Thomas v. Jenks

• Decision Date: 16 April 1835
• Citation: 5 Rawle 221
• Parties: Thomas v. Jenks. Parry v. Jenks.
• Court: Pennsylvania Supreme Court

5 Rawle 221

Thomas v. Jenks.

Parry v. Jenks.

Supreme Court of Pennsylvania.

April 16, 1835

APPEAL.

An assignment by partners of partnership effects for the benefit of creditors, contained a condition that the creditors should execute by a day certain, a release of their claims to the assignors individually and as co-partners. Both the partners had separate property. Held, that the assignment was fraudulent and void.

THIS was an appeal by Joseph S. Sloan, assignee of Jenks &amp Co., from the decision of the Court of Common Pleas of Bucks county, awarding to the plaintiffs the money in the hands of the sheriff, made under executions against Jenks & Co.

By indenture dated the 7th day of February, A.D. 1833, William P. Jenks and William Maris, trading as William P. Jenks &amp Co., made an assignment to Sloan, of all the ma chinery stock, goods, chattels, debts, moneys, effects, messuages lands and tenements, book debts, accounts, claims, and all other things whatsoever of the said William P. Jenks & Co., as well real as personal, in trust to pay creditors in the manner therein set forth.

The assignment contained the following proviso: provided always, nevertheless, that no creditor shall be entitled to any benefit under the assignment, who shall not on or before the 6th day of March next, at 12 o'clock at noon on that day, in due form of law, execute a full and sufficient release of and from their respective claims to the said William P. Jenks and William Maris, individually and as co-partners. Fourthly, to restore and repay to the said William P. Jenks and William Maris, the residue of the estate and effects or the proceeds thereof remaining in the hands of the said Joseph S. Sloan, after payment and discharge and indemnity of the aforesaid claims in the manner and order aforesaid.

Releases were accordingly signed by a number of the creditors on the 5th day of March, 1833.

On the 8th of April, 1833, Thomas and Parry issued writs of fieri facias.

On the 11th day of April, 1833, the sheriff levied under the plaintiffs' executions on the property, the right to the proceeds of which was the subject of the present controversy.

Sloan issued a foreign attachment against William P. Jenks & Co., and directed the sheriff to attach the machinery included in the assignment.

Sharswood (J. R. Ingersoll was with him) for the appellant.

The first question is, whether an assignment of partnership property for the benefit of partnership creditors, and stipulating for a general release, is per se fraudulent? It is to be taken for granted, that this transaction was fair in fact, as nothing appears to the contrary. The right of a debtor in failing circumstances to prefer one creditor to another cannot now be doubted. Hendricks v. Robinson, 2 Johns. Ch. Rep. 283; Wilt v Franklin, 1 Binney, 502. Nor can it be doubted that he may make a special assignment of part of his property for the benefit of particular creditors; nor is the mode of designation material. The case of Lewkner v. Freeman, Finch, 105, was a special assignment to pay scheduled debts and such other debts as the debtor within a certain time should appoint. The stipulation for a release has been recognized as valid in general assignments. Lippincott v. Barker, 2 Binn. 174, Pierpont v. Graham, 4 Wash. C. C. Rep. 232. It is worthy of remark that in Pierpont v. Graham, the assignment was as in our case, an assignment of partnership property only, and stipulated for a general release. Sheepshanks v. Cohen, 14 Serg. & Rawle, 35, appears also to have been an assignment of that character. But Judge Story has expressly decided this point in our favour in Halsey v. Whitney et al., 4 Mason, 218, and in a very lucid and able opinion examined and sifted most of the cases. The only thing to the contrary that can be found in any of the books is a mere obiter dictum and a very loose one of Chancellor Kent in Seaving v. Brinckerhoff, 5 Johns. Ch. Rep. 329, which turned upon an entirely different point, and where though he viewed such a stipulation as unreasonable and strong evidence of fraud in fact, he does not say it is a fraud per se.

Here was no resulting trust. The separate property continued open in the execution of the dissenting creditors. It did not pass by the assignment. All the cases on this subject are where the creditor is obliged to break down the assignment in order to get at the reserved fund. M'Alister v. Marshall, 6 Binn. 338. It results from the right of the debtor to prefer that he may offer terms, and provided he does not withdraw any part of his property from the process of his creditors, for his own benefit, the transaction is unimpeachable.

The second question is, whether the executions in these cases were not laid too late? It appears that they were levied subsequent to the signature of the release by a large number of creditors. By so doing they had in effect accepted the fund assigned in full satisfaction of their respective debts, and in equity it had become theirs. Brown v. Mintum et al., 2 Gallison, 457, was an assignment of particular property for the benefit of certain creditors enumerated in a schedule; and it was held that they acquired by their assent not only an equitable but a legal right to the fund. That such an assignment as this is capable of confirmation is shown by many cases. Austin v. Bell, 20 Johns. 442; Murray v. Riggs, 15 Johns. 571; Hatch v. Smith, 5 Mass. 42; Bradway's Estate, Ashmead, 212; Marbury v. Brooks, 7 Wheat. 556; Brooks v. Marbury, 11 Wheat. 78. In Adlum v. Yard, 1 Rawle, 163, there was no stipulation for a release, and it was decided by this court, that if a creditor take a dividend under a fraudulent assignment, he cannot afterwards question its validity. A release under the hand and seal of the creditor is certainly a more solemn and direct confirmation than the mere receipt of a dividend. " It has been conceded," says Tilghman, C. J., in Lippincott v. Barber, 2 Binn. 181," that if any of the creditors had given a release before the execution was levied, such creditor would have been entitled to a preference. Indeed, that case when examined will be found to be a case in point; for the court there carefully avoid deciding the question whether the assignment was valid; but defeated the execution of the dissenting creditor on the ground that it was not laid until after the assignment had been accepted by certain of the creditors. So it has been held in the Supreme Court of the United States, that in a fraudulent assignment, the assignee is entitled to retain for his own bona fide debt, for his equity is equal to the other creditors, and he has the possession. Beach v. Viles, 2 Peters' S. C. Rep. 675.

Ross, contra.

The assignment is void.--

1. Because it contains a resulting trust to the debtor. The court intimated that this point had been decided in favour of the resulting trust.

2. The time fixed for a release was unreasonably short only thirty days. Pierpont v. Graham, 4 Wash. C. C. R. 237.

3. Because the assignment is only of partnership property and yet stipulates for a release of their separate estates. An assignment stipulating for an exemption of part of the property is void as tending to delay, hinder, and defraud creditors. The assignors here had individual property. All the debtor's property must pass in order shown to render the transaction valid. The courts have of late a disposition rather to restrict and extend these voluntary assignments.

Mr. Ross then went into an examination of the cases, citing M'Alister v. Marshall, 6 Binn. 338; Passmore v. Eldridge, 12 Serg. & Rawle, 198; Sheepshanks v. Cohn, 14 Serg. & Rawle, 35; Wilson v. Kneppley, 10 Serg. & Rawle, 439; Johnson v. Harvey, 9 Serg. & Rawle, 123; 2 Penn. Rep. 92; Adlum v. Yard, 1 Rawle, 163; M'Clury v. Lecky, 3 Penn. R. 83; Leaving v. Brinkerhoff, 5 Johns. C. R. 329; Austin v. Bell, 20 Johns. 450.

4. The possession of the property must pass to the assignee. Hower v. Geesaman, 17 Serg. & Rawle, 251; Shaw v. Levy, 17 Serg. & Rawle, 101. The attachment was conclusive evidence that the possession did not pass. There is no evidence that the assignee...