McCord-Brady Company v. Mills

• Decision Date: 24 April 1899
• Citation: 8 Wyo. 258,56 P. 1003
• Parties: McCORD-BRADY COMPANY v. MILLS, ET AL
• Court: Wyoming Supreme Court

56 P. 1003

8 Wyo. 258

McCORD-BRADY COMPANY v. MILLS, ET AL

Supreme Court of Wyoming

April 24, 1899

ON reserved questions from the District Court, Sheridan County HON. JOSEPH L. STOTTS, Judge.

The material facts are stated in the opinion.

E. E Lonabaugh, for plaintiff.

By the great weight of authority, a partnership assignment, where the statute requires participating creditors to execute releases of the assignor, is void unless the separate property of the members of the firm is included in the assignment. (Hutzler v. Phillips (S. C.), 1 S.E 508; 3 Md. 11; 8 Md. 418; 11 Id., 376; 14 Id., 24; 16 Id 101; May v. Walker, 28 N.W. 252; Thompson v. Winona, etc., 43 Id., 383; In re Allen, 41 Minn. 430; 47 Md. 545; 23 Md. 175; 21 Ala. 380; Bank v. Beebe, 35 Id., 435; Farwell v. Brooks, 68 Id., 5; Blum v. Wellburn, 58 Tex. 157; Donohoo v. Fish, Id., 164; Williams v. Crocker, 18 So. 52; Shepard v. Reeves, 21 S.W. 774; Burrill on Assignments, 4th ed., 273, 5th ed., 285; Dodd v. Martin, 15 F. 338; Duggan v. Bliss, 4 Colo., 223; Thomas v. Jenks, 5 Rawle, 221; 5 Johns, Ch. 329; 46 Ark. 405; 66 Tex. 715; 2 Bates Part., 746; 1 Id., 747-749, 454, 457, 385; Sandmyer v. Ins. Co., 50 N.W. 353; 80 F. 862; 139 U.S. 628; 81 Wis. 641; 142 U.S. 622; Swofford Bros. v. Mills, 86 F. 556; Kennedy v. McKee, 142 U.S. 606.)

A failure to comply with the law renders an assignment fraudulent and justifies attachment. (60 Md. 447; 35 S.W. 902; 1 Gray, 239; 44 P. 447; 34 Hun., 562; 1 Shinn Att., 124; Kneeland Att., 339; Wade Att., 327, 330.) Its validity may be tested by garnishment proceedings against the assignee. (Door v. Schmidt, 21 So. 279; Williams v. Crocker, 18 So. 54; Johnson v. Graham, 6 Cal. 195; Shinn, p. 834; Ware v. Wanless, 2 Wyo. 144; Wearne v. France, 3 Wyo. 273.)

The only effect of pendency of garnishment proceedings in another court is to require a stay of proceedings. (Finch v. Bank, 65 Ill.App. 337; Knight v. Griffin, 43 N.E. 727; Howland v. R. R. Co., 36 S.W. 29; Embree v. Hanna, 5 Johns., 101; Van Ness v. McLead, 31 P. 798; Boyd v. Ins. Co., 16 S.E. 389; Drake Att., 700.)

Although our assignment act may have been taken from Indiana, the law of that State did not require releases. Our section as to releases did not come from there. Hence the Indiana decisions are not controlling.

John P. Arnott and Burke & Fowler, for defendants.

The language of Section 1 of the assignment act contemplates a partnership assignment of partnership property. An assignment of partnership property only will not necessarily bar a participating firm creditor from resorting to the individual property for any balance of his claim unpaid. We are bound by the construction placed upon the act by the courts of Indiana as our act was taken from the statutes of that State. The courts in Indiana hold that an assignment by copartners of their joint property for the benefit of partnership creditors will be valid, although it does not embrace any of the individual property of any of the partners. (Blake v. Faulkner, 18 Ind. 47; Garner v. Frederick, Id., 507; Ex parte Hopkins, 104 Ind. 157.) There are other authorities to the same effect. (Bradley v. Bischell, 81 Iowa 80; Trumbo v. Hamel, 29 S. C., 520; Armstrong v. Hurst, 39 Id., 498; Blair v. Black, 31 Id., 346; Hutzler v. Phillips, 26 Id., 136; Johnston v. Dunn (N. J.), 29 Att., 364; Auley v. Osterman, 65 Wis. 118.) We think the weight of authority sustains the validity of the assignment.

POTTER, CHIEF JUSTICE. CORN, J., and KNIGHT, J., concur.

OPINION

POTTER, CHIEF JUSTICE.

