Read v. Baylies ( 1836 )

Shaw C. J.

delivered the opinion of the Court. This is a question of property. The defendant, as a deputy sheriff, attached the goods as the property of Joseph E. Read Jr. & Co. ; and the plaintiff claims under a previous assignment, made to him as trustee for the creditors of the same firm. The plaintiff, therefore, must prevail, unless this assignment can be shown to be void against an attaching creditor. And the question here is, whether it- is fraudulent upon its face, so that a court can declare it void ; because, if it were a question depending upon intent or purpose, not apparent upon the instrument itself, it would be a question of fact, to be .tried by a jury.

One ground, on which it is contended that this assignment is fraudulent, as against the partnership creditors, is, that shortly before the assignment, two notes for $ 1500 each, were made in the partnership name, and were signed by Read senior and Bowen as sureties, which were given in the place of two notes for the like amount, previously given by one of the partners only, and antedated, to conform to those previous notes. If these facts stood alone, they would be sufficient to excite suspicion of unfairness, and would be proper to lay before a jury as evidence of fraudulent intent. But the facts agreed explain the transaction, and rebut the charge of fraud against the partnership creditors. It is agreed, that though the notes were given by one of the partners, they were for a partnership debt, and that Paddock R. Read, the other partner, on coming into the firm, had agreed to consider these partnership debts, and to pay his proportion of them as such.

The principal ground relied upon by the defendant, to impeach this assignment, is, that it purports to be an assignment both of partnership property, and of several property of the partners ; and it provides, that the proceeds shall be distributed amongst both partnership creditors and several creditors. But this circumstance alone is not sufficient to invalidate the assignment ; to have that effect, it must be shown on the part of the attaching creditor, attaching as the creditor of the firm, that these provisions in the assignment would operate injuriously to him. But it appears from the facts in the case, that the amount of the claims of partnership creditors, who had become parties to the assignment before the attachment, were more than sufficient to absorb all the partnership property assigned. The debtors, by their voluntary- conveyance, had a right to convey their partnership property, at a fair valuation, to pay such of their partnership debts as they chose to prefer, and under this right to prefer, they might well prefer those who would come in and become parties. Such an assignment would be good and effectual against all other partnership creditors, who should attach the property, because the creditors under the assignment had an equal right with those attaching, to rely on the principle, that partnership property shall be first applied to the payment of partnership debts, and to obtain a preference, and being first in time, claiming under a good conveyance, made to trustees for their use, upon a good consideration, their title is prior in right. An attaching partnership creditor, then, has no right to complain, that the partnership creditors under the assignment, have consented to let in several creditors to share with them, because such a provision does not. affect the rights of such attaching creditors. The partnership creditors under the assignment would hold the whole of the property against an after attaching partnership creditor, because the whole would be no more than sufficient to satisfy their debts ; and, therefore, whether they permit several creditors to come in and share with them or n 3t, is wholly immaterial to other creditors. It is solely a question under the assignment, between the different classes of creditors, when they come to claim distribution, a question with which those claiming adversely to the assignment can have no concern. It may be likened to a case, where a debtor, owing more than he is able to pay, makes an assignment, with the usual stipulation, that all creditors who shall become parties within a limited time, shall have equal shares in the proceeds. Suppose the debts are $ 30,000, the value of the property, $ 10,000, and creditors to the amount of $ 12,000, execute the assignment. Then an attachment is made, and afterwards within the time limited, creditors to the amount of $ 10,000 more, become parties. Inasmuch as creditors to an amount exceeding the value of the property had become parties before the attachment, and inasmuch as, under the right of preference, these would have a right to hold the whole of the property against an attaching creditor, it cannot operate injuriously to such attaching creditor, that the preferred creditors under the assignment have consented to a stipulation, that those other creditors shall come in and share with them, the proceeds of the assigned property, although such other creditors should not thus become parties until after the attachment. It is a question merely amongst the parties to the assignment, how the proceeds shall be distributed, and does not affect the validity of the assign ment as against other creditors not parties, who would attach the property and claim to hold it against the assignees. .

There may be a question upon this assignment amongst the parties to it, whether, upon a distribution of the proceeds, the partnership property shall not first be applied to the payment of partnership debts, and the several property to pay several-debts. This may be affected by the terms and stipulations of the instrument, that may constitute the rule which the parties may have made for themselves, and by which they might well modify and regulate their existing legal rights. We have not looked at this instrument with that view ; nor is it necessary, for the reasons already given. The Court are of opinion, that the assignment was valid and vested the property in the plaintiff, and that the attachment made by the defendant, in behalf of a creditor of the firm, cannot nrevail.