In re Wilson

• Decision Date: 30 January 1846
• Citation: 4 Pa. 430
• Parties: In the matter of the Accounts of WILSON, Assignee of KNOX, BOGGS and Co., Exceptions to Auditor's Report.
• Court: Pennsylvania Supreme Court

4 Pa. 430

In the matter of the Accounts of WILSON, Assignee of KNOX, BOGGS and Co., Exceptions to Auditor's Report.

Supreme Court of Pennsylvania.

January 11, 13, 14, 15, 16, 1846.

January 30, 1846.

Jan. 11, 13, 14, 15, 16.

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COPYRIGHT MATERIAL OMITTED

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Price, for Sheepshanks and the releasing creditors generally.— There is but one objection to this assignment: the omission of J. A. Knox's seal; if that were there no question could arise. We undertake to show an equivalent — first disposing of the question of the unpaid dividends. These were awarded by an auditor, and the account confirmed by the Common Pleas in 1841, before any adverse claim was set up. That decree remains unaffected, not having been appealed from, and is in full force at this time. Under the act of 1836, (assignees,) §§ 28 and 36, it is conclusive, and all matters therein decided upon are closed for ever; certainly as to collateral proceedings. This, by § 33, is of equal effect with a decree of the Orphans' Court, and therefore enforceable by attachment; nor could Wilson, in any future proceeding thereon, set up any defence. In Dyott's Estate, 2 Watts & Serg. 557, and Okie's Appeal, 9 Watts & Serg. 176, it was held, that the fact that no exceptions were filed to the report, prevented the parties from ever objecting. Gray v. Bell, 4 Watts, 411, impliedly decides this question.

On the main question. We contend the assignment is valid: 1. Because the alleged defect was cured by the ratification of J. A. K., and 2d. it was purged by an actual surrender of all his private estate. That if voidable, it cannot be avoided to the prejudice of releasing creditors, because they have acquired rights as purchasers for value before there was any election to avoid it; because the non-releasing creditors, and their representative Okie, are estopped by supineness; and have no superior equity which is essential to obtain the aid of the court in favour of a particular creditor. That the present complainant is barred by the statute of limitations; and lastly, that in this proceeding he cannot recover, though Wilson has no right to hold for his cestuis que trust.

The ratification. The deed purports to pass J. A. K.'s private estate. Two months before the creditors were called upon to release, he affirmed the deed by the letters of the 2d and 3d of June, and the power of attorney, and he would be for ever estopped by acting as he did, under a power derived from the assignee. The releasing creditors, if they had notice of the defect in the instrument, had also notice of these acts of ratification, and might have acted on the faith of them. It is well settled, that a ratification of an act in the name of another, without his authority, relates to the date of the act itself; Story on Agency, § 242; nor according to modern cases there cited, is it necessary that the ratification should be under seal, § 244. [ROGERS, J. — Does the power authorize the transfer of the private estate?] I think it does: the first clause having given every possible power as to the partnership effects, the latter was intended to cover any other acts which might by chance be required. [ROGERS, J. — Must we not construe that by reference to the "above clause?"] That would run counter to the rule that every word must have effect. [Per Cur. — Such a construction would generally produce mischief.] The party himself has put his own construction on it, by acting under the deed conveying his property. That such acts may be thus ratified, is settled in Pearpoint v. Graham, 4 Wash. C. C. Rep. 232, and it is there said the general creditors cannot object. That a sealed instrument may be subsequently ratified by parol is well settled. Gram v. Seton, 1 Hall, 262, which has received the sanction of this court. Cady v. Shepherd, 11 Pick. 400; Bond v. Aitkin, 6 Watts & Serg. 165; Darst v. Roth, 4 Wash. C. C. Rep. 471. It was well recorded, for the acknowledgment by one grantor is sufficient, §§ 2 and 17 of the act; and there may be a subsequent perfecting of the deed as by delivery, Harrison v. Trustees, 12 Mass. 461. If there be a presumption of property as has been said, that cannot be extended beyond personalty, and as to that, the authority to assign need not be in writing, though the assignment must, by implication, from the necessity of recording. Story on Agency, § 50.

The only private estate proved in the case was the pew, and that is not an article of property within the rule of law — [ROGERS, J. — I think that was the opinion of a majority of the court,] — it was worthless, being subject to any amount of rent the trustees chose to place on it. We have, moreover, shown it went into the account; the proceeds are credited. In Thomas v. Jenks, 5 Rawle, 221, the existence of other property was established under a commission from this court, and in Fassit v. Phillips, 4 Whart. 409, the omission of property valueless by reason of encumbrances was decided to be immaterial. There are many cases of contested assignments in which that feature appeared, and this is strong evidence of the understanding of the profession; they are in 5 Watts & Serg. 145; 10 Watts, 309, and others.

