Wright v. Linn

• Decision Date: 01 January 1856
• Citation: 16 Tex. 34
• Parties: WRIGHT AND OTHERS v. JOHN J. LINN.
• Court: Texas Supreme Court

16 Tex. 34

WRIGHT AND OTHERS

v.JOHN J. LINN.

Supreme Court of Texas.

1856.

Quære, whether a general assignment for the benefit of creditors, which prefers some creditors, by a debtor in failing circumstances, is incompatible with the provisions and policy of our bankrupt law.

Assuming, for the present, the right to make such an assignment, nothing is clearer or better settled than that the debtor can make no assignment of any part of his property in trust for himself. If there be a secret trust of this character, or an understanding that the assignment is, in any degree, for his benefit, it is a fraud upon creditors and is consequently void. It is not enough that an assignment be for a valuable consideration; it must be bona fide also.

Great latitude is allowed by law in the admission of circumstantial evidence on an issue as to the good faith of an assignment by a debtor in failing circumstances; and any fact may be submitted to the jury, provided it can be established by competent means, which affords any fair presumption or inference as to the real object and intention of the parties.

Where a merchant, in failing circumstances, made an assignment of his stock, book accounts, etc., to a trustee for the benefit of his creditors, preferring some to others, and afterwards continued to manage and control the business, on what agreement did not appear, there being no provision therefor in the assignment, it was held that the trustee was, prima facie at least, responsible for the acts of the debtor, and that both parties must be deemed to have contemplated and intended, at the time of making the assignment, the course of conduct, in their transactions and dealings with the property conveyed, or pretended to be conveyed, which they afterwards adopted.

Where on an issue as to the good faith of an assignment of a stock of goods, book accounts, etc., for the benefit of creditors, some of whom were preferred, the assignee was notified to produce the books of the debtor kept before the assignment, and those of the assignee kept since, and the assignee objected that they were not evidence, nor were they material, nor was he bound to produce them, and the court below sustained the objection, on error, it was presumed that the objection was sustained on the ground of want of materiality, and it was held that there was error.

Error from Victoria. This was a trial of the right of property in a stock of goods, wares and merchandise, levied upon by virtue of executions in favor of the plaintiffs in error, against Lavius F. Chapman, and claimed by the defendant in error, under the following assignment:

“STATE OF TEXAS, Victoria County.

