Albert v. Winn

7 Gill 446

• Court: Court of Appeals of Maryland
• Decided: June 15, 1849
• Status: Published

Opinions

Frecio, J.,

delivered the opinion of this court.

On the 14th day of September 1846, Johns HopkinS and others, creditors of Samuel Jones, filed in the court of chancery their bill of complaint, against Jones, William J. Albert and wife, and one Michael S. Norman, in which it is alleged, that Jones being hopelessly insolvent, and knowing himself to be so, and having no reasonable expectation of being exempt from liability or execution on account of his debts, without applying for the benefit of the insolvent laws, and being in fact under expectation of applying.for the benefit of said laws, and designing and threatening to prefer certain of his creditors, his near relations, was about to convey and transfer a large portion of his property and effects to his brother-in-law and- sister, Albert and wife, with intent thereby to give to them an undue and improper preference over the rest of his creditors. That the complainants being about to institute suit against Jones, to compel him to apply for the benefit of the insolvent laws, he had changed his residence, that he might the longer delay his creditors, and better secure to his favorite creditors the preferenees which he contemplated. The bill, therefore, prays for an injunction to restrain Jones “from conveying, assigning or transferring any of his property or effects, rights or credits, to the said Albert and wife, to secure or pay the debt due to them in preference to the rest of his creditors; and to restrain the said Albert and wife from receiving any such preference.” The injunction was accordingly granted, and still continues in force.

Jones had previously carried on business in the city of Baltimore, under the name of Talbot Jones and Company; and on the 5ih of September 1846, he suspended payment. Among the debts due by him, was a large sum of money belonging to his sister, (who afterwards intermarried with Albert,) which he held in a fiduciary character, as trustee for herself and her children, and which he had appropriated and misapplied to his own use. fu the month of November 1845, Albert had applied to him to reinstate this sum, or to give security to that intent, when Jones agreed to convey to Albert and wife, a certain property in the city of Baltimore, called the “ Wheatfield Inn,” and other property of the said Jones, with a view to such security of the moneys so misapplied by him. But this agreement was never executed.

On the 26th of September 1846, after the service of the injunction, Jones convened his creditors, explained to them his condition, and offered and agreed to convey all his property to trustees for their benefit, upon the condition and consideration of a release, to be executed by them, of all claims against him. But at this meeting, Albert, who attended, refused to concur, insisting, that the trust debt due to himself and wife, ought to be first secured and preferred over the claims of the other creditors. The proposed arrangement therefore failed, and no deed was executed at that time.

On the 29th of September, Albert and wife thereupon filed their bill on the equity side of Baltimore county court, pending the injunction granted on the preceding bill, alleging the violation of the trust on the part of Jones, and his promise to protect the interests of his sister, by a conveyance of the “ Wheatfield Inn,” and his failure so to do, and praying that he may be decreed to pay to them the sum of money thus due to them under the trust, and misapplied by him to his own purposes.

On the 1st day of October, the return day of the subpoena, which was regularly served, Jones appeared by counsel; and on the 30th of October, having filed his answer, admitting the appropriation of the money, and his promise to reinstate the fund by the security proposed, a decree was passed on the day following, (31st October 1846,) directing Jones to bring into court the amount ascertained and admitted to be due to the complainants.

Previous to this decree, on the 22nd of October 1846, Albert and wife had filed a second bill on the equity side of the same court, of the same import as the first, alleging, moreover, the intention of Jones to make a conveyance of his property for the benefit of his creditors, and praying an injunction to prevent him from conveying for this purpose the “ Wheatfield Inn” which injunction was accordingly granted.

On the 26th of October 1846, Jones executed a conveyance of all his property, (with the reservation of the “ Wheatfield Inn,” which was excepted from said conveyance,) to Ross and Winn, in trust:—

1. To defray the expenses attending the execution of the trust.

2. To the payment of the several creditors named in the schedule annexed to the deed.

3. To the payment of the claims of such of his creditors, as shall, on or before a given day, (the 1st day of January next,) execute and deliver to the trustees, full and absolute releases and acquittances of such claims. And

4. If any surplus shall remain, after satisfying the aforesaid creditors, to apply the same to the satisfaction of the claims of all other creditors of said Jones, without any distinction or priority.

In the same conveyance he also covenanted to convey to the said Winn and Ross the “Wheatfield Inn,” whenever the injunction, before alluded to, should be dissolved, oras soon as he can legally do so, to be held upon the same trusts as the other property conveyed to them.

On the 11th of January 1847, Jones made his application for the benefit of the insolvent laws, and William Winn and James Ross, the trustees under the conveyance, before referred to, were afterwards duly and regularly appointed his permanent trustees.

On the 13th of January 1847, Winn and the parties complainants in the original suit of Hopkins and others, filed their bill iti the court of chancery, stating the import and object of the original suit, and the injunction thereon; and the subsequent proceedings of Jones, and oí' Albert and wife. The object of this bill is, to impeach and set aside the decree obtained by Albert and wife against Jones, as fraudulent and void against the complainants, and to stay execution of that decree against any property of Jones. The injunction prayed for was granted, and is still in force.

Jones, in his answer, denies that the bill filed on the equity side of Baltimore county court, was through any combination or confederation with him on the part of Albert and wife. And their answer makes the same denial, and sets forth particularly file same facts in defence, which they had before averred in their bill of complaint in Baltimore county court.