But the rights of releasing creditors cannot be affected. The fund now in question did pass by admitted competent authority, and at most, the deed being voidable, and no attempt to avoid it having been made until 1844, intervening rights are saved. Creditors only could do this, and until Okie became bankrupt assignee of the last partner, he could not act in their rights. As trustee of the partners his right was to their surplus. During this delay, the acts permitted by the creditors cured the defect. The releasing creditors electing to come in, gave up all other claims; the non-releasing took their chance of future assets, and by this ex post facto consideration the assignment is supported; Adlum v. Yard, 1 Rawle, 163; Pearpoint v. Graham, ut sup.; Petrie v. Clark, 11 Serg. & Rawle, 377; for being voidable only for constructive fraud a purchase cured it, and these creditors are purchasers; Coe v. Hutton, 1 Serg. & Rawle, 398; it is an accord and satisfaction; Watkinson v. Inglesby, 5 Johns. 386; Hatch v. Smith, 5 Mass. 42, 50; Twelves v. Williams, 3 Whart. 494; 10 Watts, 312; Andrews v. Ludlow, 5 Pick. 28. A different view from that of our courts as to the effect of an omission, not a reservation, of part of the property is taken in Canal v. Cox, 6 Greenl. 395, and the reasoning appears in Angel on Assignments, 119 — 137. [GIBSON, C. J. — The condition is, you give up a part if you get the rest; that bears fraud on its face. The creditor is put to his election, and that for the very purpose of securing a part of the debtor's estate to himself.] The authorities show that these creditors having given value, the deed cannot be avoided under the statute. Sterry v. Arden, 1 Johns. Ch. Rep. 261; S. C. 12 Johns. 536; Daubeny v. Cockburn, 1 Meriv. 638, 643. [ROGERS, J. — Our cases are that a creditor not coming in may treat the deed as not existing.]

Laches. This case is in Chancery, and equity must be done to entitle complainants to equity; there must be vigilance to prevent others being injured. [ROGERS, J. — To whom were they to give notice?] They might have filed a creditors' bill, or taken out executions. This principle has been acted upon in Stewart v. McMinn, 5 Watts & Serg. 100, and in Okie's Appeal. The debtors paying the assignee, and the assignee paying dividends, are protected in acts done before hostile proceedings, and why not creditors releasing their debts, three months having elapsed without any movement? This was applied in Thomas v. Goodwin, 12 Mass. 140, in the case of an assignment palpably fraudulent. In Bradford v. Tappan, 11 Pick. 76, the court considered the releasing creditors as having acquired liens at the date of their release, the assignment being set aside. Wright v. Stanard, 2 Brock, 311. [ROGERS, J. — Are not these cases in which the defect did not appear on the face of the deed? GIBSON, C. J. — If notice affects them, of course it opens the whole case, even as to what has been paid over.] And you have protected them thus far.

What notice had they that a seal was wanting? and the presumption is, they had notice of the ratification. The conflicting decisions preclude a decision that they, laymen, were bound to decide. The assignee had equal notice, and he is protected because he had parted with the fund. So we with our rights. In accordance with these cases, it is said in Wakeman v. Grover, 4 Paige, 23 — 42, that until a lien is fixed the assignment is valid.

They must show a better equity. This is a first principle of equity; we are equally creditors; are in possession, and prior in time. Story's Eq. §§ 59, 381 — 434, on such a point is referred to, authorities not being required; it was applied in Beach v. Viles, 2 Peters, 675, where, there being merely constructive fraud, the assignee retained for his own debt.

Can Okie claim? He claims as insolvent trustee, and as such only the auditor awarded to him. His rights in this character are under the § 36, act 1836. This contemplates actual fraud, not constructive, under 13 Eliz. There is no actual fraud pretended here, it is rather a case of mistake or accident, in which equity would relieve. He was insolvent assignee of the partners on separate petitions, and as such only deals with separate interests — the resulting use; here the funds are of the partnership. Taylor v. Fields, 4 Ves. 396; 2 Johns. 282; 4 Yeates, 478; 1 Gall. 367; Doner v. Stauffer, 1 Penna. Rep. 198. In the latter case the separate interests of all the partners were sold under execution, and the purchaser was held to take, subject to the claims of the joint creditors. Okie, therefore, at this time represented the separate interests only, or for the first time that of the firm, in 1844, under the bankrupt law, as assignee of...