Frank v. Myers

• Citation: 11 So. 832,97 Ala. 437
• Parties: FRANK ET AL. v. MYERS ET AL.
• Decision Date: 22 November 1892
• Court: Supreme Court of Alabama

11 So. 832

97 Ala. 437

FRANK ET AL. v. MYERS ET AL.

Supreme Court of Alabama

November 22, 1892

Appeal from city court of Birmingham; HENRY A. SHARPE, Judge.

Bill of I. Frank & Co. and others, creditors of M. J. Mullane, to enforce for their benefit a deed of assignment made by Mullane to D. F. Myers, as assignee. From a decree sustaining demurrers to the bill, complainants appeal. Reversed.

John Vary and N. B. Feagin, for appellants.

Mountjoy & Tomlinson and Garrett &amp Underwood, for appellees.

HEAD J.

M. J. Mullane, an insolvent merchant, executed to Myers what professed to be a general assignment of all his stock in trade and other property, of value many thousand dollars, for the benefit of his creditors. The instrument was in due form, perfect in all its parts, possessing no infirmity whatever as a complete legal transfer of all the property of the assignor for the payment of his debts, except that it concluded with the following clause: "But the party of the first part, making this assignment, reserves to himself any and all exemptions to which he is entitled under the laws of the state of Alabama." The assignee accepted the trust, took immediate possession of all the property, and entered upon the duties prescribed by the instrument. At this point the appellees and J. J. Callaghan and J. A. Mullane, alleged creditors of the assignor, and defendants in this bill, attached all the goods in Myer's possession. Myers claimed and replevied them under the statute. Trials of the right of property were had, and, the bill avers, the court decided, and so instructed the jury, that the clause we have quoted above rendered the assignment inoperative as a conveyance of the legal title; and upon that ground alone verdicts and judgments were rendered for the plaintiffs in attachment, condemning the property to the satisfaction of their demands. After Myers regained possession under his claim bonds, he sold all the property for over $16,000. Not returning the property after its condemnation, his bonds were returned "Forfeited," and executions issued thereon, under the statute. The bill, which is filed by sundry creditors, inferentially avers that Myers has paid defendants Callaghan and Mullane the amounts of their demands. It further avers that Myers has on deposit in the First National Bank of Birmingham, which is also made a party defendant, $5,000 of the proceeds of the goods, which said attaching creditors are seeking, by process of garnishment against the bank, to condemn to the satisfaction of their statutory judgments against Myers; that the claims of Callaghan and Mullane, some $8,000, are simulated; and that the aggregate amount of all the claims of the attaching creditors largely exceeds the value of all the property which went into Myers' possession as assignee. Its prayer is for a settlement of the trust; that the attaching creditors be enjoined from collecting and disposing of any of said trust fund, and the trust fund be brought into and subjected to the control of the court; that the judgments in favor of Mullane and Callaghan be set aside, and the sums of money by them received be by them paid into court, etc.; and for general relief. The appellees appeared and demurred, and moved to dismiss the bill for want of equity. The city court, in a written opinion, held that the exemption clause in the assignment avoided the instrument, and rendered a decree sustaining the demurrers, and dismissing the bill for want of equity.

As the bill itself states, its theory is that the assignee acquired by the assignment an equitable title to the goods, which it was and is his duty to assert; that assets have been and are about to be taken from him, and diverted from the trust, by proceedings of renouncing creditors in courts of law, enforced through the legal title of the assignor, and based in part upon simulated claims; and that equity should intervene and enforce the equitable title, restrain the further collection and diversion of the assets by the attaching creditors, compel the restoration of the funds received by them upon simulated claims, and take charge of and administer the trust.

