debtor from assigning all of his property, without reservation or benefit to himself, to a trustee for the payment of his debts, with a stipulation for a release."

Now, if no disposition of the surplus is made, a trust results to the maker by implication of law. And so far as the validity of the instrument is concerned, we can perceive no solid distinction between an express and an implied reservation. In one case, as much as the other, the assignment hinders and delays creditors in their remedies and endangers the ultimate collection of their debts. It puts the property beyond the reach of judgments and executions, into the hands of an assignee, chosen not by themselves, but by the debtor. It is locked up until the trusts of the deed are satisfied, and whatever remains is returned to the debtor in money--a form which is ordinarily intangible and inaccessible. Accordingly, those courts which condemn express reservations of the surplus have uniformly, so far as our researches extend, held that implied reservations are equally as bad. Dana v. Lull, 17 Vt. 390; Malcolm v. Hodges, 8 Md. 418; Bridges v. Hindes, 16 Md. 101; Whedbee v. Stewart, 40 Md. 414; Atkinson v, Jordan, 5 Ohio 293; Henderson v. Bliss, 8 Ind. 100.

In New York, and perhaps in every other jurisdiction where the question has arisen, except in those mentioned in Clayton v. Johnson, the invalidity of assignments, stipulating for a release as a condition of receiving any benefit under the assignment, has been established. And it is a remarkable fact that in an opinion prepared by the late Chief Justice, the drift of the decisions on this subject in several states has been totally misapprehended. Having himself a high veneration for precedents no judge was ever more diligent in searching for them, or more careful in weighing them, or more accurate in stating the result of them.

The Alabama cases do not sustain the position assumed by the court. Take for instance, West, Oliver & Co. v Snodgrass, 17 Ala. 549. The head-note, which correctly summarizes the principle decided, is as follows: "A deed of assignment, by an insolvent debtor, which provides that the preferred creditors are not to enjoy its benefits unless they accept of its provisions in full satisfaction of their debts, and that if any of them refuse to accept they shall be excluded, and the pro rata share to which they would have been entitled, had ...