Cunningham v. Norton

• Decision Date: 19 March 1888
• Citation: Cunningham v. Norton, 125 U.S. 77, 8 S.Ct. 804, 31 L.Ed. 624 (1888)
• Parties: CUNNINGHAM v. NORTON et al . 1
• Court: U.S. Supreme Court

125 U.S. 77

8 S.Ct. 804

31 L.Ed. 624

CUNNINGHAMv.NORTON et al.¹

March 19, 1888.

W. Hallett Phillips, for plaintiff in error.

M. L. Crawford, D. A. McKnight, E. John Ellis, and John Johns, for defendants in error.

BRADLEY, J.

This action is in the nature of an action of trespass, brought by an assignee for the benefit of creditors against the marshal of the United States for the Northern district of Texas, for seizing, levying on, and converting certain goods of one Wallace, which had been assigned to the plaintiff.The seizure by the marshal was made under an attachment issued out of the circuit court, at the suit of Naumberg, Kraus, Lauer & Co., who are also defendants in the present action.The plaintiff, in his petition, sets out his ownership, as derived under a deed of assignment, a copy of which is attached, and is in the words and figures following, to-wit:

'The State of Texas, Kaufman County: This indenture, made the 24th day of October, A.D. 1881, between S. W. Wallace of the first part, I. G. Lawrence of the second part, and the several creditors of the party of the first part who shall hereafter accede to these presents of the third part, witnesseth: That whereas the party of the first part is indebted to divers persons in considerable sums of money, which he is at present unable to pay in full, and he is desirous to convey all his property for the benefit of his creditors: Now, the party of the first part, in consideration of the premises and of one dollar paid to him by the party of the second part, hereby grants, bargains, sells, assigns, and conveys unto the party of the second part and his heirs and assigns all his lands, tenements, hereditaments, goods, chattels, property, and choses in action of every name, nature, and description, wheresoever the same may be, except such property as may be, by the constitution and laws of the state, exempt from forced sale; to have and to hold the said premises unto the said party of the second part, his heirs and assigns, but in trust and confidence to sell and dispose of said real and personal estate, and to collect said choses in action, using a reasonable discretion as to the times and modes of selling and disposing of said estate as it respects making sales for cash or on credit, at public auction or by private contract, taking a part for the whole where the trustee shall deem it expedient so to do, then in trust to dispose of the proceeds of said property in the manner following, viz.: First.To pay the costs and charges of these presents, and the expenses of executing the trusts herein declared, together with all taxes which are a charge upon any of said property.Second.To distribute and pay the remainder of the said proceeds to and among all the parties of the third part who will accept thereof in full satisfaction of their claims against said party of the first part, ratably in proportion to their respective debts.Third.To pay over any surplus, after paying all the parties of the third part who shall accede hereto as aforesaid, in full, to the party of the first part, his executors, administrators, or assigns; and the party of the first part hereby constitutes and appoints the party of the second part his attorney irrevocable, with power of substitution, authorizing him, in the name of the party of the first part or otherwise, as the case may require, to do any and all acts, matters, and things to carry into effect the true intent and meaning of these presents, which the party of the first part might do if personally present; and the party of the second part, hee by accepting these trusts, covenants to and with each of the other parties hereto to execute the same faithfully; and the party of the first part hereby covenants with the said trustee, from time to time, and at all times when requested, to give him all the information in his power respecting the assigned property, and to execute and deliver all such instruments of further assurance as the party of the second part shall be advised by counsel to be necessary in order to carry into full effect the true intent and meaning of these presents; and the parties of the third part, by acceding hereto, and by accepting the benefits herein conferred, hereby and thereby agree to and with the said party of the first part to release him from any and all claim or claims, debt or debts, demand or demands, of whatever nature, which they respectively have and hold against him; and this assignment is made for the benefit of such of the parties of the third part only as will consent to accept their proportional share of said estate of the said party of the first part, and discharge him from their respective claims.

'Witness our hands this 24th day of October, A.D. 1881.

[Signed]

'S. W. WALLACE.

