In re the final accounting of Boyd

The sole question to be determined on this peal is as to the right of the' court under the provisions of the Laws of 1887, chap. 503, to direct the application of one-third of the net assets of the assigned estate towards the payment of the claim of the first preferred creditor where the assignment creates several classes of preferences and such one-third of the net assets is insufficient to pay the first preferred claim in full.

The language of the statute referred to is as follows: “ Section 30. In all general assignments of the estates of debtors for the benefit of creditors hereafter made, any preference created therein (other than for the wages or salaries of employes under chapter three hundred and twenty-eight of the Laws of eighteen hundred and eighty-four, and chapter two hundred and eighty-three of the Laws of eighteen hundred and eighty-six) shall not be valid except to the amount of one-third in value of the assigned estate left after deducting such wages or salaries, and the costs and expenses of executing such trust; and should said one-third of the assets of the assignor or assignors be insufficient to pay in full the preferred claims to which, under the provisions of this section, the samé are apjilicable, then said assets shall be applied to the payment of the same pro rata to the amount of each of said preferred claims.”

However much the practice of debtors in failing circumstances to give preference in payment to some creditors to the exclusion of pthers, by assignments for the benefit of creditors, may be condemned, the common law right to make such preferences has always been conceded to exist. Riggs v. Murray, 2 Johns. Ch., 565 ; Grover v. Wakeman, 11 Wend., 167 ; Boardman v. Halliday, 10 Paige, 223; Goodrich v. Downs, 6 Hill, 438 ; Webb v. Daggett, 2 Barb., 9 ; Barney v. Griffin, 2 N. Y., 365 ; Nicholson v. Leavitt, 6 id., 510 .,

And any statutory interference with such right must, therefore, be strictly construed. Taylor v. The Mayor, etc., 82 N. Y., 10 .

Thus in the consideration of the limitations upon the debtor’s right to apply his property towards the payment of preferred claims, contained in chap. 503, Laws of 1887, only that which may be fairly deemed to have been the intendment of the legislature by the strictest interpretation of the statute should be held applicable; and all rights not abrogated in express terms, or by implication, must, therefore, be regarded as still subsisting.

It is apparent from a careful and unbiassed reading of the statutory provision above referred to, that the only limitation intended was to .restrict the quantity of the debtor’s estate which he may desire to apply in payment of the claims of creditors preferred by him, and that the common law right of the debtor to create distinct classes of preferred creditors, and to provide that his assets

The language, “ and preference * * * shall not be valid, except to the amount of one-third in value of the assigned es-. tate,” is equivalent to saying that one-third of the assigned estate may be applied towards the payment of any preferred claim. The subsequent provision that “ in the event that said one-third of the assets shall be insufficient to pay the preferred claims in full,- then said assets shall be applied to the payment of the preferred claims pro rata" has reference only to the case where such preferred claims belong to the same class and are equally preferred in the order in which the one-third of the net assets are directed to be applied, but does not contain any inhibition upon the debtor to direct the order or manner in which so much of his assets as may be properly applicable for that purpose shall be distributed among his preferred creditors.

The order appealed from should be affirmed, with costs.

Daly, Ch. J., and Pryor, J., concur.