Fox v. Adams

• Decision Date: 01 April 1828
• Citation: 5 Me. 245
• Parties: FOX v. ADAMS & AL., and Trustees
• Court: Maine Supreme Court

5 Me. 245

FOX v. ADAMS & AL., and Trustees

Supreme Judicial Court of Maine, York

April, 1828

[Syllabus Material] [Syllabus Material] [Syllabus Material]

THE questions in this case, which was assumpsit, against the house of Adams & Amory, were raised upon the facts disclosed in the answers of Isaac Emery, one of the persons summoned as their trustees, in a foreign attachment.

It appeared that Adams & Amory, merchants in Boston, having become insolvent, made an assignment of their property, May 25th, 1826, to Ellery, Sargent, and Brooks, in trust for the benefit of the assignees, and such other of their creditors as should become parties to the assignment within seventy days then next. The proceeds of the property, after paying certain preferred creditors, sureties on bonds, and endorsers, was to be applied pro rata, to the other creditors, parties to the indenture; and a release was inserted, of all demands against the principal debtors.

On the 2d day of June, 1826, a further agreement was indorsed upon the same indenture, and declared to be a part of the same reciting that the amount due to the United States, upon custom-house bonds, was intended to be inserted in the annexed schedule of preferred debts, but could not previously be ascertained; but was now inserted in the amount of upwards of ninety thousand dollars, and declared to be entitled to preference in payment over all other debts.

On the 6th day of June, 1826, a further indenture was executed, transferring the property and the whole trust from Ellery, Sargent, and Brooks, to Jonathan Amory and Jonathan Amory, Jun.

On the 23d day of May, 1826, Emery, the trustee, being indebted to Adams & Amory twenty-five hundred dollars, for cash advanced on consignments made and expected, and they having his goods in their hands, on consignment, to the value of a thousand dollars, they drew on him for twenty-five hundred dollars, at sixty days' sight, in favor of Isaac Adams, of Newburyport. On the 25th of May, the drawers enclosed this draft to Emery, requesting him to accept it and hold it subject to the order of the payee, or till he should hear from them again; and he received and accepted the draft on the same day. On the 23d or 30th of May, they wrote to Emery, informing him that his goods, which had been consigned to them, would be delivered up, on his forwarding the draft, accepted, to Isaac Adams, the payee. And afterwards, on the latter day, they again wrote, requesting him to hand over the draft to Mr. Deshon, of his own town, and stating that their assignees, to whom the goods had been transferred among the rest of their property, would not deliver them to the Messrs. Motley, agreeably to his order, unless the draft was accepted; of which the drawers had not yet been advised, and did not pretend to control the business. But before he had time to comply with this request, he was summoned, on the same day, as their trustee, in the present suit. The gross amount due from Emery to them was included among the mass of their property assigned; and the goods were sold for whom it might concern. Formal notice of the assignment of this debt was given by the assignees in about twenty days after the failure.

It appeared by affidavits annexed to the assignment, and disclosed by the trustees, that the property assigned was insufficient to pay the debts due to the creditors who were parties thereto.

Trustees charged.

J. and E. Shepley, for the plaintiff. 1. The assignment takes effect from the second of June, when the new agreement was executed; which acts upon the original like the codicil upon a will, postponing its operation till the date of the codicil. Even a small sum of money thus given causes the will to pass lands acquired after its date, and before the making of the codicil. Coppin v. Fernybrough, 2 Bro. Ch. Ca. 291. Powell v. Clever, Ib. 511. Brownell & ux v. D'Wolf, 3 Mason, 494. In principle, this case is analogous to Denny v. Ward, 3 Pick. 199, where the alteration of a writ, by inserting the name of a dormant partner, after an attachment made, though with the subsequent assent of the debtor, was held to vacate the attachment, so far as a subsequent attaching creditor was concerned. It was in effect taking back the deed, and redelivering it in another form and to other uses, an attachment having intervened.

