Farwell v. Cohen

• Decision Date: 10 June 1891
• Citation: 32 N.E. 893,138 Ill. 216
• Parties: FARWELL et al. v. COHEN.
• Court: Illinois Supreme Court

138 Ill. 216

32 N.E. 893

FARWELL et al.

v.COHEN.

Supreme Court of Illinois.

June 10, 1891.

Dissenting opinion. For majority opinion, see 28 N.E. 35.

Per Magruder, C. J., dissenting.

ASSIGNMENT FOR BENEFIT OF CREDITORS-FAILURE TO RECORD-JURISDICTION OF COUNTY COURT.

Act May 22, 1877, provides that in all cases of voluntary assignments made for the benefit of creditors the assignment shall be duly acknowledged and recorded in the county where the person making the same resides, or where the business was carried on, and that the assignee shall at all times be subject to the order and supervision of the county court. Held, that the county court has no jurisdiction over the assignee where the assignment is not acknowledged and recorded as provided in the act.MAGRUDER, C. J., ( dissenting.)

George Silverman, of Danville, Vermilion county, signed a written instrument, which recited that he was indebted to certain persons, and was desirous of securing the payment of such indebtedness, and which purported to sell, assign, and transfer a stock of goods and certain personal property in a store building in Danville to Daniel Cohen, in trust to sell the same, and out of the proceeds of sale pay the indebtedness. Cohen assumed the trust, and was proceeding to execute it as directed. The instrument, however, under which he acted, was not acknowledged or recorded, as required by sections 1 and 3 of the act in reference to voluntary assignments, passed by the legislature of this state, and approved May 22, 1877, and he did not file an inventory and appraisement with the clerk of the county court, nor enter into bond before the clerk of such court, as required by section 3 of the act. Thereupon appellants, as creditors of Silverman, applied to the county court for the appointment of a new assignee, under section 12 of said act, and obtained an order removing Cohen, and appointing John G. Thompson as assignee in his place.

