Phelps v. Wyler

• Decision Date: 29 April 1899
• Citation: 56 S.W. 632,67 Ark. 97
• Parties: PHELPS v. WYLER
• Court: Arkansas Supreme Court

56 S.W. 632

67 Ark. 97

PHELPS v. WYLER

Supreme Court of Arkansas

April 29, 1899

Appeal fro White Chancery Court, THOMAS B. MARTIN, Chancellor.

Decree reversed.

Ben Isbell for appellant.

Green & Roberts, Roberts & Roberts, John T. Hicks, and W. B. Smith for appellees.

OPINION

BATTLE, J.

For many years Mrs. M. A. Phelps, a married woman, carried on and conducted a mercantile business on her sole and separate account at El Paso, in White county, in this state, under file name and style of M. A. Phelps & Co. Becoming much involved, and unable to continue her business profitably, on the 26th of January, 1897, she conveyed all her property, except so much as she was allowed by law to hold exempt from execution, to David M. Dayle, as assignee in trust for the payment of her debts. She directed the payments of the same as follows: First. She directed that Ben Isbell be paid $ 50 for preparing her deed of assignment. Second. She directed that the note executed by her to Lee Burrow on the 1st of January, 1897, for $ 110, for clerk hire, be paid. Third. She directed that her husband, J. T. Phelps, be paid the sum of $ 477.50, which she owed him on account for money loaned, and used by her in her business. Fourth. After the payment of the debts mentioned in the order named, she directed that the residue of her property thereafter remaining be applied pro rata to the payment of her other debts.

The deed of assignment was duly acknowledged, filed, and recorded, and the property conveyed was delivered to the assignee. Thereafter, on the 13th day of January, 1897, Wyler, Ackerland & Co. and others filed in the White chancery court a complaint against Mrs. Phelps, Isabell, Burrow, and J. T. Phelps, therein alleging that Mrs. Phelps was indebted to them for goods, wares, and merchandise sold to her for the purpose of carrying on a general mercantile business at El Paso; that she pretended to convey all her property to an assignee for the benefit of her creditors, but had fraudulently withheld a material part thereof; that she had preferred her husband in the assignment, and directed that he be paid 477.50, when in truth and fact she was not indebted to him in any amount whatever; and that the deed was void because it provided that the assignee should not take possession of the property until he had filed his inventory and bond as required by the statute. They asked that the assignment be set aside, and for other relief, which they specified.

The defendants answered, and denied all allegations of fraud.

On the 17th of June, 1897, upon the hearing of the cause, the court found and declared the deed void, because made in fraud of the creditors of the assignor, and decreed that the assignment should be treated as a general assignment for the benefit of all the creditors of Mrs. Phelps, except her husband, whose claim it declared fraudulent.

The evidence fails to show that Mrs. Phelps fraudulently withheld from her assignment any material part of her property. Some small articles of little value were accidentally overlooked, and worthless notes, barred by the statute of limitations, were not included in the schedule attached to the deed of assignment, but the articles overlooked and the worthless notes were delivered to the assignee, to be disposed of for the benefit of creditors.

The attack upon the assignment on the ground that it provides that the property shall not be delivered to the assignee until he filed his inventory and bond as required by law is unsupported by reason. We are unable to see how the interest of creditors could be affected by it. We have heretofore held, under statutes which have been amended, that assignments were void when made with the understanding that the assignee should take possession of the property assigned before he filed his inventory and bond. He can now take possession upon the execution of the deed of assignment. The failure to do so does not necessarily delay the assignee in the discharge of his duties, or the creditors in the collection of their debts, or in the enforcement of their rights.

The attack upon the assignment because of the preference of the husband is the only objection which deserves serious consideration. The facts relied upon to show that his preference was fraudulent are substantially as follows: In 1887, J. T. Phelps failed in business. How his assets were disposed of is not satisfactorily shown. He was in debt to his wife's father for land in the sum of 8400. He paid this, according to the direction of his father-in-law, to his wife. When testifying in this cause he was asked, "When you failed in business what became of the proceeds of your stock of goods?" He replied, "Part of it--about $ 400--when to M. A. Phelps, part to Wolf & Bro., and part to other creditors." He was then asked, "Who did you sell out to?" He answered, "I sold out to my wife and Mr. Booth, her father." The evidence, however, shows that his wife succeeded him in business, and that she carried on a mercantile business at El Paso on her sole and separate account, and that he, for a stipulated salary, contracted and managed it in her name as her agent, and did so for ten years. In the meantime, he paid off and discharged his debts according to terms which were agreed upon by him and his creditors. He...