Nelson v. Harper

• Decision Date: 17 January 1916
• Docket Number: 112
• Citation: 182 S.W. 519,122 Ark. 39
• Parties: NELSON v. HARPER
• Court: Arkansas Supreme Court

182 S.W. 519

122 Ark. 39

NELSON v. HARPER

No. 112

Supreme Court of Arkansas

January 17, 1916

Appeal from Union Circuit Court; C. W. Smith, Judge; affirmed.

STATEMENT BY THE COURT.

The Monroe Grocer Company, limited, recovered judgment against one J. P. Gathright for $ 52.25. Execution was issued and levied by the constable upon certain goods as the property of Gathright. R. G. Harper (appellee) instituted this suit against the plaintiff in execution and the constable to recover the possession of these goods. Harper claimed title to the property under an instrument purporting to be a deed of assignment by Gathright for the benefit of creditors in which he conveyed to Harper "as trustee for the use and benefit of all his creditors" all of his property, the deed reciting: "consisting of lands and personal property, the personal property consisting of a stock of merchandise located at my store building at Strong, Arkansas and all book accounts and notes due me by sundry parties arising from the sale to them of merchandise and otherwise all of said property, both real and personal, being described in said inventory attached hereto as aforesaid."

The instrument further reciting: "This assignment conditioned, however, that the same is made with the understanding that all my creditors accept the same in full of their said debts, fully releasing me from the further payment therefrom." And the instrument contained the further recital: "It is further agreed by the undersigned that all my rights and equity of redemption in and to all lands heretofore mortgaged by me to other creditors, is hereby assigned to said R. G. Harper as trustee, for the use and benefit of my said creditors, except the land mortgaged to J. D. Gathright, being my homestead. A further condition of this assignment being that the terms hereof are to be accepted by said creditors within a reasonable time from date hereof."

Among other things in the agreed statement of facts is the following: "That said R. G. Harper, as assignee, did not make or cause to be made an inventory of the stock of merchandise before the execution and delivery of the assignment, but did cause to be made an inventory of the same prior to the issuing of the execution on the judgment mentioned, and that J. D. Nelson, as constable, before levying the execution, was duly notified of the assignment that immediately after the assignment, the said R. G. Harper through J. D. Gathright, took possession of said stock of merchandise, directing the said J. D. Gathright to at once take an inventory of the same, and which inventory was at once taken and in the hands of R. G. Harper before the issuance of said execution, and the keys of the storehouse were not delivered to the said R. G. Harper until after the levy of the execution.

"That no inventory or bond was ever filed by the said R. G. Harper with the circuit clerk of Union County under the law governing assignments, or otherwise; that no bond was ever made."

The mortgage referred to in the instrument purporting to be an assignment was introduced, with the instrument purporting to be the assignment, in evidence, and it showed that Gathright mortgaged to his son 194 acres of land, three mules and a lot of cows and calves, to secure an indebtedness of $ 900.

The court found that the plaintiff (appellee) had title to the property and rendered judgment in his favor for the same.

Judgment affirmed.

Neill C. Marsh, for appellants.

The assignment is void and conveyed no title; hence, the assignee can not maintain replevin against an officer levying under a valid execution. Kirby's Dig., §§ 336-7. An insolvent debtor has no right to dictate terms and coerce his creditors into releasing their debts. 2 Ruling Cases Law 670-1, P 29; 47 Ark. 367; 36 Id. 406; 46 Id. 405; 85 N.Y. 464; 57 Barb. 249; 59 Miss. 69; 53 Ark. 81; 64 Id. 322. Nor can he withhold a part of his property, or omit any from the assignment. Cases, supra; 46 Ark. 405; 64 Ark. 322; Acts 1913, Act No. 88.

The property was not in custodia legis. 2 Ruling Case Law, p. 702, art. 54.

R. G. Harper, per se, and W. E. Patterson, for appellee.

The title to the property passed to the trustee under the assignment. It became trust property for the benefit of all the creditors pro rata; and was not subject to garnishment. No fraud is shown. No property is withheld or omitted, and none reserved except such as was exempt by law. Kirby's Dig., § 339; 52 Ark. 30; 66 Ark. 161; 83 Ark. 182; 104 Ark. 222.

OPINION

WOOD, J., (after stating the facts).

A provision in an assignment which requires, as a condition precedent to participation in the funds assigned, that the creditors shall release the debtor is, according to the prevailing American rule, oppressive and renders the assignment void, even though all the debtor's property is included. "This," say the authors of Ruling Case Law, "is on the ground that an insolvent debtor has no right to dictate terms which shall make him independent of his legal obligations and that it is contrary to justice and against public policy to allow debtors to coerce their creditors into releasing their debts." 2 R. C. L., 670-671, and note. This doctrine was announced in Collier v. Davis, 47 Ark. 367, 1 S.W. 684, overruling Clayton v. Johnson, 36 Ark. 406, where the contrary was held.

Under the above rule, the condition in the instrument under review requiring all the creditors of Gathright to release him from further payment of their...