Dawson v. Downing

• Decision Date: 30 November 1885
• Citation: 8 P. 838,12 Or. 513
• Parties: DAWSON v. DOWNING and others.
• Court: Oregon Supreme Court

8 P. 838

12 Or. 513

DAWSON v. DOWNING and others.

Supreme Court of Oregon

November 30, 1885

Wm. Ramsey, for respondent Coffey.

Tilmon Ford, for respondents Gilbert and John W. Minto.

Wm. Holmes and Samuel Richardson, for appellant, I.R Dawson.

THAYER, J.

This case comes here upon appeal from a decree entered upon a decision sustaining a demurrer to a complaint. It is alleged in the complaint that the respondent James Coffey had a stock of furniture and tobacco and cigars, and for a long time had been engaged in a general merchandise business, vending said articles; that he became indebted to divers parties on account of said business, amounting to $4,000, and was owing other liabilities amounting to $700; that he was indebted to the respondents A.T. and F.N. Gilbert, partners under the firm name of Gilbert Bros., in the sum of $615.50, and that he owed, or pretended to owe, the respondent Johannah Coffey who is the wife of said James Coffey, $700; that he was insolvent, and contemplated insolvency, and while in in that condition, and on the eleventh day of December, 1884, he made a general assignment to the respondent Downing of all his property for the benefit of his creditors; that on the ninth day of December, 1884, said James Coffey, being then insolvent and intending to make the said assignment entered into an agreement with the said Gilbert Bros. whereby, and as a part of the same transaction with the said assignment, and for the purpose of preferring the said Gilbert Bros. in the payment of their said demand over other of his creditors, he executed to the said Gilbert Bros. a chattel mortgage upon a large portion of his said property consisting of the said furniture; that on the tenth day of December, 1884, said James Coffey, while in the condition mentioned, and intending to make the said assignment, entered into an agreement with his wife, the said Johannah Coffey, whereby, and as a part of the same transaction with said assignment, and with a similar design of preference of payment of her demand, he executed to her a bill of sale of the said stock of tobacco and cigars, and put her in nominal possession thereof; that soon after the execution of said chattel mortgage to said Gilbert Bros. the respondent John Minto, acting for them, wrongfully took possession of the property included in the said chattel mortgage, and converted it to their own use; that it was worth $2,500; that at the time said James Coffey executed said chattel mortgage and bill of sale he was indebted in a large amount to divers persons on account of said business as before mentioned; that said creditors last referred to assigned their claims to said appellant; that he has no property out of which to recover said claims, except the property included in said chattel mortgage and bill of sale, and that if the owner of said claims is compelled to take his distributive portion of said property in the hands of said assignee, and not allowed any portion of the property mortgaged and sold, as mentioned, he will not realize more than from 5 to 10 per cent.; that said assignee is acting in good faith so far as his said trust is concerned, but is powerless to question the validity of the said instruments; that the assignment to him was not made in good faith. Said complaint contained a prayer for an accounting for said property mortgaged and pretended to be sold, and that it be transferred into the hands of an officer of the court; that the said assignment be set aside, and the assignee account for the property in his hands and pay it over to such officer, to the end that all the property of the said James Coffey, including that mortgaged and pretended to be sold to his wife, be distributed among the creditors of the said Coffey in accordance with equity, etc.

The demurrer to the complaint was upon two grounds: First because there were two causes of suit improperly united; and, second, because the said complaint did not state facts sufficient to constitute a cause of suit. The second ground is the more important one. It raises the question as to whether creditors at large, having mere legal claims against a debtor on account of ordinary contract debts, have a right to go into a court of equity to enforce them where the debtor has attempted to dispose of his property in order to defraud them. That a general assignment for the benefit of creditors may be set aside when made in violation of the insolvent law there can be no question; but whether it can be done by an ordinary creditor of the insolvent before he has obtained a judgment upon his claim, or in some manner secured a lien upon the debtor's property, is more serious. I am strongly of the impression that he cannot. Where a debtor attempts to dispose of his property in any way, in order to defraud his creditors, they may proceed and attach by taking it from the debtor, or by garnishment if in the hands of another party. They may pursue this remedy in case of a general assignment for the benefit of creditors if it be fraudulent. Moss v. Humphrey, 4 G....