The Watkins National Bank v. Sands
| Decision Date | 01 January 1892 |
| Citation | 47 Kan. 591,28 P. 618 |
| Parties | THE WATKINS NATIONAL BANK v. J. G. SANDS et al |
| Court | Kansas Supreme Court |
Error from Douglas District Court.
ACTION by the Bank against Sands and another, on a promissory note. From an order, at the May term, 1889 discharging plaintiff's attachment, it brings error. The opinion states the facts.
Judgment affirmed.
W. J Patterson, for plaintiff in error.
B. J Horton, for defendants in error.
OPINION
The Watkins National Bank brought an action against J. G. Sands and C. W. Cherry to recover the sum of $ 700 upon a promissory note, together with the interest thereon. The plaintiff alleged that Sands had sold, conveyed and disposed of his property, and was about to sell, convey and dispose of the same with the fraudulent intent to cheat, defraud, hinder and delay his creditors; and upon an affidavit setting forth these grounds an attachment was granted. Subsequently, a motion was made by Sands to dissolve the attachment, and it was alleged that the grounds set forth in the attachment affidavit were untrue. A like motion was made by Richard S. Horton, who stated that at the time the attachment was issued he was the assignee of the defendant J. G. Sands, under a deed of assignment executed and delivered to him. Considerable testimony was submitted upon the application, and the court, after hearing the same, vacated and discharged the attachment, and ordered that the property which had been attached should be delivered to the assignee under the general assignment made by Sands on May 14, 1889. A reversal of that order is sought by this proceeding.
It appears from the testimony that on May 13, 1889, Sands was in an insolvent condition, and determined to make a general assignment for the benefit of his creditors; and on that day he procured a form of assignment to be made, but no assignee was named therein, and it was not executed or acknowledged until the following day. On the 13th, he also prepared and signed certain notes and mortgages, which, however, were not delivered until after the assignment had been perfected. One was a note for $ 1,000, executed to C. W. Brown, his father-in-law, who resided in New Hampshire, and which was secured by a mortgage on real estate. Another was a note for $ 416.48, given in favor of the First National Bank of Fredonia, of which his son-in-law was an officer and stockholder; and this he secured by a mortgage on the same real estate. There was still another note, for $ 1,029.36, made in favor of his son-in-law, M. Abernathy, of Fredonia, and it was secured by a chattel mortgage upon his stock of goods. None of the parties to whom the notes and mortgages were given were present to receive them, nor had they any knowledge of their execution until after the assignment was made. The notes were forwarded through the mails to these parties, at distant towns, on May 14, 1889, and the mortgages were carried to the office of the register of deeds by R. S. Horton, after he had agreed to accept the position of assignee, and only a few minutes preceding the execution of the deed of assignment. Sands testifies that the deed of assignment was signed and acknowledged by him only about 15 minutes to half an hour after the mortgages had been placed in the hands of the assignee for conveyance to the register of deeds. The deed of assignment undertakes to convey to R. S. Horton, the assignee, all the property of Sands, real and personal, of every nature and description, except such as is exempt under the laws of the state of Kansas. The instrument contained a clause reciting that the assignment was made subject to the three mortgages that have been mentioned.
An examination of the testimony leads us to the conclusion necessarily reached by the district court, that Sands acted throughout in good faith and without fraudulent purpose. The debts which the mortgages were given to secure appear to be actual and bona fide, and the debtor's purpose seems to have been to devote all his property to the payment of his debts. If the assignment and mortgages were made in good faith, and without actual intent to defraud or defeat creditors, the fact that they were informal or irregular is not alone sufficient to sustain an attachment. While the debts are to be treated as bona fide, and the conveyances as having been made in good faith, it does not follow that the mortgages are to be upheld nor that the mortgagees are to be treated as preferred creditors. It is true, and has frequently been held, that a debtor in failing circumstances may prefer creditors, so long as he retains the control and disposition of his property, by the payment of money or property, or by securing such creditors, providing the payment is made or the security given in good faith. Such honest preference may...
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