“These presents witness, that whereas I, Lavius F. Chapman, of said county, merchant, am indebted to L. M. Wiley & Co., of New York, in the sum of two thousand seven hundred and fifty-three 40-100 dollars ($2,753 40-100), and to Seaman, Wills & Peck, of New Orleans, in the sum of one thousand and eighty-four 53-100 dollars ($1,084 53-100), and to J. Hobbs & Co., of New Orleans, in the sum of four hundred and fifty 07-100 dollars ($450 07-100), and also to Richard Patrick & Co., of New York, in the sum of three thousand five hundred dollars; and also to several other persons, whose names, with the amounts due to each, are hereafter to be given in a schedule and hereto annexed and marked A; and whereas the said L. M. Wiley & Co., and the said Seaman, Wills & Peck, and the said J. Hobbs & Co. have instituted suits against me by attachment and levied the same on my entire stock of goods, and also garnished many of my debtors, seized my books, notes and accounts; and whereas my said creditors who have brought suit as aforesaid, have agreed to dismiss said suits and attachments on condition of my giving them approved personal security for said indebtedness; and whereas John J. Linn and Edward Linn, in consideration of the transfer and assignment hereinafter mentioned, have signed with me, in solido, three several obligations of this date, payable in nine, fourteen and nineteen months, in favor of L. M. Wiley & Co. for nine hundred and seventeen 81-100 dollars each, with seven per cent. interest, making the sum of two thousand seven hundred and 53-100 dollars, due the said L. M. Wiley & Co. as aforesaid; and whereas John J. Linn and P. U. Pridham and John D. Logan have signed with me three several notes of this date, payable in ten, twelve and fourteen months, for the sum of three hundred and sixty-one 51-100 dollars each ($361 51-100) in favor of Seaman, Wills & Peck, making the sum of one thousand and eighty-four 53-100 dollars, due them as aforesaid; and whereas Wm. T. Mitchell and J. E. Shanks have signed with me a note in favor of J. Hobbs & Co. for four hundred and fifty 07-100 dollars, payable on or before the first day of January next, and the said Wm. T. Mitchell and J. E. Shanks have so signed as aforesaid, in consideration of the transfer and assignment hereinafter mentioned, agreed to be made for their security before their signing said notes as aforesaid; and whereas I am not able to pay and satisfy the several debts due by me, promptly and at maturity; therefore, in accordance with my agreement with my said personal sureties who have signed with me said several obligations and notes aforesaid, and in consideration of the purposes hereinafter expressed, I, the said Lavius F. Chapman, have bargained, sold, transferred, set over and delivered to John J. Linn, of Victoria county, and by these presents do bargain, sell, transfer, set over and deliver to the said John J. Linn (who is one of my sureties aforesaid), his executors, administrators and assigns, all and singular, my stock in trade, consisting in goods, wares and merchandise, and named in the schedule hereto annexed, dated August 24, 1852, and marked B; also all my notes, books and accounts, due me by my debtors, a schedule of which, with the names of the debtors, and the amounts due by them respectively, is to be made and hereto annexed and marked C--to have, hold and receive and take the said stock in trade, notes, books and accounts, to him, the said John J. Linn, his executors, administrators and assigns, upon trust, that he, the said John J. Linn, his executors and administrators, do and shall, as soon as conveniently may be, make sale and dispose of so much and such parts thereof as are salable, for the best price or prices in money that can be had or obtained for the same; and do and shall collect and get in so much thereof as are outstanding and not in their nature salable. And it is hereby declared and agreed that the said John J. Linn, his executors and administrators, shall stand possessed of, and interested in, the moneys to arise by such sale or sales and to be called in and received as aforesaid, upon trust, and to the intent that he shall and do, in the first place, retain, to pay and reimburse himself, all such costs, charges and expenses as he shall or may pay, sustain or expend in or about such sale or sales so to be made as aforesaid, or in getting or collecting in the debts and sums of money mentioned to be hereby assigned as aforesaid, and all other costs, charges and expenses incident to, or which may be incurred or sustained in or about the execution of the trust herein expressed or any of them, and for the expense of preparing these presents, and then in trust, that he, his executors and administrators, do and shall apply the residue of the said trust moneys in and towards the payment and satisfaction of the debts due by me, and to pay and satisfy the same in the order and preference herein stated, that is to say: First, as they severally fall due, the notes hereinbefore described, signed by me, with my sureties herein named, in favor of L. M. Wiley & Co., Seaman, Wills & Peck and J. Hobbs & Co. Second, the account due by me to Richard Patrick & Co., of New York, for the sum of three thousand five hundred dollars. Third, all my other creditors, pro rata and pari passu; and after payment of the whole of such debts, and of such costs, charges and expenses as aforesaid, then in trust, that he, the said John J. Linn, his executors and administrators, do and shall pay the surplus, if any, unto me, the said Lavius F. Chapman, my executors, administrators or assigns.

And for the purposes aforesaid, I, the said Lavius F. Chapman, hereby fully empower the said John J. Linn to do and perform all and singular the act or acts necessary and proper to carry out the object and intention of these presents, and to appoint such agents or attorneys to act in his room and stead, and under his directions, as may by him, the said John J. Linn, be deemed necessary the more effectually to secure the several objects herein set forth.

It was duly recorded on the same day.

The property was in possession of Chapman at the time of the levy, and the burden of proof was on defendant.

After introducing the deed of assignment in evidence, the defendant proved by A H. Phillips that he drew said...