The instrument in question may be conceded, for the purpose of this case, to be an assignment, but, inasmuch as it was not acknowledged or recorded, either in the recorder's office or the county court, it was not such an instrument as called for or justified the exercise of the power of appointment conferred upon that court by section 12. A voluntary assignment for the benefit of creditors, as spoken of in the act of 1877, has no other or different meaning than it had before the passage of that act. Long before 1877 such an assignment had a well-defined signification in this state and in all other states. According to the common acceptation of the term, it is a transfer without compulsion of law by a debtor of his property to an assignee, in trust to apply the same, or the proceeds thereof, to the payment of his debts, and to return the surplus, if any, to the debtor. As to the form and contents of it, it has always been understood in this state to be a written deed of conveyance, executed by the assignor, as party of the first part, to the assignee, as party of the second part, reciting the grantor's indebtedness and inability to pay, and conveying his property, real and personal, by apt words of sale and transfer, to the assignee in trust, to take possession of and sell the same, and to collect the outstanding debts, and out of the proceeds to pay the creditors. Sometimes it provided for preferences, and sometimes not. Schedules were generally attached to the deed, prescribing the property and naming the creditors. That such was the understanding as to its general form and character will appear from an examination of the following cases decided by this court: Cross v. Bryant, 2 Scam. 36;Conkling v. Carson, 11 Ill. 503;Kimball v. Mulhern, 15 Ill. 205;McIntire v. Benson, 20 Ill. 500; Wilson v. Pearson, Id. 81; Bowen v. Parkhurst, 24 Ill. 257;Sackett v. Mansfield, 26 Ill. 27; Myers v. Kinzie, Id. 36; Finlay v. Dickerson, 29 Ill. 9;Pierce v. Brewster, 32 Ill. 268;Whipple v. Pope, 33 Ill. 334;Field v. Flanders, 40 Ill. 470;Gibson v. Ress, 50 Ill. 383. Such a deed of assignment as is above described is referred to and held good in Cross v. Bryant, supra; and in Sackett v. Mansfield, supra, such a one is thus spoken of by this court: ‘This deed, made an exhibit in the cause, fulfills, in our judgment, all the requirements of a valid deed of assignment. * * * It is for the benefit of the assignor's creditors,’ etc. The first sentence of the first section of the act of 1877 assumes that the meaning of a ‘voluntary assignment for the benefit of creditors' is already well understood, and therefore no new definition of the term is attempted. A study of the language in which the various provisions of the law are expressed will demonstrate that its framers intended to designate just such a deed of assignment as is described in the foregoing decisions. The assignment contemplated by the act must be in writing. This is so, because it is required to be acknowledged and recorded, and it is so, whether the requirement to acknowledge and record be directory or mandatory, because the fact that it is spoken of as an instrument that may be acknowledged and recorded shows that it must be in writing. The assignment contemplated by the act must be one single instrument of transfer. It is so treated and spoken of in almost every section. The debtor is required to annex to it an inventory of his property, and a list of his creditors, and, although the absence of these does not make it fraudulent or void, yet an instrument to which an inventory and list may be attached cannot very well be constructed out of a number of acts done by the debtor, or out of a number of notes, mortgages, or other documents signed by him, and passed out of his hands into the possession of different parties. The assignee is required to give notice of the assignment, by mail and by publication, to the creditors, and it would hardly be possible to write or print a notice of an assignment which does not come into existence until it is constructed out of acts and circumstances by the determination of a judicial tribunal. The contents of the assignment mentioned in the act must be substantially the same as those of the ordinary deed of assignment referred to in the text books and judicial decisions. It is spoken of in sections 2 and 12 as an instrument in which an assignee is ‘named,’ and in section 1 as an instrument by the terms of which title to property becomes vested in the assignee. If it vests title to property not named in the attached inventory, but ‘comprehended within the general terms of the ‘assignment, it must certainly contain apt words by which a grantor therein named transfers to a grantee therein named the title to property described in specific terms in the assignment, or in the inventory attached to it. It is spoken of in sections 3 and 12 as an instrument by which a trust is ‘confided,’ and in which a trust is embraced, and in sections 1 and 3 as an instrument made for the benefit of creditors, and authorizing the collection of debts and the sale of property. The act contemplates no such thing as a constructive assignment. The thing about the act which is new is the relation which it brings about between the assignment and the county court. By section 18 of article 6 of the constitution, county courts are made courts of record, and are given original jurisdiction in certain specified matters, of which the subject of voluntary assignments for the benefit of creditors is not one, ‘and such other jurisdiction as may be provided for by general law.’ Under the latter clause of said section 18, as thus quoted, the act of May 22, 1877, was passed by the legislature. Therefore, county courts derive their power to deal with voluntary assignments from an act of the legislature, and not from the specific mention of that subject in the constitution itself. Hence the jurisdiction conferred upon them by the act of 1877 is a special statutory jurisdiction, and must be exercised in the mode prescribed by the statute. The act in question makes a previously executed assignment the basis and foundation of the jurisdiction of the county court. An assignment already made is a preliminary requisite to the exercise of any jurisdiction whatever by that court. The sole power of the court is to oversee and regulate the administration of a trust which has been created independently of it, and without its aid. It acts upon an instrument which has been prepared for it in advance.

The county court is mentioned for the first time in section 3 after the mode of executing the assignment is provided for in section 1, and after the assignee is directed by section 2 to notify the creditors to present their claims to him. The person who is required by section 3 to file an inventory and appraisement with the clerk of the county court is the assignee. An assignee is defined by Bouvier in his Law Dictionary to be ‘one to whom an assignment has been made.’ The existence of an assignee presupposes the existence of an assignment, to which he owes his appointment. He is to file an inventory, etc., of ‘said estate.’ The words ‘said estate’ refer back to ‘the debtor's estate,’ mentioned in section 1, to which the assignee had obtained title through an assignment made before the time for filing the inventory had arrived. The form of the assignee's bond prescribed by section 3 speaks of a trust that had theretofore been confided to the assignee. Section 7 provides that assignees shall be subject to the order and supervision of the county court ‘in the execution of assignments;’ that is to say, in the performance of the duties imposed by the assignment. The assignment, specifyingand defining the duties to be performed, must have been previously executed. The power to decide whether any creditor whose claim is questioned may or may not share in the assigned funds, and to determine how and when such funds shall be distributed, is conferred upon the county court by ...