Johnson v. Kelly

Each of these actions is brought to set aside a general assignment, made by Kelly, on the ground that the assignment does not, in its terms, prefer laborers; the plaintiffs claiming that for this reason it is fraudulent and void.

The -statute, laws 1884, chapter 328, was evidently enacted for the benefit of laborers. It intended, in the case of an insolvent debtor, that the laborers whom he owed, (who usually have small claims for which they cannot litigate), should be always protected. It is a humane statute and its objects should be carried out as far as possible.

The plaintiffs claim that the statute requires the assignor to insert in the assignment a clause preferring laborers and that a failure to do this makes the assignment void.

The defendants claim that whether such clause be in the assignment or not, the duty of the assignee under the statute is the same, viz., to pay all laborers first.

If the plaintiff’s construction is correct then, in case assignor fails to insert such a clause, the laborers lose all the benefit of the statute. Because, if the assignment be set aside, the laborers can obtain no preference, since there will be no assignment. And the person benefited by the action to set it aside will be the vigilant creditor. This will seldom be a laborer, whose little claim could not generally bear the expense of such litigation. It would be necessary for every laborer to recover a judgment on his demand and then to bring or to join in an action to set aside the assignment on the ground of the omitting a clause of preference.

• For, if the defendants’ construction is correct, no neglect of the assignor to prefer these laborers can take away their rights. They are preferred by the statute. The assignee must first pay them, just as an executor must first, pay debts of the testator, although not required to do so by the will.

It is, therefore, evident that the defendants’ construction always carries out and the plaintiff’s often defeats the humane intention of the statute.

Is there any difficulty in giving this construction ? The statute says, “In all assignments,” etc. The plaintiffs construe these words as referring to the instrument itself. But it is equally sound to construe them as referring to the whole transaction, as if the language were, “In the case of all assignments,” etc. This meaning is made more distinct in the statute of 1886, chap. 283: “ In all distributions of assets under all assignments made,” etc.

The plaintiffs urge that the whole duty of the assignee must be found in the assignment. There is a certain half truth in that statement. The court cannot, from its own views of what the assignor ought to have done, change the duty which he has put on the assignee. But the legislature has put, as it lawfully might, certain restrictions about the matter of general assignments, and they are, as it were,' bankruptcy proceedings. The legislature has required the assignee to do several things which are not mentioned in the written assignment. We see no reason why it may not require him first to pay the laborers.

The plaintiffs do not claim that the legislature could not impose this obligation on the assignor to prefer laborers. If that can be done we see no reason why the legislature may not make the preference of laborers in the distribution of assets, a condition upon which alone the assignor may make a general assignment.

There is another view. This construction of the defendants’ sustains the assignment as valid. There is no charge that it was intentionally fraudulent, and, therefore, it should be supported if possible. The plaintiffs, it is true, assert that the omission to prefer the laborers is evidence of an intent to defraud them. But if the assignor knew that they were preferred by the statute, and that such preference was beyond his control, his omission to prefer them in the assignment showed no intent to defraud. A testator does not intend to defraud his creditors when he gives all his estate in devises and bequests and says noth

The conclusion to which we have come is that of the first department in Richardson v. Herron ( 39 Hun, 537 ); and of the fifth department in Burley v. Hartson ( 40 Hun, 121 ).

In the case of Harriet v. Masterson, of which a brief statement appears in 1 N. Y. State Rep., 245, the assignment was set aside as made with fraudulent intent. The question here involved is not discussed, it is only briefly mentioned, so that we have no decision of the second department on the point.

The judgment should be reversed, and, as there can be nothing gained by a new trial, judgment for defendants must be rendered, with costs here and in the court below.

Landón and Mayham, JJ., concur.