Farmers' & Traders' Bank v. Martin

• Decision Date: 07 January 1896
• Parties: FARMERS' & TRADERS' BANK v. MARTIN et al. BUCHANAN et ux. v. SAME.
• Court: Tennessee Supreme Court

33 S.W. 565

96 Tenn. 1

FARMERS' & TRADERS' BANK v. MARTIN et al.

BUCHANAN et ux. v. SAME.

Supreme Court of Tennessee.

January 7, 1896

Error to chancery court, Sumner county; J. W. Bonner, Chancellor.

Action by the Farmers' and Traders' Bank against J. D Martin and others and by I. W. P. Buchanan and wife against the same. On demurrer the chancellor entered a decree for defendants. On appeal to the chancery appeals the decree was reversed, and defendants bring error. Affirmed.

Vertrees & Vertrees and Wilson & Pardue, for plaintiffs in error.

B. D Bell, W. C. Dismukes, Ed T. Seay, J. J. Turner, J. W Blackmore, and Geo. W. Boddie, for defendants in error.

BEARD J.

Jo D. Martin, on the 18th of November, 1893, made a general assignment for the benefit of his creditors. Among these were the complainants in the above-entitled causes. They, however, repudiated the trust created by this instrument, and filed their respective bills, attacking it on several grounds as fraudulent in law. On demurrer the chancellor entered a decree sustaining the assignment. On appeal the court of chancery appeals reversed this decree, and remanded the causes to the court below for further proceedings. The cases are before us on assignment of error to this last decree.

By the deed in question there was conveyed to the assignee personal and real property which he was directed to take possession of "at once." The personalty he was authorized to sell or dispose of "at any time to the best interest of all the creditors, and the real estate he was to rent out, either publicly or privately." It was then provided that "if the debts of the assignor were not paid on or before the 18th of November, 1895, then, and in that event, the trustee shall proceed to sell said land, after legal advertisement, upon the usual terms of one-third cash, and the balance in one and two years." It will be seen that the effect of this clause is, in the event of a sale of the realty, to postpone a final distribution of its proceeds for at least four years from the date of the deed. The court of chancery appeals held that this was a general assignment, distinguishable in important features from a mortgage or a deed of trust in the nature of a mortgage, and that, whatever might be the effect of this extension of time in winding up the trust created by one of these latter instruments, it was a fatal vice in the former. It is true that Mr. Burrell, in his very valuable work on Assignments, draws a distinct line of separation between an assignment, whether general or special, and a mortgage or a trust deed in the nature of a mortgage. By the two latter instruments, while the legal title is conveyed to the mortgagee or trustee, it is only in the nature of a security. The equitable title remains in the grantor, subject to his control, and to be reached by his creditors. On the other hand, Mr. Burrell says: "An assignment is more than a security for the payment of debts. It is an absolute appropriation of property to their payment. It does not create a lien in favor of creditors on property which in equity is still regarded as the assignor's, but it passes both the legal and equitable title to the property beyond the control of the assignor." Burrell, Assignm. (6th Ed.)§ 6. The distinction made by this author rests upon the authority of a number of reported cases emanating from courts of the highest character, and it is adopted by Mr. Pingrey in his late work on Mortgages. 1 Ping. Mortg. § 69. This court, however, if it has not heretofore declined, at least has not undertaken, to follow Mr. Burrell or the cases relied upon by him in thus sharply distinguishing these instruments. Yet it has noted a common-law assignment as possessing virtues peculiar to itself (Young v. Hail, 6 Lea, 175), and especially has it recognized a general assignment executed under chapter 121, Acts 1881, as being, to a great extent, sui generis (Scheibler v. Mundinger, 86 Tenn. 674, 9 S.W. 33; Steedman v. Dobbins, 93 Tenn. 397, 24 S.W. 1133). But, if this court was disposed to adopt the definition of an assignment given by these text writers, the case at bar would not be a proper one in which to announce it, for though the deed in question is none the less a general assignment, still, by its terms, it does not make an unconditional appropriation of the grantor's property to the payment of his debts. On the contrary, it is only in the event that "the debts are not paid on or before the 18th of November, 1895," that the trustee can sell the realty. Thus it is an instrument of a mixed nature. It is a general assignment, partaking of the nature of a trust deed so far as the land was concerned. For while it appropriates all the property as an ultimate fund for the payment of debts, yet intermediately between its execution and the date fixed for sale, the realty simply stands as security against the grantor's default in the payment of these debts. It thus answers the description of the instruments referred to by Mr. Burrell in section 8...