Farwell v. Cohen

18 L.R.A. 281, 138 Ill. 216
CourtIllinois Supreme Court
DecidedJune 10, 1891
StatusPublished
Cited by25 cases

This text of 18 L.R.A. 281 (Farwell v. Cohen) is published on Counsel Stack Legal Research, covering Illinois Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farwell v. Cohen, 18 L.R.A. 281, 138 Ill. 216 (Ill. 1891).

Opinions

Mr. Justice Baker

delivered the opinion of the Court:

The material question in this case is, whether or not the' instrument which, on December 18, 1887, was executed and delivered by Silverman to Cohen, is such a voluntary assignment as will, under the act of May 22, 1877, (Laws of 1877,, p. 116,) confer jurisdiction and authority upon the county court -to supervise the execution of the trusts created by or; growing out of such instrument, and the administration of th» property thereby conveyed.

By the act its provisions are made applicable “in all eases of voluntary assignments hereafter made for the benefit of creditor or creditors.” In the late case of Farwell et al. v Nilsson etal. 133 Ill. 45, it was said: “The word ‘assignment’ had, at the time this statute was adopted, a well defined meaning, understood by all the people, and it has no different meaning in said act. According to the common acceptation of the term it is a transfer, without compulsion of law, by a debtor, of his property to an assignee, in trust, to apply the same, or the proceeds thereof, to the payment of his debts, and to return the surplus, if any, to the debtor.” And in the same case it was said: “The mere form of the instrument is, no doubt, immaterial, provided the operation of it is to create a trust in the property conveyed, for the benefit of creditors, and if such is the purpose and design of the instrument, then any preference in it, or which, by construction of law, forms a part of it, is in fraud of the statute, and void.” In Preston et al. v. Spaulding et al. 120 Ill. 217, it was said: “The statute is silent as to the form of the instrument or instruments by which an insolvent debtor may effect an assignment.” And in one of the earlier cases that arose under the statute, (Hanchett v. Waterbury, 115 Ill. 220,) it was said “that the right and power of a failing debtor to pass the title of his effects to an assignee remain as they did before the statute.” In the ease of Weber v. Mick et al. 131 Ill. 520, in speaking of the subject of a voluntary assignment for the benefit of creditors, we said that such an assignment was and had “always been understood to be an instrument voluntarily executed by a failing debtor, by which he assigns to some third person, as assignee or trustee, the whole, or sometimes the bulk, of his property, to be by such trustee distributed among the assignor’s creditors in satisfaction of their demands.” In Schroeder v. Walsh, 120 Ill. 403, this court, in speaking of such assignments and of the statute of 1877, said: “That act applies only to conveyances of property to an assignee or trustee, in trust, to convert the same into money for the benefit of creditors of the assignor.” And to this statement was added this further clause: “Which can now only be made under that law.”

: Since the right and power of the failing debtor to pass title to an assignee remain as they did before the statute, and since ’the mere form of the instrument is immaterial provided it op•erates to create a trust for the benefit of creditors, and since •the word “assignments” found in the act has no different meaning than that which it had at the time the statute was adopted, and prior thereto, it would seem that the expression, “which ■can now only be made under that law, ” signifies, merely, that . all voluntary assignments for the benefit of creditors must he carried into execution in conformity with the principles and rights established by that act, and that administration of the .trusts may be enforced by the court to which the act gives jurisdiction over the particular subject matter of such voluntary assignments.

Waiving, for the present, the question of the capacity of Silverman to make a voluntary assignment, and the fact that the instrument executed purported to assign certain specified property and contained no general terms that would include other property, and waiving, also, various matters of supposed non-compliance with statutory requirements, we think it man-' ifest, as well from the citations made above from former decisions of this court as from the doctrine laid down in the books and in cases adjudicated in other courts, that said instrument was an assignment for the benefit of creditors, and not a mere mortgage, security or pledge. By it, Silverman sells, assigns, transfers and sets over unto Daniel Cohen the goods and chattels therein mentioned, and it provides that said Cohen shall take, hold and receive the goods and chattels thereby conveyed, in trust, to sell the same at public sale, in such quantities as he may see fit, and out of the proceeds pay expenses and certain debts in a specified order of payment, and it contains a proviso that the trustee shall not sell any more of said goods, and property than is sufficient to pay said indebtedness and expenses. Some of the specified debts were due and some were not due. The instrument, on its face, was an absolute trans-. fer of the whole interest, legal and equitable, in the property. In express terms it created a trust in favor of certain creditors of Silverman other than Cohen. The fact that a debt due Cohen was also provided for, did not take from the instrument its character of an assignment for the benefit of creditors. A creditor of the assignor may be the assignee in such an assignment. There is no condition of defeasance, providing for the return of the property upon the payment of the debts mentioned. At most there was an express provision for a resulting trust for any excess of assets over liabilities, and that much the law itself implied. A correct definition of an assignment for the benefit of creditors, as we understand the law, is given in the American and English Encyclopaedia of Law, and it is this: “A voluntary transfer by a debtor of all or a part of his property to an assignee or assignees, in trust, to apply the same, or the proceeds thereof, to the payment of some or all of the assignor’s debts, and to return the surplus, if any, to him.” See vol. 1, pp. 845, 846, and authorities cited.

Since appellee claims title under the instrument of December 14, 1887, and appellants have no ease in court except as based thereon, it would seem that the capacity of Silverman to execute the same must necessarily be admitted by both parties, and that the only issue between "them in regard thereto can be in respect to its legal effect. The Assignment act of 1877 is not, in express terms, confined to debtors who either are in fact insolvent or contemplate insolvency. The expression, “assignment for the benefit of creditors,” implies insolvency, and an inability on the part of the debtor to provide for the claims of his creditors in the usual way. It is to be presumed that a debtor who is or thinks he is solvent will not transfer his estate, and yield up all dominion over it, for the purpose of having it administered upon under the supervision of a court; and it is unreasonable to suppose that the legislature contemplated or intended that the provisions of the act should be applicable to a solvent debtor. In Hanchett v. Waterbury, 115 Ill. 220, this court held that said act was, in its framework and detail, essentially a general insolvent law, and' that it was so intended by the legislature. In Gardner et al. v. Commercial Nat. Bank, 95 Ill. 298, it was held that a solvent debtor could not make a valid deed of assignment for the benefit of creditors. It follows that the allegation of the assignor’s insolvency contained in the petition is material to the case made by the petition, but we think that the statements of the answer, they being taken most strongly against the pleader, sufficiently admit such insolvency.

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Bluebook (online)
18 L.R.A. 281, 138 Ill. 216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farwell-v-cohen-ill-1891.