Memphis Grocery Co. v. Leach

• Decision Date: 09 April 1894
• Citation: 71 Miss. 959,15 So. 113
• Court: Mississippi Supreme Court
• Parties: MEMPHIS GROCERY COMPANY ET AL. v. J. G. LEACH ET AL

15 So. 113

71 Miss. 959

MEMPHIS GROCERY COMPANY ET AL. v. J. G. LEACH ET AL

Supreme Court of Mississippi

April 9, 1894

FROM the chancery court of Marshall county, HON. B. T. KIMBROUGH Chancellor.

Section 117, code 1892, provides that the assignee or trustee in a general assignment for creditors, where the property exceeds in value $ 1,000, shall, within twenty-four hours after taking possession, file a petition in the chancery court for the administration of the trust, making the assignor and all his creditors parties. Sections 118 and 119 provide for the giving of a bond by the assignee and for his becoming a receiver of the court. Section 120 requires the assignee "as speedily as may be, and within ten days after filing his petition, to prepare and file in the cause a complete and perfect inventory of the property and effects assigned." Section 121 provides that any creditor may file a cross-petition and show that the assignment is fraudulent or should not be enforced, and, by succeeding in this, obtain priority in the distribution of assets. Section 124 requires that, with every general assignment, there shall be filed unless the data appears on its face, at least two schedules -- one a schedule of liabilities -- which must set forth, so far as known to the assignor: (a) The name of each of his creditors; (b) the post-office address of each; (c) the same due each; (d) how each debt is evidenced; (e) the amount of interest each debt bears, and if, in any way, the debt is usurious, the fact must be stated; (f) the consideration for each debt, and, in case of renewals, the history of the transaction must be traced to the original consideration; and (g) what security, if any, each creditor has. The other schedule -- a schedule of assets -- " must describe the property conveyed, and give its location and value."

In December, 1892, J. W. Moore, a merchant, made a general voluntary assignment to J. G. Leach, assignee, for the benefit of creditors, preferring therein debts to Smith &amp Totten for $ 500 and to Lida Moore for $ 2,100. In the schedule of liabilities filed by the assignee, the debt to Smith & Totten is described as "an open account for legal services and advice in and about this assignment and for the execution of this trust."

Among other debts listed in the schedule of liabilities, is one for $ 1,500 to Emmett Crook, evidenced by five notes for $ 300 each. As to this, Moore, the assignor, testified that Crook was his former partner, and the notes were given in purchase of his interest in the firm when it dissolved; that, to secure the notes, Moore executed a deed to certain lots in Red Banks, Miss. but never acknowledged the deed; that there was a verbal agreement that Crook should reconvey if the notes were paid; that the deed was delivered to Crook, but after a few days, was returned by him to Moore, to be taken to Holly Springs, the county seat, to be acknowledged and put upon record; that Moore went to Holly Springs with the deed, but, finding the clerk busy, omitted to acknowledge it, and was in possession of the deed and also of the land at the time the assignment was executed.

The assignment itself contained a list of creditors and the amount due to each, and a list of these was also filed separately as a schedule. Among these is a debt listed as" Holly Springs Bank, Holly Springs, Miss. note and interest $ 1,000." The schedule of assets sets out and describes the several tracts of land assigned, with the valuation of each, and proceeds to give the personal property as follows: "The stock of goods, fixtures, etc., worth about $ 1,200; books, notes and accounts, and other evidences of debt, estimated at about $ 2,000 in value; mules and horses, eight head, worth $ 400; seed cotton, estimated about three bales, worth $ 110."

The day after the execution of the assignment, the assignee filed a petition in the chancery court for the administration of the trust, making the assignor and creditors parties defendant. Thereupon the Memphis Grocery Company and others, filed an answer and cross-bill alleging that the assignment was void, because made for the purpose of hindering, delaying and defrauding creditors; that the purpose of the assignor was to force a compromise from his creditors, and to enable himself and family to repossess the estate; that the debt to Lida Moore, a sister of the assignor, was simulated; that the consideration of the debt to Smith & Totten was in part services to be rendered in defense of the assignment, in the event of an attack upon it by creditors, and for services to be rendered to the assignee in the execution of the trust. It is also contended that the schedules are insufficient under the statutes above mentioned, and that the preferences are for that reason void.

The Bank of Holly Springs, one of the creditors, and a defendant, filed a separate answer and cross-bill, alleging that part of the debt of $ 1,000 listed in the schedules as due to it was really due by the firm of Moore & Crook; that Moore, the assignor, had purchased the interest of his partner, Crook, in said firm for $ 1,500, giving his notes therefor; that $ 410 of the debt due to it by Moore was an indebtedness of the firm of Moore & Crook, and that Crook was equally liable for the same; that the preference of $ 1,500 to Crook was an attempt to divert partnership funds and place them in the hands of one of the partners, and rendered the assignment void. In any event, respondent claims the right to have paid to it so much of the $ 1,500, which the assignment directed to be paid to Crook, as will pay its debt due by the firm of Moore & Crook.

Crook also filed an answer and cross-bill, in which he set out the facts in reference to...