The question, then, first to be determined, is, what is the nature and effect of the instrument in question? Does it convey a legal title, or a mere equity, or neither? We remark just here that the expression "reserves to himself" was used, in the clause quoted from the assignment, in the sense of an exception, and not a reservation. As may be seen from authorities cited hereafter, a reservation is a clause in a deed whereby the grantor reserves some new thing to himself, issuing out of the thing granted, and not in esse before; but an exception is always of a part of the thing granted, or out of the general words or description in a grant. The books call attention to the frequent misuse of these terms; but in all cases effect is given to the clause as a reservation or exception, according to the subject-matter to which it applies, without regard to the term used. We will speak of it, then, in this opinion, as an exception. The validity of assignments for creditors, as affected by exceptions of exemptions like that in the present case, has frequently undergone discussion and adjudication in our highest courts. It is conceded, we believe, in all the authorities,-except one in Tennessee, since overruled,-that such an exception does not render the conveyance fraudulent because creditors have no right to subject exempt property to their debts, and the exception, therefore, does not prejudice them. That is the settled doctrine of this court. The point of attack lies in its alleged invalidity, said to be found in the want of sufficient identification and description in the instrument of the property attempted to be conveyed. It is said to be an attempt to convey an uncertain and undefined part only of a larger quantity or mass of property, and therefore inoperative and void. Our research discloses that the courts of last resort of Pennsylvania, Wisconsin, Iowa, Maryland, Kansas, Indiana, Kentucky, and Texas have passed upon such assignments, and sustained their validity. Mulford v. Shirk, 26 Pa. St. 473; Bank v. Peterson, 69 Wis. 561, 35 N.W. 47; Perry v Vezina, 63 Iowa, 25, 18 N.W. 657; Muhr v. Pinover, (Md.) 10 A. 289; Walker v. Newlin, 22 Kan. 106; Garner v. Frederick, 18 Ind. 507; Knefler v. Shreve, 78 Ky. 297; and Baldwin v. Peet, 22 Tex. 709. The question, however, of sufficiency of identification of the property to pass the title, was not raised or considered in the cases cited. In each case the assignment was assailed as fraudulent by reason of the exception; and, that contention being overruled, the instrument was upheld as a valid legal conveyance, and enforced accordingly. The supreme courts of Michigan, Missouri, Mississippi, Tennessee, and this court, have passed upon the question now presented; the three former sustaining the assignments, (Brooks v. Nichols, 17 Mich. 38; Rainwater v. Stevens, 15 Mo.App. 544; Richardson v. Marqueze, 59 Miss. 80,) and the last two holding that, by reason of the exception, there was no sufficient identification of the property to pass the legal title. Whether the assignment was of any effect in equity was not expressly considered, though the Tennessee case was a bill in equity by creditors to set aside the assignment, and the relief was granted. Sugg v. Tillman, 2 Swan, 208; Block v. Maas, 65 Ala. 211; Myers v. Conway & Co., 90 Ala. 109, 7 South. Rep. 639. In the case of Sugg v. Tillman, supra, no authorities are cited, and the point is dismissed with the following reasoning: "But upon another ground it [the clause excepting exemptions] would avoid the deed. It is in the nature of a sale of all the property of the vendor, of the same nature, to these trustees, for the payment of debts, except so much of the same as he is allowed by law to hold exempt from execution. Now, what is sold is not separated from that which is reserved from the sale. All the corn lies together in a heap, all the pork in the smokehouse, all the horses in the stable, all the cows in the pen, etc. The vendees or trustees cannot bring trover for the quantity conveyed to them, because it is not separated from the part retained. They have no title in any particular thing or quantity. The debtor may pass his claim from one part of the bulk to another, under this undefined right, until all is consumed. The property, therefore, under this principle, not passing at all, remains subject to other execution creditors,-to the complainants." In Block v. Maas, supra, the reasoning is short, and we quote it: "The distinction between a bargain and sale, by which title passes immediately to the vendee, and an executory agreement, the goods remaining the property of the vendor until it is executed, cannot be more certainly and clearly traced in any class of cases than where there is a power of selection reserved by the vendor, or by the vendee, to distinguish and identify the goods sold from other goods in the possession of the vendor. The law is said to be stated very perspicuously by BAYLEY, J., in Gillett v. Hill, 2 Cromp. & M. 530, (cited in Benj. Sales, p. 294,) in the following words: 'The cases may be divided into two classes,-one, in which there has been a sale of goods, and something remains to be done by the vendor; and until that is done, the property does not pass to the vendee so as to entitle him to maintain trover. The other class of cases is where there is a power of selection in the vendor to deliver which he thinks fit. Then the right to them does not pass to the vendee until the vendor has made his selection, and trover is not maintainable till that is done. If I agree to deliver a quantity of oil, as ten out of eighteen tons, no one...