We shall first, in order dispose of the assignment from Samuel Jones, Jr., to Winn and Ross, as trustees under that conveyance for the creditors of Jones.

Having brought our minds to a satisfactory conclusion against the validity of the conveyance from Samuel Jones, Jr., to these complainants, in this cause, we might be content with a reference to the opinion and reasoning of this court, heretofore, in the case of McCall vs. Hinckley, 4 Gill, 128, as full to the purpose, and claiming our unqualified assent. But as the assent thus given is not. only to affect the decision of the case now under consideration, but to determine the law upon that class and character of assignments involved in the present controversy, we are not entirely free to pass a silent judgment upon the question, without a few words in vindication of the opinion and conclusions thus formed.

It is to be regretted that there has been so little uniformity of opinion on a subject of such constant occurrence, and so much. general interest. From their first introduction into commercial practice, these assignments have always encountered difficulties and opposition, and have only finally obtained countenance, in the courts, upon the assumed weight of professional opinion in their favor. Still, it may be safely said, that whatever sanction has been given to them, by this alleged preponderating opinion of the profession, the question is still to be considered floating and unsettled; and wherever this influence has been permitted to prevail, it was with a distrust, which, looking to the tone of more recent decisions, is every day increasing. In many of the States, (it may be said in a majority of them,) they have been rejected by the courts, as fit instruments for the perpetration of fraud. In others, where the judges have yielded to the force of professional opinion against their own judgment and conviction, the legislatures, conforming to the general and healthy sentiment of the community, have denounced and exploded them; and wherever sanctioned, as it is not denied they have been, by the highest judicial names of the country, it has been with a constant expression of reluctance and regret that from deference to authority and precedent, they were not at liberty to decide otherwise.

That these considerations, however, do not disembarrass the question, is shewn by the continued conflict of opinion, which has prevailed from the earliest decisions on the subject, up to the recent action of this court in the case of McCall and Hinckley, 4 Gill, 128, which resulted in a divided opinion of the court. If, then, the alleged preponderance of professional opinion in this State be invoked in their favor, yet it is something that the question is not concluded here, but still open to review, and may now be settled upon principle, by the action of this court, free to dispose of it, upon what may be considered its own intrinsic merits.

It is not pretended that at common law, a debtor in failing circumstances, may not prefer any creditor he may please to select. “Apart from the provisions of the insolvent laws, he may secure one creditor to the exclusion of others,” 5 G. & J., 377. Nor is there any objection to the validity of a transfer by the debtor, of his whole estate for the equal benefit of all his creditors, 6 G. & J., 205. And it is properly assumed, that wherever a party is unable to pay his debts, he becomes morally a trustee for all his creditors. In such a predicament each is entitled, without conditions, to such a ratable share of the property and estate of the debtor as it will yield; and an assignment to that effect is therefore good. On this assumption of equality among the creditors, the bankrupt and insolvent laws of every commercial community proceed, at the proper time, to divest the debtor of his property, and give the distribution into the hands of the law. Where the debtor is involved beyond his means, in equity and justice, his property belongs to his creditors; and such an assignment in favor of all his creditors equally, is but acting in conformity with the general policy of the law. Yet this same policy, which encourages an equal distribution among the creditors, has, by legislative enactments, continually warred against these individual preferences at common law; and, under the insolvent system oí our own State, has maintained a struggle against them for almost half a century.

But the question is not in relation to this preference of particular and favored creditors, admitted to be good at common law, or upon an assignment, conveying equally to all creditors without condition. But whether an assignment of all the property of a debtor, for the benefit of all his creditors equally, upon condition, that each shall execute a previous release of his whole debt, or be postponed until all other creditors, signing a release, shall be satisfied in full, is to be treated as valid. In other words, it is said, that a debtor in failing circumstances, unable to pay all his debts, may say to his creditors, that they shall have none of his estate, unless they will release the whole of their claim for a portion; and if they decline to surrender the whole for a part, they shall be deferred to the'precarious balance, which the assenting creditors may leave for the satisfaction of the claims of the recusant creditors.

Let us now examine how far judicial and professional opinion, in favor of this doctrine, rnay be said to preponderate, and what the reasoning that is relied on in support of it. In the case of Halsey vs. Whitney, 4 Mason, 206, so constantly xeferred to,.because it is the judgment of that distinguished jurist, Justice Story, on the subject, he says: “In one sense the discussion may be said to depend upon local law; in another, so far as it involves principles and presumptions of constructive fraud, it belongs to the common law, and must turn upon the same considerations as would govern in New York, Pennsylvania, or England.” And he adds: “General assignments for the benefit of all creditors, free from the operation of the bankrupt laws, are rather encouraged than discountenanced by the common law.”

• So far as a general proposition, it is unquestioned, and fully sustained by the authorities both here and in England. But do the cases in the English courts proceed beyond this general proposition ? The case of Pickstock vs. Lyster, 3 Maule & S., 371, is an assignment precisely of this character, free from all reservation and condition, and may well be pronounced by the judges, “an act of duty rather than of fraud.” So, also, the cases of Holbird and Anderson, 5 Term R., 235. Estwick vs. Calleau, 5 Term, 420. Meed vs. Howell, 4 East., 1, are to the same purport; inflict no conditions on the creditor, and reserve no benefit to the debtor.

