OPINION TEXT STARTS HERE
Appeal from appellate court, first district; EGBERT JAMIESON, Judge.
Creditors' bill by Ada S. Havens, Daniel A. Loring, and Hiram B. Peabody against Caleb Clapp and Thomas Davies. Intervening petitions were filed by Charles P. Young and other creditors of the defendants. From a decree of the trial court, which was affirmed by the appellate court, Charles P. Young, Alonzo F. Bennett, and the Meriden Silver Plate Company, intervening petitioners, appeal. Affirmed.
The following statement of the facts of this case appears in the opinion of the appellate court:
‘The proof in this case shows that for some time prior to January 1, 1884, Caleb Clapp and Thomas Davies were partners in the wholesale jewelry business in Chicago, under the firm name of Clapp & Davies. On said January 1, 1884, said Clapp & Davies entered into an agreement with one William B. Clapp, by which they purchased from him a large stock of jewelry, fixtures, and accounts of his former business, agreeing to pay him therefor the sum of about $115,000; and it was arranged that said William B. Clapp's name should appear in the firm name of Clapp & Davies, and he should be held out to the world as a general partner; and for the use of his name he was to receive a sum equal to 12 per cent. on the average balance of his account, payable monthly. Said William B. Clapp continued the relationship thus commenced until about March 1, 1886, when by arrangement said William B. Clapp withdrew from his apparent partnership relation in the firm, and notices were purlished in the daily papers, and circulars announcing the fact of his withdrawal sent to the customers of the firm. His account with the firm of Clapp & Davies was left an open account; the books showing that they were indebted to him for a large amount. Clapp & Davies continued their business until April 14, 1887, when, being largely indebted to divers persons, and among them said William B. Clapp, they executed divers judgment notes upon which judgments were entered in the superior court: One in favor of one Cudworth for $10,408.86; one in favor of one Mary E. Hanley for $12,993.30; one in favor of William B. Clapp for $65,500; one in favor of Mary E. Hanley for $14,067.70; one in favor of one Loring for $5,274.40; one in favor of one Peabody for $14,700; another in favor of Peabody for $4,224.32; and one in favor of one Ada S. Havens for $10,388.82,-eight judgments in all. On the same day execution was issued on each of said judgments, and placed in the hands of the sheriff, who levied the first four executions upon the stock of goods of Clapp & Davies, and returned the other four executions, ‘No property found, and no part satisfied.’ On the same day said Ada S. Havens, Daniel A. Loring, and Hiram B. Peabody, as complainants, filed a creditors' bill in the said superior court against Caleb Clapp and Thomas Davies as defendants, which contained the ordinary allegations found in such a bill, and alleged that executions on the judgments therein set out and described had been returned nulla bona. On the same day, on the application of the said complainants in said bill, one Charles Catlin was appointed receiver in said cause, and an order was entered requiring the defendants, said Clapp & Davies, to transfer all their property, and deliver possession of the same, to said receiver. Afterwards said Clapp & Davies did make such transfer, and deliver possession of such property, to said receiver. No answer to the original bill was ever filed by Clapp & Davies. Subsequently intervening petitions were filed in said cause by a number of persons. The petition under which the interveners came in, and on the allegations of which they rely, showed that the complainants in said petition had recovered judgments before a justice of the peace, on which the executions were returned, ‘No property found,’ and alleged that Clapp & Davies had been prior to the 14th day of April, 1887, engaged in the business of wholesale jewelers; that in the course of said business they had contracted debts to a large amount; that $150,000 of said debts was for goods and merchandise purchased by them upon credit in the course of their business within six months last past before the filing of said intervening petition; that among the debts so contracted were the debts due to the complainants in the intervening petition; that for more than six months said Clapp & Davies had been insolvent, and unable to pay their obligations, and that they combinded and confederated with their codefendants, or some of them, to try and dispose of their property and effects, including their merchandise, so as to hinder and delay their creditors; and that, in pursuance of said scheme, they caused the judgments heretofore mentioned and set out to be entered in the superior court; and alleged that said Clapp & Davies had consented