Majority
p. 335Wilkes and Fontaine against Ferris, Sheriff.
Headnote
A debtor may lawfully prefer one creditor to another. A delivery of the key housed wddeh Iq,ositc<fd is^a .sufficient delivery of the goods* to transfer the property. A de,tivery of the re-ceipt of the storekeeper for the goods, being the documentary evidence of the title, is tan-to a of the
Where, in an assignment of a debtor, in trust for several creditors, it was expressed to be all the property, goods, chattels, debts, See. of the debtor, particularly specified in a schedule, annexed and referred to, this was held not to be a general assignment of all the debt- or’s estate, but was to be construed to operate only on the articles specified.
The resulting trust, or residuary interest, remaining to the after the purposes an assignment, for the payment of debts, are satisfied, is not such an interest as can he taken and sold on execution ; and unless the assignment be merely colourable, and for the sake of the resulting trust, it is not, on account of such residuary ínteres!, void.
THIS was an action of trover, brought to try the right of the plaintiffs to 75 hhds. sugar, marked B. E. which had been levied on by the defendant, as the pro•perty of Henry Cheriot, under a Ji. fa. in favour of William Fan Wyck, against Cheriot.
A verdict was taken for the plaintiffs, subject to the opinion of the court, on the following case.
p. 336
The plaintiff gave in evidence a receipt, signed by , the defendant, and dated July 15th, 1808, of the amount of the execution,, paid to him, without preju-dice, in order to avoid a sale of the sugars ; and by which the defendants agreed to admit a demand and refusal of the property ; also a receipt, signed by Isaac Sebring, dated 21st December, 1807, acknowledging that he had received from Cheriot, on storage, the same 75 hhds. of sugar,. to be at his disposal on paying the storage; also, a certificate, signed by /. Sebring, Afhjr 7th, 1808, stating that the plaintiff (Wilkes) had exhibited to him, an assignment of the sugar, dated 6th January, 1808, made to the plaintiffs ; and that he acknowledged to hold for them,, they paying the storage. Cheriot, by an indenture, dated 6th January1802, which recited that Cheriot was .indebted in the several debts, in the schedule B. thereto annexed, and that being anxious to secure the payment of all the said debts, and having agreed to assign the property therein mentioned, to the plaintiffs, in trust, &c. He did, accordingly, assign to them, “ all the goods, property, wares, merchandises, chattels, vessels, debts, sum and sums of money, claims and demands, and effects,, belonging to, and now due and owing to, the said Henry Cheriot, or to which, and in which, he has any right, property, claim, or demand, which said goods, wares, and merchandises, hereby granted and sold, are particularly described and enumerated in the schedule A. signed by the , said Henry Cheriot, and to these presents- annexed, &c. and for greater certainty, and for a more full description of the same,” he goes on and assigns specifically, the brig Emmeline, and the brig Eliza, and the freight due thereon, and the outward cargo of the Eliza, specified in the schedule C. annexed, and all sums due • from the consignees of the said cargo, and the policies of insurance on the said brig, and on the ship Mary, . ■ and all sums due from the master of the ship Polly, &c.„
p. 337
&:c. &c. upon trust, that the plaintiffs shall convert the • l • ' J , , j . property assigned into money, and to pay the bonds m schedule B. annexed; and all the notes, bills, acceptanees and endorsements, in the said schedule specified; and a number of other specified engagements, not in-eluding, however, the debt due Van Wyck.
This assignment was executed and delivered by Che- riot, on the day of its date. Cheriot, about that time, became insolvent, and executed the assignment for the purpose of securing the creditors therein mentioned. JHe was, at the same time, indebted to Van Wyck, to the amount of the demand, for which the judgment was afterwards obtained. All the property specified in the assingment was stored in three stores, occupied by Cheriot, excepting the vessels and cargoes abroad, and excepting the sugars in question. At the time of executing the assignment, Cheriot delivered to the plaintiffs the keys of his Stores, and Behring’s receipt for the sugars. On the 7th of May, 1808, the plaintiffs called on Behring, to give him notice of the assignment, and to take a new receipt, which was given, as above mentioned. Immediately after giving this receipt, on returning to his counting-house, he found a letter from the defendant, saying he had levied on the sugar ; and it was admitted, that such levy had been made, while Sebring was absent from his store, for the purpose of giving the receipt to the plaintiffs. The execution was issued on the 6th of May.