It is not singular that these cases should have challenged the approbation of the English courts, and of Judge Story, as being “so far from fraudulent,” they were rather the honest acts of the parties. In the case in 5 Term R., 235, Lord Kenyon said “there was no fraud. The plaintiff was preferred by his debtor, not with a view to any benefit to the latter, but merely to secure the payment of a just debt.” Here is, at once, an obvious distinction, and a clear principle, elicited from these cases; and it is atleast questionable, whether the case of “ The King, (in aid of Braddock,) vs. Watson,” 3 Price, 6, so much relied on, can be said to controvert it. It has been justly pronounced a bald case, in 11 Wendall. The assignment under consideration is no where set out. The terms set forth in the ' defendants’ plea do not purport to exclude any creditor, and would seem to contemplate that each (creditor) should receive only his proportion of the whole fund: — ‘ cIn trust for the benefit of all his creditors, and that they should take the same in discharge of the respective debts due and owing to them, and release the said Wheeler therefrom.” It seems to be rather a deed of composition, that contemplated a release from all the creditois. There is certainly no express preference to any who sign, or an exclusion of such as do not. All are placed upon an equal footing; not under any menace or condition that the portion which one might refuse, shall go to swell the dividend of the others. It gives, by its terms, to none more than his dividend. And this appears, also, to be sustained by the remark of the court: “There is no fraud,” they say, “in this case, affecting the assignment, which has been made for equal benefit of all the creditors, Braddock, as well as the rest. But even if this weie a misconstruction of the case, it is at least justified by the report of it, which, as before observed, is extremely “bald;” and presents but a feeble foundation on which to build a great and overruling principle in the law. It is, at all events, the only case in the English books, from which the doctrine can derive any support. And when it is considered, that the other cases referred to expressly discountenance such assignments, as are made with a “view to any benefit to the grantor,” it ought not to be allowed that preponderance in the English decisions on the subj ect that is claimed for it here. The authorities there, as seen, do repudiate assignments, even of all the property of the debtor to his creditors, that reserve any ulterior benefit to himself. And tried by this test, it is doubtful whether the question in the immediate form now before this court, has ever been distinctly or substantially decided in England, in favor of such a stipulation. This, however, is assumed in the case of Halsey vs. Whitney.

In approaching the New York cases in the progress of Judge Story’s opinion, it is admitted, that the reasoning of the court in Hyslop vs. Clarke, 14 Johns. R., 459, and in Austin vs. Bell, 20 Johns. R., 442, is, as far as it goes, strong against these stipulations in favor of the debtor. (4 Mason, 228.) Yet in the decision of Halsey and Whitney, these authorities are rejected, because “they do not turn upon the naked point of a release, but upon that, as incorporated into a peculiar trust,” (p. 230,) and the weight of authority is consequently affirmed to be in favor of this stipulation. To this weight of authority, the decision in Halsey and Whitney is made to yield, not without the pregnant declaration, however: “If the question were entirely new, the strong inclination of my mind would be against the validity of them.”

In the case of Lippencott vs. Barker, 2 Binney, 174, the point was presented. And it was there affirmed by two of the judges, that the stipulation for a release was not fraudulent, against the opinion of Judge Breckenridge, who pronounced it immoral in the debtor to “couple an interest for himself, in exacting a discharge from that portion of the debt which may-remain unpaid.” The C. J. Tilghman, (with J. Yeates,) rested the decision upon the particular circumstances of the case before them. The objections urged, that the debtor had no right to insist on so unreasonable a condition, and that it is ill policy to suffer any kind of conveyance that stifles all enquiry, he observed, had great weight as general principles. But the question was, how far they were applicable to the present case? to the circumstances of which, he begged to be understood, his opinion was confined.

It is conceded, that the validity of these stipulations has been sustained in Pennsylvania. In the case of Brashears vs. West, 7 Peters, 608, it was reluctantly sanctioned as the received doctrine of her courts. But the Supreme Court of the United States through C. J. Marshal, expressed themselves far from satisfied, that such a deed, excluding from the benefit of its provisions, all who should within a given time refuse to release, ought to besustained: “ If the release were voluntary,” he says, “it would be unexceptionable. But it is induced by the necessity arising from the certainty of being postponed to all those creditors, who shall accept the terms, by giving the release. It is not therefore voluntary”- — (T. 615.)

This opinion of the Supreme Court was expressed long after the decision in Halsey vs. Whitney; and indicates distinctly, what the decision of that court would be upon principle, untrammelled by the local decisions of the States. It is therefore, now, a part of that judicial sanction which may be set up, against the preponderance in- favor of the validity of these stipulations; and whatever the weight of judicial opinion before, it has contributed materially, with the more recent decisions in some of the Stales, to incline the balance of authority the other way.

To these decisions in New York and Pennsylvania, and to the English authorities, the investigation in this case, of Halsey vs. Whitney, has been limited; and even, within those bounds,

I am not able to persuade myself, that the sanction they give to that opinion, is so decidedly preponderant, as to control the question, which in Maryland, at least, is still open upon principle and authority.

