Bennett v. Campbell , 189 Pa. 647 ( 1899 )

Opinion by

Mb. Justice Mitchell,

Campbell & Company having made an assignment for the benefit of their creditors, the plaintiffs by appropriate proceedings in the Supreme Court of New York had the assignment set aside as to themselves for fraud upon them. It is not expressly said anywhere that Campbell & Company were residents and doing business in New York, but that seems tobe intended to be taken as the fact. By the case stated it is agreed that under the law of New York an assignment for benefit of creditors may be set aside for fraud as to one creditor without affecting its validity as to the others, and that thereupon the creditor as to whom it has been set aside may pursue his ordinary remedies against his debtor and his debtor’s property, with the same effect as to such creditor alone as if the assignment had never been made.

After the assignment had been so set aside as to them, plaintiffs obtained a judgment in the court below and issued an attachment execution against the bank as garnishee. Thereupon their rights, according to the law as agreed in the case stated, were the same as if no assignment had ever been made. As to them the assignment was a nullity. With the assignment out of the way, the plaintiffs upon the service of the attachment succeeded to the rights of Campbell & Company against the bank, no less but no greater. That is the status of an attaching creditor by the settled law of Pennsylvania: Roig v. Tim, 103 Pa. 115. At the time of service of the attachment the bank held two overdue notes of Campbell & Company. As to Campbell & Company the right of set-off was unquestionable, and the same right existed against the plaintiffs who had in law taken Campbell & Company’s place as the bank’s creditor.

But it is argued for the appellants that the assignment having been duly made and recorded is binding upon the bank as between it and Campbell & Company and, having been made before the notes fell due, no right of set-off existed against the assignee, and therefore none could be asserted against the plaintiffs. In other words, the plaintiffs claim that they may treat the assignment as a nullity with regard to their own rights, while at the same time enforcing it as a binding restriction on the rights of the bank. This proposition does not command our assent. It extends the operation of the decree of the Supreme Court of New York beyond its legitimate scope. By the law as agreed in the case stated, the decree setting aside the assignment as to the plaintiffs left them in the position of creditors in the ordinary course of business. In any question arising between them and their debtor or his property, the status of fact was conclusively assumed to be that there was no assignment. But as to other creditors the decree made no change in status. Its purpose was to enlarge the rights of plaintiffs, not to affect those of other creditors. These the decree did not assume to touch; it left them where they were before. When the plaintiffs took their rights thus enlarged, or restored to their position before the assignment, they necessarily took them precisely as if the legally presumed status existed in fact, with all its legal incidents, favorable or unfavorable. As to other creditors in relation to the assignee or to each other, the decree of the court left everything untouched, and all questions so arising will be determined by the facts as they actually are, but as to plaintiffs the assignment is legally nonexistent either in favor or against.

Judgment affirmed.