'I. G. LAWRENCE.'

The defendants filed an exception to the petition, in the nature of a demurrer, assigning therefor the following reasons, to-wit: (1) Because the paper appended thereto and called an 'assignment' or 'deed of assignment' is not such in fact, and does not on its face purport to convey to the creditors of S. W. Wallace, the grantor, all of his estate not exempt from forced sale for the benefit of his creditors; (2) said deed is, only purports to be, for the benefit of such creditors as will accept it, and release the said Wallace from his debts due to them, reserving to said Wallace all of the estate not used in the payment of said accepting creditors, and directing the plaintiff Lawrence to pay to him all that part of the estate not appropriated by the accepting creditors; (3) said deed shows on its face that it was and is not an assignment under the statute, and that the trust was to be administered out of the court(4) it is not shown or assigned that any creditors have accepted such assignment; (5) the petition shows that the creditors at whose suit the attachment was levied, to-wit, Naumberg, Kraus, Lauer & Co., were and are non-residents of the state of Texas, and that they reside in New York; (6) said deed does not show that said Wallace was insolvent or in contemplation of insolvency; (7) said deed shows that the property pretended to be conveyed was to be disposed of by agents appointed by said Wallace, or by his authority, and that Lawrence was but an agent, and not a grantee.This demurrer being sustained, the petitioner had leave to amend, and did so by an averment that, after the execution of the assignment, and within the time allowed by law, the following-named creditors of Wallace had come in and accepted under the same, to-wit, Holt, Rivers & Corley, $108.40, (and 21 others named,) the total amount of whose claims aggregated over $14,000; and it was averred that the indebtedness so proven up against Wallace was largely in excess of the assets that came to the plaintiff's hands, including the property attached by the marshal.The demurrer was still sustained, notwithstanding the amendment, and judgment was rendered for the defendants; to reverse which this writ of error was brought.

The assignment in question was made under a law of the state of Texas passed on the 24th of March, 1879, immediately after the repeal of the national bankrupt law, and evidently intended to take the place of that law, as well for the benefit of creditors as that of insolvent debtors.Its main object seems to have been to secure a speedy appropriation of all the property of an insolvent debtor, willing to make an assignment, to the payment of his debts, so far as it might be adequate for that purpose.As an encouragement to the making of such assignments, h e law provides that, if the debtor so desires, he may make his assignment for the benefit of such creditors as will accept their proportional share of his estate, and discharge him from their respective claims, and the whole statute is evidently framed with a view to make the proceedings as simple as possible, and to obviate technical objections to their validity.The principal provisions of the act, bearing upon the questions raised in this case, are as follows, to-wit:

Section 1 declares that 'every assignment made by an insolvent debtor, or in contemplation of insolvency, for the benefit of his creditors, shall provide, except as herein otherwise provided, for a distribution of all his real and personal estate, other than that which is by law exempt from execution, among all his creditors, in proportion to their respective claims, and, however made or expressed, shall have the effect aforesaid, and shall be construed to pass all such estate whether specified or not.'Section 2 requires an inventory to be annexed containing a list of all the creditors of the debtor, with their residence, the amount due to each, and the consideration thereof, and whether any judgment or security exists therefor, and an inventory of all the debtor's estate, with an affidavit of the truth thereof; but it is declared in section 10 that no assignment shall be declared fraudulent or void for want of any inventory or list; but it may be required by the assignee.Section 3 enacts as follows: 'Any debtor desiring so to do may make an assignment for the benefit of such of his creditors only as will consent to accept their proportional share of his estate, and discharge him from their respective claims, and in such case the benefits of the assignment shall be limited and restricted to the creditors consenting thereto; the debtor shall thereupon be and stand discharged from all further liability to such consenting creditors, on account of their respective claims, and, when paid, they shall execute and deliver to the assignee for the debtor a release therefrom.'Section 4 provides for notice of his appointment to be given by the assignee.Section 5.'The creditors of the assignor consenting to such assignment shall make known to the assignee their consent in writing, within four months after publication of the notice provided in the preceding section, and no...