If the English cases there cited, do not turn upon this naked point of a release, (and that they do not is manifest from a close review of them,) then it cannot be said, as was urged in argument,- from high authority in this State, that the doctrine is sustained by the uniform current of English decisions.” And if the doctrine which is affirmed in Pennsylvania, is denied in New York, then nothing is so far gained in its favor, on the score of preponderance. As regards the latter State, no doubt now remains of the decision of her courts directly upon the point. The case of Grover vs. Wakeman, 11 Wend., 187, affirms, that such an assignment to be valid, 44 must be absolute and unconditional; must contain no reservation or condition for the benefit of the debtor; nor extort from the fears or apprehensions of the creditor, an absolute discharge for a partial dividend.” This is characterized by Chancellor Kent, as the most “ stern decision that exists any whereon the subject.” And yet, what principle or doctrine of wider latitude can. be tolerated, consistent with the sanctity of contracts between debtor and creditor? It is manifest from the reasoning in 4 Mason 228, that Judge Story himself, freed from authority, would have yielded his entire assent to the doctrine, upon principle. He says: “ Where a debtor stipulates for a release, he surrenders nothing but upon his own terms. He attempts to coerce his creditors, by withholding from them all his property, unless they are willing to take what he is willing to give, or is able to give, in discharge of their debts, it is not sufficient to say, that it is a proposition to creditors; so would be the condition by the debtor to receive' a gross sum. Has it not a tendency to obstruct the common, right of the creditors? Is not its design, to prevent creditors from receiving compensation, out of the debtor’s property, without yielding up some portion of their debts,, and conferring on him a substantial benefit which he has no right to- demand.”

He yielded, however, to what he conceived the preponderance of authority, to the contrary. Not to the decisions of Massachusetts; for there the cases were pronounced m equilibrio. His decision, therefore, was not upon the local law of that State, but upon what “seemed the weight of authority in favor of them elsewhere.” Certainly the point had not been then judicially settled in Massachusetts. For in the case of Borden vs. Sumner, 4 Pick., 265, under consideration, about the same time, before C. J. Parker; the question, (although not embraced in the case,) was declared to be still an open question. His language is: “ The point has never been decided in the State of Massachusetts; and the court reserve themselves until it is directly presented.” Nor does it appear, even now, definitively settled there, at least up to the year 1837, from the case of Nostrand vs. Atwood, in the supreme judicial court of that State, 19 Pick., 281, where the question was fully argued; but Dewey, Justice, observed: “Upon the point many authorities were cited, which shew that this question has been one elsewhere much litigated, and the result has been a conflict of opinion in the courts of the different States in reference to it. In the view we have taken of the present Gase, it is wholly unnecessary to consider, particularly,-the various adjudications, or pronounce any opinion upon the abstract question, of the effect of the introduction into an assignment of a stipulation for a release by the creditors who become parties to it, in a case where such stipulation- might be prejudicial to a creditor indisposed to assent thereto; and who might thus be deprived of receiving his share of the fruits of the assignment.” — (P. 284.)

Thus far, then, the preponderance which is claimed in their favor, does not prevail. And in other States of the Union, where the question has-been presented, the decisions are still so much at variance, and in conflict with each other, that the fan-limits of a judicial opinion, forbid a more critical examination here. It is not hazarding much, however, to say that the prevailing tone of those decisions, is now more against, than in fever of the validity of these stipulations.

For authorities against these stipulations see in New York:— 4 Paige, 24. 11 Wendall, Grover vs. Wakeman. 6 Hill, 438, Goodrich vs. Downs. 1 Denio, 197, Hastings vs. Belknap, In Ohio: — 5 Ohio Rep., 893, Atkinson vs. Jordan. Wright R., 606, Wooley vs. Urner. Same, 701, Bandall vs. Reed. In North Carolina: — 1 Iredel’s Law Rep., 490, Heffner vs. Irvin. In Mississippi: — 1 Smedes and Marshall, 208, 265, Robinson vs. Emory. In Missouri: — 6 Missouri Reports, 302, Brown vs. Knox. Same, 317, 319, Drake vs. Rogers. In Alabama: — 6 Alab. Rep., 179, Wiswall vs. Ticknor. 4 Alab. Rep., 322, 374, Gazzan vs. Pointz. In Connecticut: — 6 Vol. Conn. Rep., 282, Ingraham vs. Wheeler. In Illinois: — 3 Scammon, 417, Howell vs. Edgar.

In favor of the validity of such stipulations, see for Pennsylvania: — 2 Binney, 174. 10 Sargt. & Rawle, 439. 5 Rawle, 221. 6 Watts & Sergt., 301. 8 Watts & Sergt., 304. 10 Watts, 257. For Virginia: — See 8 Leigh, 291, Howell vs. Edgar. For South Carolina: — 1 Richad’n Equity, 217. For Massachusetts: — 4 Mason, 206, Halsey, vs. Whitney. But see, also, 5 Pickering, 28, and 19 Pickering, 281, heretofore referred to. For New Hampshire: — 5 N. Hamp., 113. But see, also, 10 N. Hamp., 108. For Maine: — See 5 Greenleaf, 245. But, also, 23 Maine, 261, and Ware’s Rep., 241, 244. See, also, the 1 Vol. Amer. Leading Cases, 84, inclined against them.

The cases in tile Supreme Court of the U. S., are but in conformity to State decisions, and, therefore, only shew what the doctrine in such States is. And in the States of Pennsylvania, New Hampshire and Maine, statutes have been passed, declaring such deeds void.

For cases of equivocal import, see further, 2 Pick., 129, 137. 3 Penrose & Watts, 83, 94. 3 Wharton, 347, 356. 4 Mason, 137. 1 Iredell’s Eq., 120, 124. 8 Maine, 234. 16 Number Am. Jurist, 284, Case of the Brig Watchman.

