Gummersell v. Hanbloom

• Decision Date: 09 November 1885
• Parties: W. H. GUMMERSELL v. CHARLES HANBLOOM (F. A. SAMPSON, Interpleader, Appellant, v. W. E. SHAW, Interpleader, Respondent).
• Court: Kansas Court of Appeals

19 Mo.App. 274

W. H. GUMMERSELL v. CHARLES HANBLOOM

(F. A. SAMPSON, Interpleader, Appellant, v. W. E. SHAW, Interpleader, Respondent).

Court of Appeals of Missouri, Kansas City.

November 9, 1885

APPEAL from the Pettis Circuit Court, HON. JOHN P. STROTHER, Judge.

Reversed and remanded.

Statement of case by the court.

On June 18, 1881, plaintiff instituted a suit by attachment against defendant, and a certain stock of goods was seized under the attachment. On September 13, 1881, in this attachment suit Sampson filed his interplea, claiming as his the property attached, by virtue of a chattel mortgage executed on said property, on June 13, 1881, by defendant, Hanbloom.

On September 14, 1881, Shaw filed his interplea in this suit claiming the attached property by virtue of a deed of assignment made to him by defendant, Hanbloom on June 14 1881. The deed of assignment was in the usual form of all the defendant's property, and was made for the benefit of all the creditors of defendant.

By agreement of parties, the two interpleas were tried together by the court without the intervention of a jury. It was admitted that the assignee received property to the amount of fourteen dollars only outside of the property in controversy.

For Shaw the court declared the law to be:

" 1. If the court finds that the mortgage to Sampson and the deed of assignment to Shaw were both made under a common understanding between Hanbloom and the mortgagee, that Hanbloom was to make the assignment, and that he intended to prefer Sampson in the distribution of his effects, and that for that purpose and with that intention, Hanbloom and the mortgagee made and received the mortgage, to be followed by the assignment, and that the two deeds were so made to avoid the law prohibiting preferences in assignments, then all said acts were to be regarded as parts of one transaction, and the said mortgage has no effect to give Sampson a preference over the other creditors, and the claim of the assignee to the property in controversy must prevail."

The court found the issues presented by the interpleas in favor of Shaw and against both the plaintiff and the interpleader, Sampson. From the judgment of the circuit court Sampson only has appealed to this court.

F. A. SAMPSON and E. J. SMITH, for the appellant.

I. There was no evidence to support the first declaration of law given for Shaw.

II. If there was such evidence that declaration is erroneous; and it was error to refuse instructions two and three asked by Sampson. Greely v. Reading, 74 Mo. 309; Shelley v. Booth, 73 Mo. 74; Nash v. Norment, 5 Mo.App. 545; Forrester v. Moore, 77 Mo. 651.

III. It was error to refuse Sampson's fourth instruction, declaring that as to the three hundred dollars exemption to Hanbloom, he, Sampson, was entitled to it; and it was error to permit the withdrawal of Hanbloom's application for exemption.

IV. The question of possession cuts no figure one way or the other in the case. State ex rel., etc., v. Cooper, 79 Mo. 464.

WILLIAM S. SHIRK, for the respondent.

I. There was ample evidence to support the first instruction given for Shaw. It correctly states the law as applicable to this case. That the deed of assignment and the mortgage to Sampson, if contemporaneous documents, and made to effiectuate a single purpose, must be read together, hardly requires a citation of authorities. 2 Parsons on Cont. (5 Ed.) 553, and cases cited. Brownlee v. Arnold, 60 Mo. 79; Copeland v. Yocum, 38 Mo. 349; Donovan v. Duinnng, 60 Mo. 441.

II. Under section 354, Revised Statutes, the assignment stands, but the preference given to Sampson by means of his mortgage is void. Crow v. Beardsley, 68 Mo. 435. The authorities cited by appellant and the declarations of law asked by him are wholly inapplicable.