in open court to the appointment of a receiver; that the judgments were confessed with the purpose on the part of Clapp & Davies to give a preference to the said judgment creditors in whose favor they were confessed, and to defeat and avoid the operation and effect of the laws of the state of Illinois regulating voluntary assignments; and alleged on information and belief that the said judgments, or some one or more of them, were for a much greater sum than the amounts actually due from Clapp & Davies to the plaintiff in said judgment or judgments. Interveners asked that the petition be consolidated with the creditors' bill filed, and that the interveners or petitioners have the same rights and equities which they could have had had this bill been filed either as an intervening petition in said cause or as an original bill; prayed that the receiver be enjoined and restrained from paying over to any of said persons in whose favor the said judgments against Clapp & Davies were confessed any of the moneys or properties that had come to the hands of said receiver; that said judgments and all the proceeds thereof subsequent to the assignment to Catlin as receiver, and the transfer and assignment of the property and effects, be decreed and adjudged to be a general assignment of the property and effects of said Clapp & Davies, and that Catlin may be decreed to be the assignee holding the property as a trustee; and that, after paying all costs and expenses, all the money to be divided equitably and pro rata among the creditors of Clapp & Davies in proportion to the debts due to each creditor, and the whole amount of the indebtedness of Clapp & Davies. These petitions were answered by the plaintiffs in the judgments which were confessed, and all fraud and collusion denied. By consent of the plaintiffs in the first four judgments the sheriff turned over the property on which he had levied his executions to the receiver, they to retain their liens thereon; and under the orders of the court the tangible property, as well as the book accounts, were sold by the receiver. The property that had been levied upon by the sheriff brought the sum of $101,000, and the book accounts brought the sum of $10,000. Both sales were made under order of court. While in possession of the store before the sales, the receiver took in $14,000 for goods sold and in bills collected. Upon the hearing the court found the allegations of the original bill to be true, and ordered that the $101,000 be applied on the four judgments on which the levy upon the stock had been made, and that the $10,000 realized from the sale of the book accounts and the $14,000 in the hands of the receiver, making in all $24,000, should be applied pro rata on the judgments of the complainants in the original creditors' bill. A large amount, to wit, the sum of $1,600, of attorneys' fees, was included in the amounts of the eight judgments confessed; but the money realized upon the sales of the property by the receiver was paid over in satisfaction of the judgments without the deduction or allowance of any attorneys' fees from the amount realized.'
Moses & Pam
MAGRUDER, J.
The thirteenth section of the assignment act (Rev. St. 1891, c. 10 a) does not prohibit preferences generally, but only preferences which are contained in written deeds of assignment voluntarily executed for the benefit of creditors. The language of the section is that ‘every provision in any assignment hereafter made in this state for the payment of one debt or liability in preference to another shall be void,’ etc. A preference, given by a debtor after he has made up his mind to execute a general assignment for the benefit of his creditors, has been held to be void, upon the theory that such a preference must be regarded as a part of the assignment. There is no such thing as a constructive assignment contemplated by the assignment act. That act does not take away the common-law right of a debtor to prefer one or more of his creditors. A preference may be given by the execution of a judgment note resulting in the entry thereon of a judgment; and, where a creditor files a creditor's bill for the purpose of acquiring such a lien as is appropriate to that form of proceeding, no reason is perceived why a debtor may not give a preference by consenting to the entry of orders therein, or by withholding his opposition to the prosecution thereof. Whatever may be the nature of the act which constitutes the preference, it does not come within the prohibition of the thirteenth section, unless there is a deed or written instrument of assignment for the benefit of creditors, of which such act is a part, or may be construed to be a part. The assignment to which said section refers is a transfer, without compulsion of law, by a debtor, of his property to an assignee or trustee, in trust to apply the same, or...