An examination, (even cursory,) of these authorities, will shew, that the doctrine, where it prevails, has grown up more by the assent and assumed acquiescence of the profession, than by original authoritative precedent in its favor. And in the case of the Brig Watchman, Ware, 232, (16th No. Am. Jurist, 285,) Judge Ware intimates the salutary caution to the profession and the public, “ not to trust too implicitly to apractice, which, to whatever extent it may have insinuated itself into the usages of commerce, was yet to be subjected to the severe and rigorous scrutiny of the law.”

To that scrutiny the case at bar is now submitted. For in this State the subject is res non adjudicata. I am not unmindful, that assignments like the one before us, have had the sanction of high judicial names among us, yielding to the authority of the decisions and the opinions we have had under review. Those decisions and opinions, however, are neither so general or so uniform as to preclude an examination upon the merits, and upon principle, in this State, where the question is still open. And following the lights of my own mind, I have not found them so overruling, as to bear down the force of those principles and convictions, upon which I feel myself bound to denounce them.

The validity of these assignments must be maintained upon the reasoning, that there is no coercion contemplated upon the creditor. For if it is intended to compel or coerce the creditor into the terms of the debtor, such an assignment, it seems, may be treated as a fraud.

“ The question (says Judge Story,) is, whether the intent apparent on the deed, be not to coerce the creditors to a settlement.” — Halsey vs. Whitney, 4 Mason, 229.

“One object of the deed evidently was to coerce the creditors to acquiesce in the terms offered to them.” — Van Ness, (Justice,) 14 Johns. R., 443, Hyslop vs. Clarke.

“An attempt to lock up his property from his creditors, so that they cannot reach it, but on such terms as he chooses to prescribe, would be such a manifest effort to defraud them, that two opinions cannot be entertained on the subject.” — Judge Ware, 8 Maine, 234.

In all these cases the stress of language, and the inquiry, is upon the point of coercion. The variation in the terms of the assignment cannot affect the principle, when the intent is manifestly to defeat the creditor in his resort to the property of the debtor, unless he will release the debt. It is not the question here, whether the assignment is void under the statute of Elizabeth, 13, ch. 5 ? Conceding it not to be obnoxious to the provisions of the statute, is it not such a disposition of the debtor’s property, as is open to the imputation of fraud, upon those to whom it is addressed, and intended to affect ? Does it not place the property beyond the reach of the creditor, and deprive him of the most effectual means to enforce his debt? What is it, then, but an address to his fears ? Has he any remedy left him, but the fruitless resort against the person of his debtor ? The condition of the assignment requires him to abandon his legal remedies, or forfeit his just proportion of the debtor’s property; to relinquish the whole of his claim for the portion then available, and all reservation or resort to tile future acquisitions of his creditors. “ To execute full and absolute releases and acquittances,” is the language of this instrument. All the property of the debtor is conveyed in general terms, subject to pre-existing liens and priorities to certain preferred creditors. When all is thus withdrawn from the legal action of the creditor upon it,, and as his last alternative, he accepts a part, for the whole of his debt, is it the assent of his will, or the assent of his fears that directs him? Can the creditor, in such a position, be considered as acting out his own will, in relation to the debt at risk ? He sees at once, his whole relation to the debtor changed by the alternative presented to him; and if he hesitates to accept, the prospect before him is delay, expense, and litigation; and the result in most cases, hopeless and barren. For even the residue of the fund that may remain, after satisfying the assenting creditors, is beyond his reach, except such proportion as the debtor has chosen to reserve to him, from the surplus, if any; and thus the non-assenting creditor is essentially defeated of his remedy, even against such surplus.

But this it is said, is but another mode of preferring creditors, who, by executing the release, become favored over those that refuse; and the debtor it is conceded, may prefer any creditor he pleases. In other words, that the creditors who release, are placed upon the footing of preferred creditors. This by no means follows. It does not necessarily result, that because a debtor may grant a preference absolutely, that he may also do so conditionally. The distinction is obvious. In the one case he proposes to pay one or more creditors, still leaving his liability and the balance of his property unaffected as regards the others; while in the other case, he designs to influence or coerce all into the terms stipulated, or remove his property out of their reach. He holds out to the creditor this contingent preference, to become absolute only by an act of the creditor, beneficial to the debtor himself, by a release of the debt. Such a power would enable the debtor, at any time, to lock up his property against his creditors, until they accept the terms he chooses to dictate.

It is besides worthy of remark, that this is proposed to be done by an instrument, larger in its scope than the law; that exacts a release more comprehensive, and a disposition of his property less equable, than the law contemplates upon the surrender of a failing debtor, with reference to all which the creditor is supposed to contract. The law exempts the future earnings of the debtor from any further claim on the part of the creditor after a discharge. Yet every acquisition by gift, descent, devise, &c., is still liable, in discharge of his debts. The condition of the release here stipulated for, requires an unqualified surrender of all claim, and is not to be defended upon the ground, that it is a mere legal possibility which the law reserves. For, to this it is a sufficient answer, that such an assignment is, at least, agaihst the policy of our law, which gives the benefit of this possibility to the creditors.