III. There was no error in refusing Sampson's fourth instruction. His mortgage was to avoid the provisions of the statutes of assignment against preferences, and he took nothing under his mortgage, and stood as any other creditor under the assignment. Therefore, the withdrawal of Hanbloom's claim for exemption could not injure him; it was the personal privilege of Hanbloom to claim his exemption, and no one else could do it for him. Osborne v. Schutt, 67 Mo. 712.

IV. Sampson is estopped from claiming the property as against Shaw, the assignee. He presented his claim for allowance to the assignee, and it was allowed. He cannot claim against the assignment, and at the same time claim the benefit of such assignment. Valentine v. Decker, 43 Mo. 583. Nor does his claim, that he will look to his security, help him. Frierson v. Branch, 3 Cent. Law Journal, 334; Jones v. Pickard, 1 N.E. 741. He must make his election, and either take under it, or disclaim it. Valentine v. Decker, supra.

HALL J.

There was sufficient evidence upon which to found the declaration of law given by the court for Shaw. Thus the first question for our consideration is: Does that declaration of law, abstractly considered, contain a correct statement of the law?

I.

Section 354, of the Revised Statutes, provides that, " Every voluntary assignment of lands, tenements, goods, chattels, effects and credits made by a debtor to any person in trust for his creditors, shall be for the benefit of all the creditors of the assignor, in proportion to their respective claims; and every such assignment shall be proved or acknowledged * * *."

Under this statute no preference of any creditor can be made by a voluntary assignment; and a provision in a deed of assignment making such a preference is null and of no effect. Crow v. Beardsley, 68 Mo. 437.

In favor of the action of the trial court, in giving the above declaration of law, the respondent, in effect, reasons about as follows: The obvious intention of the statute is to secure the equal distribution of the effects of insolvent debtors, not exempt from execution among all their creditors, in proportion to their claims. Preferences in the act of assignment cannot be given. When, therefore, a debtor, in contemplation of an assignment under this statute, shall determine upon a distribution of his estate among his creditors, and, in execution of such contemplated assignment and determination, and for the purpose of giving a preference to a certain creditor over the other creditors, shall transfer to such preferred creditor distinct portions of his estate, and then assign the residue thereof to his general creditors, though the different instruments may not bear the same date or be executed at the same point of time; if they are executed in pursuance of an original design, contemplated and determined upon in the beginning, they will be deemed in law one transaction; a transaction consisting of a series of acts, intended to produce one result, to-wit, the distribution of the debtor's estate among his creditors. If, therefore, the transaction when fully executed, as originally contemplated and determined upon, makes a preference in favor of a certain creditor, the preference is invalid, just as it would have been invalid had it been made in the deed of assignment.

In support of the respondent's position and reasoning, there are not a few courts of high standing. Berry v. Cutts, 42 Ill. 447; Van Patten & Marks v. Burr, 52 Iowa 519; Bassett et al. v. Herman, 5 McCrary 269, 272; S. C. 16 F. 812; Kellogg et al. v. Root et al., 23 Fed Rep. 525; Heineman v. Hart, 20 N.W. 792.

In most of the above cases, Perry v. Holden (22 Pick. 275) opinion by Shaw, C. J., is cited as an authority for the opinions therein delivered.

On the other hand, " It is settled that the insolvent has the right, while his property remains in his own hands, to apply the same to the payment of one creditor in preference to another, notwithstanding the principle of this court, that equality among creditors is equity." Wakeman v. Grover, 4 Paige 23. And, " It is only when a man loses dominion over his property and transfers that dominion to another, that the rights of creditors to a pro rata dividend attaches. Whilst a man retains dominion of his property he may incumber and convey it as he pleases, if not directly forbidden by law, and prefer such creditors by payment and transfer as he chooses. And if it were not so, an individual could not get along in his business." Blakey's Appeal, 7 Barr. 449; Lampson & Powers v. Arnold, 19 Iowa 484.

" It is indeed true, that where two instruments are executed at the same time, between the same parties, relative to the same subject matter, and to effectuate one object, they are to be taken together; but where two deeds are given to different persons, for different considerations, not executed at the same time, nor relative to the same subject matter,...