On the arrival of one of the vessels from abroad, mentioned in the schedule annexed to the assignment, the manifest was dated 15th July, 1808, and made out by the master, in the names of Wilkes and Cheriot; and on the 1st oí February, 1808, the policy of insurance against fire was effected in the name of Wilkes, Fontaine and Cheriot, on the property assigned, and the premium was paid by Cheriot.
p. 338I can only anticipate and answer such objections as may be made on the other side. 1. That the assignment was fraudulent and void, because it assigned the whole property of the debtor to a particular creditor. If, however, the language of the assignment is duly considered, it will be found to be no more than an assignment of the goods specifically enumerated in the schedule. But admitting it to be an assignment of all the property of Cheviot, I am yet to learn that a debtor may not, bona fide, transfer all his property to a particular creditor, in payment of an individual debt, provided possession is also delivered. The statute of frauds, or the statute of Elizabeth, does not reach this case.[23] It is not a case of bankruptcy, nor within the spirit of the bankrupt law. 2. That there was such a resulting trust, or interest remaining in Cheviot, that it may be taken in execution. But I answer, that where goods are delivered to a trustee, under an assignment, they cannot be taken by execution in the hands of the trustee.[21] 3. Then was there a delivery of the property to the plaintiffs in this case ? This is the only point in the cause; but the question, what is a delivery of goods, has been so often discussed in this court, that it is necessary only to refet to some of the cases decided.[22] When Cheviot parted with the receipt, he parted with his dominion over the goods, for Sebving would not deliver them, unless on the production of his receipt.[15] It may be said, perhaps, that the plaintiffs should have given notice to Sebving, of the assignment and delivery of the receipt to them. The want of notice might, perhaps, excuse Sebving for delivering the goods to a third
The jury found a verdict for the plaintiffs for 1,131 dollars and 17 cents.
Hoffman, for the plaintiffs.
p. 339person; but it is a circumstance of which the other r .. , , creditors cannot avail themselves. 1. It is true that one creditor may be, bona fide, preferred to others ; but the cases of this kind were those in which specific property was assigned to the particular creditor. In the present case, there is an assignment of all the property of the debtor; for though a schedule is referred to, yet if he possessed any article not contained in the schedule, the words of the assignment are broad enough to comprehend it. It is admitted that such an assignment would be void, under the bankrupt law of England.[23] It follows, we contend, that it must be also void, under the statute of frauds. By the statute of James I. c. 15. § 2. a fraudulent conveyance, made with intent to defeat or delay creditors, is declared to be an act of bankruptcy. By the act of the 13th Eliz. c. 5. § 2. made perpetual by the act of the 29th Eliz. c. 5. all conveyances, with intent to delay,hinder, or defraud creditors, are declared void. The bankrupt law, therefore, declared that such a conveyance as would be fraudulent, by the statute of frauds, shall amount to an act of bankruptcy. If, then, this assignment would be an act of bankruptcy in England, it follows, that it is void under the statute of frauds ; for the bankrupt law merely adds to the provisions of that statute, by declaring such fraudulent conveyances to be acts of bankruptcy,[21] The words in the two statutes are the same. Though every transfer of property from a debtor to his creditor, is not a fraud, or an act of bankruptcy •, yet if done by deed, it is void, and an act of bankruptcy.[22] Cheriot was insolvent, and indebted to the judgment creditor, when he made this assignment. He transferred the whole of his substance to the plaintiffs, without any value being fixed, by which it could appear, whether