The questions reserved by the district court for our decision arise in certain garnishment proceedings, upon a motion of the garnishee and the defendants for the discharge of the garnishee. Quoting from the record the motion is as follows: "On behalf of the garnishee and assignee of S. E. Mills & Co., as well as on behalf of S. E. Mills & Co., defendants in the original action, move the court that the garnishee be discharged in this proceeding, his answer disclosing that he has no property belonging to the individual members of the firm of S. E. Mills & Co., who are the judgment debtors in the original action; further, that his answer discloses that the property which he has in his possession is the property of S. E. Mills & Co.; that he holds the same under deed of assignment dated January 13, 1898, and that holding it as stated under said deed, it is not liable to garnishment proceedings at the instance of these garnishment creditors, and for the further reason that if the assignment be void the answer of the garnishee discloses that the property in his possession is in the custody of the Federal Court for the District of Wyoming, and this court has no jurisdiction over it either by mesne or final process."

The answer of the garnishee disclosed that he had certain moneys and merchandise which he held as assignee for the benefit of the creditors of the firm of S. E. Mills & Co., under a deed of assignment executed by the firm and each member thereof January 13, 1898, conveying all the partnership property for the benefit of the partnership creditors. The title of the action would indicate, and it is to be assumed that the plaintiff is a creditor of the partnership. It also appears by the answer of the garnishee that he had previously been summoned as garnishee in the United States Court for this District in the suit of another partnership creditor and had not been discharged. The reserved questions are as follows:

First. Is a voluntary assignment for the benefit of creditors made by a partnership, including all of the firm property, void under the laws of this State because it is not made to include the individual property of the several members of such firm so assigning?

Second. Is a voluntary assignment made by a partnership for the benefit of creditors, void under the laws of this State, where it includes all of the property of the partnership, the individual property of the several members of the firm not being included in such assignment?

Third. Would a creditor of a partnership filing his claim with the assignee of such partnership, and participating in the distribution, thereby release the individual members of such firm and their property from all further liability for the payment of his claim or any balance there might be left after the application of the assets in the hands of the assignee of such partnership, in a case where the assignment of the partnership property did not include and was not accompanied by an assignment of the individual property of the several members of the firm?

Fourth. Can a judgment creditor having a judgment against the individuals of a firm on a firm debt attack the validity of an assignment for the benefit of creditors made by the partnership and including only partnership assets, such attack being based upon the proposition that the individual property is not included in the assignment?

Fifth. Where a voluntary assignment is made by a copartnership of its firm property only, and the assignee named in the deed of assignment takes the oath of office, gives bond, enters upon the discharge of his duties, and files an inventory and appraisement and takes possession of the property assigned within the time provided by law, is such property in the custody of the law?

Sixth. Where an assignee, for the benefit of the creditors of a copartnership which assigns its copartnership property only, is garnished in the federal court by creditors of the copartnership, can he be garnished in the State court by other creditors of the copartnership while the garnishment proceedings are still pending in the federal court?

The first four questions involve practically the same inquiry; viz., whether, under the statutes of this State, a voluntary assignment for benefit of firm creditors by a partnership of all the partnership property is void for the failure to include or convey the separate property of the individual members of the partnership.

The statute authorizes "any debtor or debtors in embarrassed or failing circumstances" to make to one or more assignees "a general assignment of all his or their property, in trust for the benefit of his or their bona fide creditors." All such assignments are to be deemed fraudulent and void unless made as in the act provided. Insolvency occurs within the meaning of the act when the debtor is unable to pay his debts from his own means as they become due. Laws 1890, Ch. 51, Sec. 1.

It is required that the deed shall contain a full description of all the real estate assigned, and be accompanied by a schedule containing a particular enumeration and description of all personal property assigned; and that the assignor shall make oath that the indenture and schedule contains a statement of all the property, rights, and credits belonging to him, or of which he has any knowledge, and that he has not transferred or reserved any sum of money or article of property for his own use or for the benefit of any other person, and has not acknowledged a debt or confessed a judgment to any person for a greater sum than was justly owing or with the intention of delaying or defrauding his creditors. Sec. 2.

Preferences are forbidden except that the wages of employees of the assignor for three months prior to the assignment constitute preferred claims. Sec. 23, as amended by Ch. 15, Laws 1893. Section 28 of the act provides as follows:

"In all cases where the assignor complies with the provisions of this act, any creditor accepting from the assignee any dividend arising from the property of the assignor to which he is entitled under any assignment made under this act shall release the assignor from all further liability on the claim or claims on which such payment may be...