2. Courts of law will not give effect to assignments, whether by operation of law, or by act of the parties, in a foreign jurisdiction, until after the debts of their own citizens are satisfied. So are the cases of ancillary administration. Goodiwin v. Jones, 3 Mass. 517. Selectmen of Boston v. Boylston, 4 Mass. 324. Richards v. Dutch, 8 Mass. 515. Dawes v. Boylston, 9 Mass. 350. Stevens v. Gaylord, 11 Mass. 269. Dawes v. Head, 3 Pick. 128. As to the case of bankruptcy, though the English decisions are contradictory, -- 3 Ves. & Beame, 97, -- yet in this country the question seems at rest. 5 Cranch, 289. 3 Pick. 133. That the same principle should be applied to assignments by the act of the parties themselves, is intimated in Meeker v. Wilson, 1 Gal. 419, and expressly decided in Massachusetts, in Ingraham v. Geyer, 13 Mass. 146. If it were not thus settled by authority, the extreme inconvenience to our own citizens, resulting from giving unqualified effect to foreign assignments, to which they might never be able to become parties if they would, ought to induce the court to withhold its sanction.

3. The assignment is void for legal fraud, as against creditors not parties to it, they not being permitted to become so, without releasing their debts. To this point it is admitted that the cases are opposed. Widgery v. Haskell, 5 Mass. 144; Harris v. Summer, 2 Pick. 129; Seaving v. Brinkerhoff, 5 Johns. Chan. Ca. 329 Hyslop v. Clarke, 14 Johns. 459; Austin v. Bell, 20 Johns. 442, and Bond v. Smith, 4 Dal. 76, support the position. Lippincott v. Barker, 2 Binn. 174, and Halcey v. Fairbanks, reported in Oliver's Conv. 573, seem to the contrary; though in the latter case, the arguments of Story, J., are against the assignment, the weight of authority only being understood to turn in its favor.

It is also void, because the time prescribed, beyond which creditors shall not be permitted to come in, is unreasonably short, the debtors having been merchants in very extensive business. On this point, it is for the court to fix a rule for itself; and in similar cases, courts usually advert to the enactments of the legislature, as affording correct analogies. Thus courts of equity adopt the periods of the statute of limitations; and in cases like the present it would seem that the period of six months allowed by law to the creditors of deceased insolvents to bring in and prove their claims, was not an unreasonable rule. Prevost v. Gratz, 6 Wheat. 497. Ricard v. Williams, 7 Wheat. 117. Hughes v. Edwards, 9 Wheat. 489.

4. The drawing of an order in favor of Isaac Adams, was no assignment of the debt to him, nor was it payment of the debt, so as to prevent a suit by Adams & Amory for the amount against Emery; the draft having remained always subject to the control of the drawers, and never having been in possession of the payee. Dennie v. Hart, 2 Pick. 204. Lansing v. Gaine & al., 2 Johns. 300. Leigh v. Horsum, 4 Greenl. 28. Chitty on Bills, 117.

J. Holmes argued for Isaac Adams, the payee; contending, first, that the draft on Emery having been made and accepted before the assignment, the property vested in the payee. It was not necessary that he should have cognizance of the transaction, in order to derive the benefit of the draft. 2 Stark. 228, 237. Powell v. Monier, 1 Atk. 612. 1 Esp. 40. Wynne v. Raikes, 5 East, 520.

2. The control reserved by the drawers, was not to retain any property in the draft; but was merely a directory reservation, as the agents of the payee. After the acceptance of a bill, the drawer is the agent of the payee, to whom the property has passed. If this had been the case of goods thus coming to the hands of the agents of the vendee, they could not have been stopped in transitu. Dixon v. Baldwin, 5 East, 175.

3. But the control reserved over the bill after its acceptance, being expressed in the alternative, the paramount right to control it belonged to Adams, who was both creditor and payee. It is preposterous to suppose that it was left at the will of the drawers whether the payee should have the benefit of the draft. Its being left in the hands of the acceptor, gave him no property in it, but he was bound to deliver it to the payee on request, or pay him the value. Nor was it in the power of the acceptor to annul his acceptance. Bentinck v. Dorrien, 6 East, 200.

4. At the time of the service of the plaintiff's writ, the defendants had no existing right of action against Emery which their creditors could attach. They had previously parted with every shadow of control over the draft, as the agents of the payee, by requiring the acceptor to deliver it to Deshon. This process is nothing more than a direction to the trustee or debtor not to pay over to his creditor. But what could Emery, at the moment of service, have paid over to Adams & Amory, after having accepted their draft in favor of Adams, and thus become his debtor? The drawers could no longer countermand the direction thus given, and therefore had no longer a claim against Emery. Even before acceptance, the bill was an assignment of the debt, being given for the whole amount of the fund. Mandeville v. Welch, 5 Wheat. 277.

N Emery, for the assignees. Enough appears in the assignment to show that it was made to the honest creditors of the assignors; and if it amounts to a preference, they had a right to make it. So far as the United States were concerned, the assignment...