D. B. Ogden and Slosson, contra.
p. 340there was enough to pay all his creditors. Since the time of Twine's case,[23] such a conveyance, by a debtor, in such circumstances, has been held to be fraudulent. If there is a trust reserved to the grantor in the conveyance, it is, ipso facto, void. A gift or trust, is not within the proviso of the statute. Trusts are express or implied ; and Coke states a bona fide conveyance to be, where there is no trust, express or implied. In the present case, there is a trust, first to pay the plaintiffs, next to pay certain creditors, and, lastly, to the grantor himself. By this mode of transferring all his property to a particular creditor, the debtor delays his other creditors. Though a debtor may legally prefer a particular creditor, he must take care to do it in such a manner as not to injure other creditors. That is, he may deliver to a particular creditor specific property, to a specific amount j but he cannot transfer to him all his property. Suppose A. beipg indebted to various persons, conveys all his estate^ gf the value of 100,000 dollars to C, in trust to pay C. 10,000 dollars, owing to him, and the residue in trust for A. himself, would not this conveyance, if allowed to stand, hinder and delay the other creditors of A. in the recovering of their just debts ? That the other credit- or? m,ay be injured, is sufficient to render such a con- • veypnce fraudulent and void. It was so decided in the case of Wilson v. Warmal[21] soon after Twyne’s case, on the principles of the common law, independent of any bankrupt law. Again, there was a trust reserved to Cheriot, which was fraudulent. A deed which is fraudulent in part, is void in toto ; fqr, as Lord Coke[21] observes, “ the .common law doth so abhor fraud and covin, that all acts, as well judicial as others, and which of themselves are just and lawful, yet being mixt with fraud and deceit, are, in • judgment of law, wrongful and ’ unlawfuland the same doctrine is laid down by Montague, Ch. J. in the case of Wimbish v. Tailbeis,[15] “ that covin may be where
p. 341the title is good, and the title shall not give benefit to him that has it by reason of the covin, for the mixture of the good and evil together, makes the whole bad; the truth is obscured by the falsehood, and the virtue drowned in the vice.” It is a principle of the civil law, as well as of the common law, that where the grantee knows of the fraud in a part of the deed, he shall not, as particeps criminis, derive any benefit from such a deed. If the deed is not void under the second section of the statute, it is so under the first, which is- explicit, though too often overlooked by courts-of law.- Though, at common law, a deed may be good in part, ■ and void in part;- yet if part of a deed is made void by statute, the whole must be void,-[23] for a statute is strict law. . 2. Again, there was, in consequence of the resulting trust to Cheviot, such an interest as might be taken in execution. The case of Cailland v. Estzvick,[21] which has been cited, is not in point. The debt for which the execution issued, arose in 1770, the lease was executed in 1784, and Estzvick had possession under the lease, and-received the rents and profits for five years,- and released to Lord Abingdon, who, over and over again, offered to pay the judgment creditors out of other property. Itwas a lease of certain real estate ; not an assignment of all a man’s property. Lord Kenyon said, “ if the deed had been different from what it was, he should have been pressed by the argument, that there xvas a- tenancy in common.” By considering--this as'a tenancy in common, no injury is done to the plaintiffs, or the creditors intended to-be preferred by the assignment. In the'case of joint partners in trade, xvhere judgment is entered against one of them, the share of the partner against xvhom the execution issues, may be sold.[22] An equity of redemntton may- be sold m execution.[15] 3. But if the assignment xvas not void by the statute of frauds, xvas there a sufficient delivery of the goods, to rebut the presumption of fraud[16] symbolical de
p. 342livery, in order to be effectual, must give the vendee a control over the property, as by the delivery of the key of the warehouse where it is deposited. The vendor must do every thing in his power to give, and the vendee to take, the possession.[23] No notice was given to Sebring, until four months after the assignment. During that time, Cheriot might have demanded the goods, and Se-bring would have been''bound to deliver them to him, or to his order. So that Cheriot may be said to have had a perfect control of the property. Though in the sale of a ship at sea, the delivery of the grand bill of sale is sufficient, yet the moment the ship arrives in port, the vendee must take possession.[21] Here was a laches on the ... part of the plaintiffs, in not giving notice to Sebring? of . the assignment to them. 1. This was not an assignment of all the property of Cheriot. It did not include his household goods. The general words in the deed, would not include property not contained in the schedule to which a reference is made. The subsequent specification must control the general words. But supposing this to be an assignment of all the property of the debtor, yet the statute of frauds expressly saves all conveyances made bona fide, and for a good consideration; though no such proviso is contained in the bankrupt law of James I. Though every act which is fraudulent under the statute of the 13th Eliz. will, when done by a trader, be an act of bankruptcy, and void by the statute of James, it does not follow, e converso, that every conveyance which is void under the bankrupt law, is also void under the statute of Elizabeth. A debtor may assign the whole of his property to a particular creditor, if there be a delivery at the time, without its being considered-a fraud, within that statute, though his other creditors may be thereby hindered or delayed in the payment of their debts.[22] The deed being J J T °
