Scheibler v. Mundinger

• Decision Date: 28 May 1888
• Parties: SCHEIBLER v. MUNDINGER et al.
• Court: Tennessee Supreme Court

9 S.W. 33

86 Tenn. 674

SCHEIBLER v. MUNDINGER et al.

Supreme Court of Tennessee.

May 28, 1888

Appeal from chancery court, Shelby county; W. W. McDOWELL Chancellor.

W. W Goodwin and Miller & Gillham, for appellant.

T. B Edgington, Beard & Clapp, Taylor & Carroll, and Wright & Folkes, for appellees.

NEIL Special Judge.

The questions made in this cause arise upon demurrer to the complainant's bill. The bill, in substance, charges that on the 12th day of January, 1886, the defendant C. Mundinger then in a failing condition, made to the complainant, Scheibler, a general assignment of all his property for the benefit of all his creditors; that, within three months preceding this assignment, he suffered his property to be seized under certain collusive attachments, and under executions issued upon judgments by confession; and that these attachments and said judgments were so permitted with the view of giving these favored creditors a preference, and that the Preferences so given were in contemplation of the general assignment which he subsequently made. The assignment is exhibited with the bill, and refers to Schedule A as containing a statement of his property. This schedule is in the following words: " Schedule A. (1) All hardware goods in my store No. 205 Main street, taxing district Shelby county, and fixtures; said hardware goods consisting of shelf-hardware, cutlery, and agricultural implements; (2) also all notes and accounts due me; (3) and all money, whether in my said store or on deposit in any bank in the city of Memphis or elsewhere. An itemized description of said hardware goods, and a description of said notes and accounts, will be found in my books and invoices in said store, which books and invoices are embraced in my assignment, and to which I refer for a minute and detailed description thereof. If required, I will make this Exhibit A more full. I own no other property save that named, except my household and kitchen furniture. C. MUNDINGER. Subscribed and sworn to before me, March 12, 1886. HUGH B. CULLEN, Clerk." The assignee brings the bill to administer the trust under the direction of the court, to have all preferences declared void, and to secure a pro rata distribution among all creditors alike. The creditors whose preferences are attacked demur, and assign numerous grounds of objection to the bill. We need notice only two. These question the sufficiency of the schedule, and the oath thereto, under section 4, c. 121, Acts 1881.

That portion of the section referred to which more immediately concerns the questions now in hand reads: "The debtor making a general assignment shall annex thereto a full and complete inventory or schedule under oath of all his property of every description." Other parts of the act provide that preference of creditors in general assignments of all a debtor's property for the benefit of creditors shall be illegal; that all general assignments shall operate for the benefit of all the debtor's creditors pro rata; that, in case a clause giving a preference shall be inserted in such assignment, such clause shall not render the instrument itself invalid, but the clause shall be nugatory, and the pro rata rule prevail notwithstanding; that any mortgage, deed of trust, or other conveyance of a portion of a debtor's property for the benefit of any particular creditor or creditors, made within three months preceding a general assignment, and in contemplation of making a general assignment, shall be void in the event such assignment shall be made within three months thereafter, and that the property so conveyed shall be shared ratably by all creditors; that any confession of judgment by a debtor, or permitting judgment to be taken by default or by collusion, within three months preceding a general assignment, and in contemplation of such assignment, shall be void in event such assignment shall be made within three months after said judgment, and that the assignee shall be entitled to the property, or its proceeds, "signed to satisfy" such judgments, and likewise to any other property of the debtor not embraced in the assignment, and not exempt from execution, but not to interfere with conveyances to secure payment for property bought or money loaned, and executed at the time of borrowing the money or buying the property.

