Kaufman v. Simon & Co

• Decision Date: 31 March 1902
• Citation: 80 Miss. 189,31 So. 713
• Parties: JOSEPH KAUFMAN v. SIMON & COMPANY
• Court: Mississippi Supreme Court

31 So. 713

80 Miss. 189

JOSEPH KAUFMAN v. SIMON & COMPANY

Supreme Court of Mississippi

March 31, 1902

FROM the circuit court of Washington county. HON. THOS. R. BAIRD Special Judge.

The appellees, Simon & Co., as creditors of W. Shaphran, attached certain goods in the possession of Joseph Kaufman, who had purchased them from E. Frankel, W. Shaphran's assignee in a general assignment for the benefit of creditors. Frankel filed a claimant's affidavit and bond, and this appeal is from a judgment on the claimant's issue for Simon & Co. plaintiffs in attachment, in whose favor the court below gave a peremptory instruction. The property mentioned in the assignment exceeded $ 1,000 in value, and the assignment was therefore, one to which code 1892, ch. 8, was applicable. The other material facts are stated in the opinion of the court.

Reversed and remanded.

Thomas & Rose, for appellant.

1. The delivery of personal property by the owner for a lawful purpose carries the title with it, and a bona fide purchaser from the trustee for a valuable consideration, before any lien attaches, takes a good title. The validity of an assignment is wholly immaterial when the property is lawfully surrendered to the assignee for a lawful purpose, and the rights of innocent purchasers intervene before a specific lien has attached. Crum v. Shoe Co., 72 Miss. 460 461; Baldwin v. Flash, Preston & Co., 58 Ib., 599; Covington v. Mayers, 62 Ib., 732. There was no question of fraud in this case, the assignment and the sale by the assignee both being wholly free from any imputation of it.

2. All the other creditors assented to the sale by the assignee; and the appellees cashed the draft for their distributive share of the proceeds, and several days afterward reconsidered the matter, and sent their draft for the amount to the assignee. Clearly they also assented to the sale, and are now estopped to object that ch. 8, code 1892, in relation to assignments, was not complied with.

Shields & Boddie, for appellees.

Chapter 8 of the code, § 117, provides that "in every case of a general assignment, where the property assigned shall exceed in value the sum of one thousand dollars (and it is proven that the property assigned in this case was worth $ 2,500), the assignee or trustee shall, before he enters upon the discharge of his duties, after taking possession, and within twenty-four hours thereafter, file a petition in the chancery court of the county of the assignor's residence or place of business or where the property, or some of it, may be, for the administration of the trust. The assignor and all of his creditors must be made parties to the petition." Said section is mandatory, and a compliance therewith by the assignee is indispensable to his right to deal with or dispose of the property. Under § 118 the assignee is required to file a bond with his petition, to be approved by the clerk, in a penalty therein fixed, conditioned for the faithful administration of his trust. Upon a compliance with said sections the assignee becomes a receiver of the court, etc., and § 121 provides that any creditor may file in said case a cross-petition against the receiver, and he may make the assignor, or other persons, whether parties to the suit before or not, defendants thereto, and show to the court that the assignment is fraudulent, and ought not for any other reason be enforced. Section 123 of said code requires all creditors to "establish their claims to the satisfaction of the court," and any creditor may oppose or controvert the demand or claim of any other creditor, and it is made the duty of the court on motion to cause all proper issues to be made up to test the validity of claims. Now, what is the effect of a total failure to comply with the plain mandatory requirements of said chapter 8? If an assignee can ignore the requirements of said chapter at his election, in cases where it applies, then it seems to us said chapter is a dead letter. The manifest object of the chapter is the protection of the creditors of the assignor, and it is no answer to an attaching creditor, where said chapter has not been complied with, to say, as appellant says in this case, that the dealings of the assignee were fair; that the property was sold by him for a reasonable price, and the proceeds ratably distributed among the creditors. Section 123, as above shown, provides that any creditor may oppose the demand or claim of any other person. In this case appellee had no opportunity of "opposing the demand or claim" of any other person, because the assignee took unto himself the authority of selling all of the property at private sale for $ 2,500, and then proceeded to remit to W. Shaphran's creditors twenty-five per centum of their claims. How did he know that the claims he paid were valid? He necessarily took Shaphran's or his agent's word for it, and he or his agent may have given in the names of parties to whom Shaphran did not owe a cent, with a secret understanding that the amount so paid to them was to be returned to W. Shaphran. Certainly some such fraudulent arrangement could have been made, and we submit that one object of the law was to prevent that very thing by requiring creditors to prove their claims, and when that was done then other creditors could oppose them. It may be that all claims paid by the assignee were valid, and properly provable against the assignor, but the appellees and other creditors should have been given the opportunity of contesting them if they saw fit to do so. The law plainly gave them that right.

It is axiomatic that an assignor is not a bona fide purchaser for value. The appellant, Kaufman, admits that he knew that he was purchasing from Frankel as assignee of W. Shaphran, and he was chargeable with notice that Frankel had not complied with the requirements of the law. Now it is not even contended that Frankel, the assignee, had any title or right to the property assigned superior to the right of the attaching creditor; and Kaufman knowing the relationship of Frankel to the property, could and did not acquire any better title to it than Frankel had.

But appellant admits that the assignment from Shaphran to Frankel was void for noncompliance with the requirements of chapter 8 of the code; but he contends that the transaction should stand, because he says that one owing debts has a right to turn over his property to his creditors in payment of his debts, and relies on the decision of Baldwin v Flash, 58 Miss. 599, and S. C., 59 Miss. 61, and on Covington v. Mayers, 62 Miss. 730, as supporting his position. The court will observe from the record in the case at bar that nothing was done by W. Shaphran, or his agent, to...