The assignment is conceded to be void, if there be any reservation in it for the benefit of the debtor. In this view of the case, is there not a constructive benefit reserved to the grantor? Besides the benefit of a discharge of the whole debt for a part, is it nothing to reserve for himself all future acquisitions by gift, descent, devise, &c., of which the possibility is not always remote ? A debtor in insolvent circumstances, may still have large expectations from the devise or bequest of friends, and still larger,- perhaps, in the course of descent or distribution. If he applies for relief under the insolvent laws, the advantage of all this belongs to his creditors. The testator or donor would, under such circumstances, naturally withhold or withdraw his intended bounty. At all events,- the application for the relief by the debtor must defeat these ulterior expectations, and he resorts to a voluntary assignment of this character, by which, (if sustained in law,) he secures the acquisition, otherwise lost to him. And thus both modes of discharge from debts are legalized under one system. Can it be questioned to which the debtor will resort ? If no such motive of benefit to himself be in the view of the debtor, thus assigning on condition of release, why not claim the protection of the law,- which gives him, (with this reservation,) a full discharge,- and secures to his creditors an equal distribution of his property, in obedience to the spirit and policy of the law?

Under the present humane system of policy, in its action upon debtors in failing circumstances, every restraint, calculated to deter him from acting on the fears and apprehensions of his creditors, ought tobe sustained. It is sound policy in commercial affairs, and the best security for fair dealing, that the creditor should be assured, that it is not with the debtor an option, at any time, to compel him to accept a portion of his debt, or incur the contingency of losing the whole. To sustain such assignments is to enable the debtor to prescribe his own law, against the known policy of the State; to require of the creditor, acting upon his fears, what the law cannot compel him to do. The debtor dictates the terms of settlement. If the creditor refuses, his safest security for his debt, the properly of his debtor, is transferred beyond his reach. Unlike deeds of composition, to which none are compelled, and the assent of all is necessary, and without the assent of all, nothing passes; here the terms are absolute and irrevocable upon the execution of the deed, and the creditor must take them as they stand, or refuse at the risk of losing his debt. It is but seldom, after the execution of such a deed, that spes recuperandi ever revives to the unfortunate creditor, who refuses to become a party to its conditions. It is the will' of the debtor, which is law to the creditor. And if such disposition of property is valid, what has the creditor left, but to assent upon compulsion. It is mockery to say,- under such conditions, that it is optional or voluntary.

Further, to legalize this mode of proceeding, holds out to a debtor an easy and tempting mode to cancel his debts, without further scrutiny or inquiry, such as the law contemplates under a system purposely devised for the discharge of honest debtors. After all the property has passed under a voluntary assignment, the creditor has but small inducement to pursue his claim, with any other prospect than to'force his debtor to a legal insolvency, and incur the cost and labor of the proceeding. It ought, therefore, to be considered neither a harsh or severe decision, that repudiates these assignments. Looking to the facilities under our laws of obtaining a discharge, and the justice of those principles, which seek to place all the creditors upon equal terms, it is a just, and not a stern rule, that takes from the debtor in failing circumstances, the right of a voluntary conveyance to his creditors, upon terms dictated by himself. It is a sound standard of right and morality, upon which a court may safely base its decision. It closes the door upon a practice which, if encouraged, becomes the parent of fraud and litigation. Instruments of voluntary settlements like these, may be used for the execution of any nefarious purpose, if left to the discretion of the creditor. They are contrary to the sound principles and policy of the law; and if so, neither general opinion or common consent ought to make them valid. Where they have been sustained, it has been against the sound conviction and judgment of the courts, and with a constant expression of regret, that a doctrine at variance with equity and with morals, must be maintained upon the prevailing understanding of the profession and the public. In deference to this opinion, some among the purest and loftiest legal minds of the country have yielded their own convictions, and given to them the weight of legal authority. They yielded to what at that time was deemed the preponderance of opinion; but the judgment, and the convictions of these great ornaments and lights of the profession, may still be challenged to our support, in the decision which is hero' pronounced against the validity of this assignment.

With respect to the creditors of the first class, named and preferred in the assignment, it is unnecessary to inquire, bow far their position and rights under the deed may be distinguished from those of other creditors under its provisions. In the opinion of this court, as before expressed, a deed, which does not fairly devote the property of the debtor in desperate circumstances, to the payment of his creditors,- but prescribes to them the terms upon which they shall receive part payment, is, in law, fraudulent and void. It is void at common law, and void as against the statute of 13 Eliz., ch. 5, being made with intent to delay, hinder, and defraud creditors, of their just and legal actions. And when thus void as to part, it is void altogether. The taint, as to part, affects its entirety. The cases of Grover vs. Wakeman, 11 Wendell, 187, and Hyslop vs. Clarke, 14 Johns., 458, before referred to, are cases in point, and parallel with the case before us. They determine, that where a conveyance is good in part, and also bad in part, as against the provisions of a statute, it is void in tota, and no interest passes to the grantees under the part which is good. In the former case it is said, that the assignment, being void in part, as against creditors and the provisions of the statute, it is void in teto, although there he no fraud intended. And to this feature of the case it is, that Chancellor Kent directs the remark, that “it appears to be the most stern decision that exists on the subject.” 2 Kent Comm., 536, (note.) But the decision is far from standing alone and unsupported. Judge Story affirms it in Halsey and Whitney, 4 Mason, 230, and says: “The doctrine in Hyslop & Clarke, above, and Harris vs. Sumner, 2 Pick., 129, on this point, is sound and wholesome.” In 6 Hill, 438, Goodrich vs. Downs: “If any part of an assignment be contrary to the statute for the protection of creditors against fraudulent transfers, the whole is void.” In 9 Alabama, 305, Tickner and Day, vs. Wiswall: “A conveyance, fraudulent as to part, is void as to the whole of the property conveyed, so far as creditors are concerned.” In 6 Conn., 277, Ingraham vs. Wheeler, the parallel is true to the case now under review, where the residue, after preferred creditors, was to be paid to> creditors, who should release and discharge the debtor, and the court determined the conveyance to be void in toto, under the statute of frauds. So also in Mackie vs. Cairns, 5 Cowan, 547: “A deed or judgment void in part, as being a fraud on creditors, is void in loto." And to the same purport are other cases. Brown vs. Knox, 6 Missouri, 302. (Mackie and Cairns,) in Hopkins' Ch. R., 373. McCluig and Lecky, 3 Penrose and Watts, 83. Irvine vs. Keene, 3 Wharton R., 347. And the case of Macdonald and Strike, 2 H. & G., 191, may also be cited to shew, that where a deed is annulled as fraudulent, “it is void ab initio, and. cannot stand in legal fitness for any purpose.” We may also here, in. passing, add the remark, that the States of New Hampshire, Massachusetts and Pennsylvania, have enacted especial statutes- declaring such assignments void.

