Rice v. Frayser

• Decision Date: 25 July 1885
• Citation: 24 F. 460
• Parties: RICE and others v. FRAYSER and others.
• Court: U.S. District Court — Eastern District of Arkansas

24 F. 460

RICE and others v. FRAYSER and others.

United States Circuit Court, E.D. Arkansas.

July 25, 1885

On the twenty-ninth day of January, 1885, the defendants, Frayser Mitchell & Co., merchants, made an assignment of their stock of merchandise and other property, for the benefit of their creditors, to L. N. Black, trustee. The deed of assignment contains this provision following the granting clause 'And they hereby deliver the same into the possession of said L. N. Black, trustee. ' And later on it is provided 'And it is hereby stipulated that said party of the second part shall execute bond, as required by law, make and file a true and perfect inventory and description of said property, and shall thereupon advertise said property for twenty (20) days, by publication in some newspaper printed in said Cross county. ' The statutes of Arkansas regulating such assignments contain the following provisions:

'Sec 305. In all cases in which any person shall make an assignment of any property, whether real, personal, mixed, or choses in action, for the payment of debts, before the assignee thereof shall be entitled to take possession, sell, or in any way manage or control any property so assigned, he shall be required to file, in the office of the clerk of the court exercising equity jurisdiction, a full and complete inventory and description of such property, and also to make and execute a bond to the state of Arkansas in double the estimated value of the property in said assignment, with good and sufficient security, to be approved by the clerk of said court, conditioned that such assignee shall execute the trust confided to him, sell the property to the best advantage, and pay the proceeds thereof to the creditors mentioned in said assignment, according to the terms thereof, and faithfully perform the duties according to law. ' Act February 16, 1859, Sec. 1, as amended by act February 23, 1883.

'Sec. 309. Said assignee shall be required to sell all the property assigned to him for the payment of debts, at public auction, within one hundred and twenty days after the execution of the bond required by this act, and shall give at least thirty days' notice of the time and place of such sale; and any person damaged by the neglect, waste, or improper conduct of such assignee shall be entitled to bring his action on the bond, in the name of the state, for the use and benefit of such person. ' Act February 16, 1859, Sec. 3; Mansf. Dig. 219, 220.

The plaintiffs sued out an attachment against the defendants, and attached the property in the possession of the assignee under the deed of assignment, upon the ground that the deed was in contravention of the statute and void.

U. M. & G. B. Rose, for plaintiffs.

Greer & Adams, for defendants.

CALDWELL J.

The execution of the deed, and the delivery of possession of the property to the assignee under it, were simultaneous acts. The deed declares 'they hereby deliver the same into the possession of said L. N. Black, trustee. A subsequent provision of the deed requires the assignee to execute a bond before he sells the property, but that the deed contemplates that the actual possession of the property shall pass to the trustee before he executes a bond or files an inventory, and that the possession did so pass is not controverted. It is said by the learned counsel who argued this cause for the defendants that it has been decided in Clayton v. Johnson, 36 Ark. 407, that such a provision in a deed, and possession taken under it, does not affect the validity of the assignment. This is a misconception of what was decided by the court in that case. The court in that case decided but three propositions, viz.: (1) That the statute regulating assignments was constitutional; (2) that the execution and delivery of the deed of assignment vests the legal title to the property in the assignee, and entitles him to 'access' to the property for the purpose of making the inventory, but that he cannot take possession of the property, or sell or in any way manage or control it, until he gives the bond and files the inventory required by the statute; (3) that the assignor may exact releases.

The defendant in that case might, at the trial, have raised other questions, but these were the only questions of law reserved, and of course the court could not pass on any others. It is clear from the later decisions of the court that the deed in that case was bad for several reasons, and must have so been held if the points had been raised. The construction of the statute of assignments by the supreme court of the state is binding on the courts of the United States. The points raised and decided in the case of Clayton v. Johnson are rules of decision in this court, but the effect of a stipulation in the deed that the assignee shall take possession before giving the bond and filing the inventory required, or the effect of his taking possession independently of any stipulation in the deed, did not arise, and was not considered or decided, in that case. The statute is peremptory that the assignee shall not take possession, sell, or in any way manage or control the property assigned until he has given the bond and filed the inventory required. In this respect the statute of this state has no counterpart. The supreme court of the state have never decided that an assignee may lawfully do what the statute expressly says he shall not do; or that a deed containing a provision that the assignee shall do what the statute, in terms, says he shall not do, is valid. When that court decided that the execution and delivery of the deed passed the legal title to the assigned property to the assignee, it seems to have been taken for granted by some that the right of possession passed with the title, without the execution of the bond and inventory by the assignee, and that in some way the provision of the statute on that subject had been abrogated. This delusion was speedily removed by the supreme court.

In Thatcher v. Franklin, 37 Ark. 64, an assignee who had not give; bond or filed an inventory brought replevin for the assigned property. The circuit court, misinterpreting the case of Clayton v. Johnson, held he could recover; but the supreme court said:

'But, though the deed vested the legal title to the goods in the trustee, yet, by the express language in the statute regulating assignments, (Gantt's Dig. Secs. 385, 387,) before he was entitled to take possession, sell, or in any way manage or control the property assigned, he was obliged to file the schedule and execute the bond required by the act. This case differs from the case of Clayton v. Johnson, supra. In that case, the trustee filed the schedule and executed bond before he brought replevin, as provided by the statute. The court below erred in refusing to charge the jury, as moved by appellants, in effect, that plaintiff having failed to file the schedule and give bond, as required by the statute, could not maintain replevin; for the goods.'

This doctrine was affirmed in Falconer v. Hunt, 39 Ark 68. The result of the opinions in Clayton v. Johnson and Thatcher v. Franklin is that the legal title to the property assigned passes to the assignee by the execution and delivery of the deed of assignment; that 'he is entitled to access to' the property to make the invoice; but that he cannot take possession, and has no right to the possession, until he gives bond and files an inventory. Until this is done, the assignor must retain the possession of the property. The result is not a novel one. It often occurs that the legal title to property is in one person, and the possession and right of possession in another. There never was any excuse for misapprehension on...