Watson v. Brown

Headnote

Creditor’s suit.—Assignment for creditors ; provision for COMPLETING BUILDINGS.-RECEIVER.

A provision in an assignment for benefit of creditors, in the form, “ And it is further provided that, should it be necessary and to the better performance of the trust, the party of the second part shall have full power and authority to finish such work as is unfinished, to complete such buildings as are incomplete, and to pay all necessary charges and expenses for such completion prior to the payment of all debts and liabilities-hereinbefore mentioned and provided,’’ is illegal, and vitiates the assignment.

In a creditor’s suit to set aside such assignment, it was alleged by plaintiff that the assignee had received a large amount of property under the assignment, that he was individually irresponsible, and that, his bondsmen would be no longer liable should the assignment be set-aside and be declared fraudulent and void upon its face.— Held,, that a receiver of the assigned property should be appointed.

Motion for receiver.

This action was brought by James H. Watson and James H. Pettinger, as judgment creditors of George W. Brown, after execution returned unsatisfied, against said George W. Brown and William W. Butcher, as his assignee for creditors, to set aside a general assignment made by said Brown to Butcher, as void on its face.

The assignment contained the following provision : 66 And it is further provided, that should it be necessary and to the better performance of the trust, that the party of the second part shall have full power and authority to finish such work as is unfinished, to complete such buildings as are uncompleted, and to pay all necessary charges and expenses for such completion prior to the payment of all debts and liabilities herein-before mentioned and provided.”

The motion for a receiver was based upon the complaint, and an affidavit by plaintiff, alleging the judgment against Brown, the return unsatisfied of an execution thereon, and the assignment for creditors which was alleged to be void upon its face ; that the defendant assignee had collected and reduced to possession a large amount of personal and other property from the assets of his assignor, and that there was other property not yet reduced to possession ; that deponent was advised and believed that should he succeed in his action and should said assignment be declared fraudulent and void upon its face, and should the same be set aside as against the plaintiffs, that then and thereupon the bondsmen of said assignee will be no longer liable « upon the bond given by them, and the assignee would then be responsible in his individual capacity only ; that deponent was informed and believed that the defendant assignee was individually irresponsible, and that there was danger that the property and assets would be lost, unless a receiver thereof was appointed.

The defendant Butcher answered denying generally

the allegations of the complaint, except the assignment, and put in issue by affidavits, the allegations of fraudulent intent and as to the irresponsibility of the assignee. It was further alleged thatamong the assets of the assigned estate were ten unfinished buildings in the city of Brooklyn, in and around which was a large quantity of building material of a perishable character ; that said buildings were subject to mortgages to secure builder’s loans; that the assignor did not intend,' by the provision authorizing completion of buildings, to confer upon the assignee any unlawful or extraordinary powers, but to convey the idea of the assignor, a builder of long experience, as to what could better be done with the materials on hand. That the assignment was made at a season of the year when unfinished buildings require constant care and attention, and the assignor had anticipated, that should the weather become extremely cold or wet, it might be necessary before a sale could be effected, to take some measures to protect the buildings. That, in fact, the assignee had simply boarded up the buildings- which were dangerously exposed, and had sold the materials.