It remains now to inquire into the propriety and effect of the decree obtained by Albert and wife, on the equify side of Baltimore county court, pending the injunction and proceedings in the court of chancery. The answers, both oí Jones and of Albert and wife, upon the proceedings now before the court, deny all fraud and combination between them, to evade the injunction upon the original bill, and to procure a preference by this proceeding in Baltimore county court,, on the part of Albert and wife. They claim to have pursued a legal right which the chancellor’s injunction did not restrain; and that they have obtained only what the law awards them, in the race of diligence with other creditors. But they shew that they had knowledge, before filing their bill, that Jones had failed in business. In fact, the filing of the original bill was notice to them of the doubtful position of Jones, and put them in possession of eveiy fact as alleged in it. The bill was filed in the court of chancery on the 14th of September 1846, stating that the debts of Jones were far beyond his means of payment, and that he could entertain no hopes of extricating himself, but by an application for the benefit of the insolvent laws;, that he designed to secure certain of his relations, among others, Albert and wife, by giving to them an undue preference over other creditors; and prayed for the appointment of a receiver, and an injunction to restrain Jones from giving, and the other parties from receiving, any transfer or assignment in preference to the other creditors. This injunction was granted, and still remains in full force. If Albert and wife, therefore, can maintain the priority and lien which they have acquired upon the property of Jones, by reason of their decree in Baltimore county court, it must be because they have obtained it in fair and due course of law, without any violence to the injunction and original proceedings pending in the court of chancery.

Let it be borne in mind, that the injunction from chancery had interposed all the powers of that court, between the parties, and any avowed or contemplated intention of Jones to secure them, or any other of his creditors. The original bill of Hopkins and other creditors, had drawn to the chancery court all jurisdiction over the estate of Jones. He was averred to be hopelessly insolvent, and the bill looked to the appointment of a receiver, until, under the impending application for the benefit, of the insolvent laws, it should pass into the hands of trustees. Until this proceeding before the chancellor was properly disposed of, and while the injunction under it remained in force, the parties were restrained, in any form, from seeking the preference which it prohibited. Tins jurisdiction had attached before the proceedings in Baltimore county court on the same subject matter were instituted. And the bill filed by Albert and wife, in that court, as the basis of their complaint, expressly avers, that Jones “'promised and pledged himself to secure and protect” their debt. On this point, the averments in both bills are identical; and it is but just to the counsel who advised the proceedings, and filed the bill in Baltimore county court, to assume, from this fact, all absence of design to counteract the proceeding in the high court of chancery. He doubtless supposed himself fairly in the pursuit of a legal remedy, which the injunction of the chancellor did not design to reach, and that in resorting to an adverse and coercive measure against Jones, he was not within the terms of that injunction, receiving a preference such as was there inhibited. But it was this very pledge mentioned in the bill before Baltimore county court, that had been enjoined, and over which the chancery court had already assumed jurisdiction: and it was an error to assume, that the preference which Albert claimed and Jones had promised, could be enforced in another forum. The error was in resorting to another, when the jurisdiction had already attached in a forum of concurrent power with Baltimore county court. It may also be assumed with regard to the action of Baltimore county court, that they did not view the case in the light in which the present bill presents it, otherwise the proceedings before that court would have been arrested before the decree, and the conflict of jurisdiction which resulted, would have been obviated.

The chancellor was therefore right, in regarding the proceedings of the 14th of September 1846, as the commencement of this controversy, and that it drew to the court of chancery the whole litigation in regard to the distribution of Jones’ estate. Move especially, as the injunction there was intended to prevent Albert and wife from securing to themselves a preference in any way; and their resort to another tribunal, designed or not, was, under the circumstances, a disregard of the chancellor’s injunction. If even not so in form, and upon its face, yet in substance and effect it amounts to an evasion of that injunction. Be that as it may, the court of chancery-had drawn to itself the whole subject of Jones’ insolvency, and his intent to prefer certain creditors, move particularly Albert and his wife.

