Williams v. Winsor , 1877 R.I. LEXIS 70 ( 1877 )

The respondents in this case claim under an assignment of personal property from Nicholas C. Briggs for the benefit of his creditors. The complainant claims as administrator of William B. Lawton, deceased, under a mortgage which, besides property in the possession of the mortgagor at the time of the execution of the mortgage, also purports to convey certain property thereafter to be acquired, it being the same mortgage heretofore before the court in the case of Williams v. Briggs, 11 R.I. 476; and the bill prays that the complainant's lien on the property may be established and enforced and that the respondents may be required to surrender the property, or for a sale thereof, and for an account of any of said property that may have been sold, and for other relief.

The answer admits so much of the facts as are material for this decision.

The respondents' counsel contend that such a mortgage is voidper se as a fraud upon creditors, at least so far as respects the after-acquired property. It is difficult to see how, if the mortgage was executed to defraud creditors, it can be good even in part; but there is another objection to the point here made. While in some States a mortgage containing a power to sell and replace, or where the mortgagor retains possession, has been held to be therefore void, such has not been the doctrine of the courts in this State. Here, the question whether such a mortgage is fraudulent or not is a fact for the decision of the jury, upon the circumstances and evidence in the particular case.

The respondents' counsel further object that it is inconsistent and unjust that equity should adopt a different doctrine from that of the law in relation to mortgages of this sort. This is only one of many cases where a party has a remedy in equity where he has none at law; and we can see no greater inconsistency in it than in the fact that a party is at law obliged to adopt a particular form of action.

In England, Parliament has seen fit to abolish this distinction, and to provide that hereafter, where the rules of law and equity differ, the latter shall prevail; but our legislature has not yet seen fit to make any change in this respect.

Counsel further contend that although such a mortgage might be good between the parties, yet it is void as against creditors.

It is perfectly well settled that a voluntary assignee for the benefit of creditors takes property subject to all the equities to which it was subject in the hands of his assignor, and that he does not stand in the light of a bona fide purchaser for a new and valuable consideration without notice, and entitled to be protected as such.

The complainant is therefore entitled to the relief prayed for.

The case was afterwards heard on the form of a decree, and an order was made January 3, 1878, sending it to a master to ascertain and report:

1. What property came into the hands of the assignee underthe assignment?

2. How much of the property received by the assignee wascovered by the mortgage, either as having been acquired before orafter the execution of the mortgage?

3. What expenses have been incurred by the assignee inregard to the property under the mortgage?

4. Also to report any facts which either party may wish tohave reported. All questions to be reserved until the report comes in.

NOTE. — See Albany Law Journal, vol. 17, p. 359, May 11, 1878, for comments in this case.