T. A. Emmet, in reply.
p. 343general, is not, alone, sufficient to avoid it. It is a mere circumstance to excite suspicion of fraud. Lord Kenyon, in the case of Nunn v. Willsmore,[23] says, “ that putting the bankrupt law out of the case, a debtor may assign all his effects for the benefit of particular creditors.” Such an assignment is not within the words •of the bankrupt law ; but it has been decided to be within the spirit of the statute of James, because the debtor thereby destroyed his capacity to carry on his trade. The distinction between the statute of frauds, and the bankrupt law, as laid down by Lord Kenyon, was adopted by the supreme court of Pennsylvania, in the case of Wilt v. Franklin,[21] which is a case strongly in point. Again, it is said that every deed which reserves a trust to the grantor is void, as it respects creditors ; but this cannot be law. On this doctrine how stand deeds of settlement and mortgages ? The case of Wilson v. Wor mal, cited from Godbolt, is given by Roberts in a note.[22] That case decided that where a man, having goods of the value of 20/. gave the whole to another to whom he owed 10/. with intent, that for the residue he should be favourable to him, the assignment was altogether void, because fraudulent in part; for the grantee, as to the 20/. was a privy to the fraud. In Styles, (128.) it is said that Rolle, Ch. J. ruled, that a deed might be fraudulent in part, and good in part. There could be no valuation in this case. The assignment was in trust to sell the goods and pay certain debts, and account for the residue, if any. As it was impossible to know what would be the amount of the proceeds of the sale, it was requisite that the assignee should be required to account for any surplus. Again, it is said there should have been an assignment of specific property, of a specific value, to the particular creditor. But no authority was cited in support of this doctrine, and the contrary is laid down by Nezvland before cited.
p. 3442. There was a sufficient delivery of the goods. The case of Searle v. Reeves[23] is precisely in point. Eyre, Ch. J. decided that a written order from the vendor, on t^ie Person who had the custody of the goods, directing him to deliver the goods to the vendee, was a sufficient delivery within the statute. If the delivery of the receipt of the storekeeper in this case was a valid delivery, at the time, no subsequent act of the grantor can avoid the transfer. In the case of a symbolical delivery, it is not requisite that the vendor should absolutely put it out of his power to commit a fraud ; for in the case of a delivery of the key of a warehouse, he might have two keys, and deliver one to the vendee, and one to another person, and thereby commit a fraud. 3. How can Cheriot be a tenant in common with the plaintiffs ? They have the entire legal estate. Cheriot is a mere cestuy que trust. A tenant in common must have a present right of enjoyment; but Cheriot has no such right until all the other purposes of the assignment are fulfilled. It is a mere trust, as to personal property; and there is no decision, that such a trust of personal property can be taken in execution. The case of Estwick v. Caillaud shows, that the personal property included with the real, could not be taken in execution, unless the trust deed had been proved to be void.
This is a plain case. There is no colour or ground for the suggestion of fraud. Cheriot might lawfully prefer one set of creditors to another. The whole legal estate of the property specified (and the sugars in question were part of that property) vested in the plaintiffs. The object was lawful and just, and openly and fairly carried into effect. The goods in the storehouses were actually delivered, at the time, by the delivery of the keys of the stores ; and the sugars were delivered by the delivery of Sebring’s receipt, which was the regular documentary evidence of title, and gave the plaintiffs the command of the sugars.
p. 345
It would be a waste of time to take notice of all the . . . • , ,-1 • cases which were cited, or which support this assignment. That of Estwick v. Caillaud (5 Term Rep.- 420.) is very much in point, and fully establishes the plaintiffs’ claim. This was not, in fact, a general assignment of all Cheviot's estate; for though the words, in one place, be general, yet the assignment immediately goes on to specify, by a reference to the schedules annexed, the specific articles of property assigned; and it therefore could operate only upon the articles specified ; for as the court said, in Munra v. Alaire, (2 Caines, 327.) if a general clause be followed by special words, which accord with the general clause, the deed shall be construed according to the special matter. Cheviot may have had a resulting trust, after the purposes for which the assignment was made were satisfied j but such residuum of interest was not the subject of sale on Ji. fa. (Scot v. Scholey, 8 East, 467.) The case of a sale of an equity of redemption of a mortgage of lands, is not at all applicable. Such a residuary interest necessarily arises in every case where property is assigned in trust to pay debts, or to satisfy other specified objects; but unless the assignment be merely colourable, and made for the sake of the resulting trust, it is not void.
The plaintiffs must have judgment.
Judgment for the plaintiffs -