In any view of the case, that tribunal was fully competent to grant such relief to them as they were entitled to, and was the appropriate tribunal, to which, under the circumstances, they should have applied. Their application to another naturally, if not necessarily, involved a conflict of jurisdiction. The court of chancery had enjoined Jones from giving, and any creditor, these parties particularly, from receiving, a preference out of his estate, which was alleged to be insolvent. It was alleged further, that he could not avoid applying for the benefit of the insolvent laws, and in contemplation of that fact sucli preference is void. He did subsequently so apply, and the question (not now necessary for us to determine,) was submitted and fully argued before this court, as well whether this proceeding of Albert and wife was not a device to obtain such a preference, as whether it was not also a violation of the injunction, to that effect, in the original bill. Had Albert and wife asserted this preference in the court of chancery, on the ground, that Jones, when in solvent circumstances, had agreed, and was bound by such agreement, to secure their debt, and particularly by a conveyance of the “Wheatfield Inn,” and had they claimed in that court, where the whole matter was submitted, the specific performance of this agreement, we are not now to say, whether such agreement would not have been sustained against the bill of the other creditors. That court, at all events, was, under the existing state of things, the proper tribunal, with full powers to administer ample relief.

Jones was already under an injunction not to convey any property, the Wheatfield Inn” particularly, to any creditor. He could not, therefore, convey it, as a preference, without a contempt of the chancellor’s injunction. Yet we find Albert and loife applying to Baltimore county court for an injunction to the same intent against Jones, manifestly contemplating to reserve it for execution upon their decree, which was nearly matured in that court. Not until tire proceeding was consummated, the decree obtained, and they? fa. levied upon the “Wheatfield Inn,” is the existence of the original bill in chancery recalled to mind. Then Albert and wife, on the 23rd of February 1847, first filed their answer to this original bill, and there again alleged the indebtedness of Jones, his misapplication of the trust in his hands, and his promise to convey to them the “ Wheatfield Inn,” to replace that fund. The jurisdiction is then recognized over the same subject matter, that forms the basis of proceedings in both courts, the indebtedness and insolvency of Jones, and his promise to secure the debt by assignment of the “Wheatfield Inn.” And upon this averment and answer, the ease in the chancery court now sleeps under the injunction. The property which was enjoined in both courts, was brought within their grasp by the exeeution out of Baltimore county court, and the answer concludes “These defendants having no further interest or concern in the premises, as they conceive, pray to be dismissed with their costs,” &c.

W.e are not unmindful, in reviewing the position of the parties in this case, and their proceedings, (hat the bill on the equity side of Baltimore county court, although alleging the promised security of the “ Wheatfield Inn,” sought to make the claim of complainants (here available, by a decree against Jones, in money. But the attempt, afterwards, to restrain the conveyance of the “ Wheatfield Inn,” under another bill in the same court, when it had already been enjoined in chancery, could have had no other view, than to reserve it for the execution which was afterwards levied upon it. In the opinion of this court, the whole proceeding was in conflict with the cause which was pending on the same subject in the high court of chancery. Baltimore county court, as a concurrent court of equity, was not, by the complainants there, or by Jones, advised of all the facts and proceedings, prior to the filing of their bill, so as to enable that court to act and decide with knowledge; and, therefore, to prevent or counteract this conflict of jurisdiction, it was competent for the court of chancery to restrain the parties from the execution of their decree, and to treat the whole proceeding in Baltimore county court as a nullity.

It may be necessary here, in conclusion, to distinguish between this case and Ellicott vs. U. S. Ins. Co., ante, 307, which was decided at the last term of this court, and has been invoked here, in support of the proceedings of Albert and wife. The injunction, in that case, imposed no restrictions upon the creditors, in the prosecution of their claims. The decree was limited to the appointment of a receiver, and the preservation of the property of the concern. It did not, at the time, contemplate or embrace any ulterior disposition of it; and Ellicott had neither the right nor the opportunity to prefer his claim in the court of chancery. To have been stayed in his legal remedy, would have exposed his claim to limitations; and, moreover, his suit was instituted before the appointment of the receiver. Had the court of chancery possessed such a jurisdiction as would have authorised Etticott to establish his claim there, it is inferrible that they would not have sanctioned his proceeding at law; and the cases would be more analogous. If the decree in the cause, had called upon the creditors to file their claims, it is there said, “the creditor who should institute or continue to prosecute his claim, would be enjoined.” But. the court of chancery could give Etticott no relief. His remedy was at law alone, and he was not hound to wait until his claim might be subjected to limitations. No fraud or collusion was imputed to him, and he was not to be restrained, “unless there was a proceeding pending, under which, he had a right to go in and prove his claim.”

We have shewn that the appropriate remedy for Albert, was, to have gone into the court of chancery, upon the bill of Hopkins, both to avoid the conflict of jurisdiction, and to assert his right to be secured, in compliance with the subsisting agreement of Jones. His proceeding was pending in court, and that court had ample power to afford him the relief, which he sought in another form, in another court of concurrent jurisdiction; and by thus proceeding, subjected his claim to-be defeated entirely in that forum.

The order of the chancellor, therefore, continuing the injunction, is affirmed.

ORDER AFFIRMED.

Note by Reporter. — In the case of Kettlewell vs. Steuart, decided at June term 1850, and not yet reported, the court, Chambers, Magruder and Spence. J., sustained a deed similar in its provisions to the one referred to in this case, Martin and Frick, J., dissented, and Dorsey, C. J., did not sit in the cause, Thus it seems the court are equally divided in reference to the validity of such deeds, Chambers, Magruder and Spence, J., being for, and Dorsey, C. J.r and Martin and Frick, J., against sustaining them.