Before this act, general assignments were not unknown in Tennessee. Young v. Hail, 6 Lea, 175. The legislature did not intend to introduce any new legal instrument, but simply to regulate an old one. The statute, it will be observed, speaks of it as a thing already in use, and within its body contains inferentially a definition of what is such an assignment, by which it is designated as "an assignment of all a debtor's property for the benefit of creditors." This is substantially the characterization used by this court in the case of Young v. Hail, supra, decided in 1880, upon an instrument made in 1865. This definition is in strict accord with the most approved precedents. Burrill, Assignm. (Ed. 1887,) §§ 4, 21, 24, 171, 172. The instrument then in common use, which the statute was designed to regulate in practice, was one wherein a failing debtor purported to convey all, or substantially all, of his property for the benefit of a creditor or creditors. Before this statute, general assignments were most usually of the character described in Young v. Hail, supra. Creditors who were more urgent than others, or who had some peculiar claims upon the debtor, either of relationship, friendship, or indulgence, were preferred, and other creditors were left to take such surplus as might remain. Sometimes the beneficiaries under the debtor's trust deed were divided into first, second, third, fourth, and fifth class creditors, and in some exceptional cases the scaling was even more minute; and among these several classes the debtor distributed his estate as his conceptions of justice, moral and social obligations, or self-interest, it may be, dictated. Every man, in general, has an inherent right to sell or assign his property, in good faith, so as to prefer one creditor or other person having claims upon him above another; but by making a general assignment he may, if he desires, denude himself of this power. But, if he choose to make a general assignment, he must conform to the statutory limitations of that instrument. If he choose to make a special assignment, he still has three months in which to change his mind, and merge that into a general assignment, if such special assignment was by him made under the particular circumstances named in the statutes. Obviously, then, it becomes a very important matter to determine, in a given case, what constitutes an attempt to make a general assignment within the act of 1881. This is to be ascertained from the face of the instrument. If the paper, on its face, purports to be a general assignment, (Hays v. Covington, 16 Lea, 262, 267) or if it otherwise appear upon its face by necessary intendment to be such, (Bank v. Noe, 5 S.W. 433,) or if it purports to convey all the debtor's property for the benefit of creditors, then it must be measured by the rules that govern such instruments, and stand or fall accordingly. In the case we are now considering, all doubts upon this particular question are met by the fact that the instrument upon its face declares that it is intended to be a general assignment, and purports to convey all the debtor's property for the benefit of his creditors. The provisions which we have but now been considering set forth the effect of a general assignment when truly and legally such, all of which provisions are new, and were grafted upon the law of general assignments as it previously stood in this state. We now come to consider the new features which the statute has added to the proper execution of this instrument, the schedule, and the oath.

Heretofore nothing was needed to effect the due execution of such an instrument except proper conveying words, a general description of the property conveyed, a declaration of trust signature, acknowledgment, delivery, and registration. This was the instrument which was amended so as to require the additional formalities of a schedule and an oath. Under this and like instruments, prior to the statute of 1881, a very general and meager description would, under all circumstances, suffice with the qualification that all its imperfections might, in the majority of instances, be cured by parol proof. This is illustrated by a series of cases, running through Gait v. Dibrell, 10 Yerg. 146, 152; Barker v. Wheelip, 5 Humph. 329; Overton v. Holinshade, 5 Heisk. 686,--and culminating in Atwood v. Brown, 1 Tenn. Leg. R. 59, in which latter case the proposition was announced that "any description which will enable third persons to identify the property, aided by inquiries which the mortgage itself indicates, will be sufficient;" and in that case a description was held quite definite enough which set forth the property conveyed as "seventeen head of horses, and three mules, eight wagons complete, six carts and harness complete, eighteen scrapers and attachments," with no indication of place or other means of identification. This was the state of the law when the act of 1881 was passed. Can it be doubted that the legislature intended, if not to eliminate, certainly to supplement, this lax rule so far as it was operative upon general assignments? Beyond question, before this act, a conveyance, in trust, of all the grantor's undivided interest in all the real estate of his father, wherever situated, would have been good. McGavock- v. Deery, 1 Cold. 265. It would still be good so far as the statute of frauds affects the question. But would it be good in a general assignment under the act...