Mr. Justice Scholfield
delivered the opinion of the Court:
Although the deed of assignment was executed in Rhode Island, yet its validity and effect, as an instrument for the conveyance of real estate located here, must be determined by our law. Story’s Conflict of Laws, sec. 364; Rorer on Inter-State Law, pages 139, 204; Cutter v. Davenport, 1 Pick. 81; Osborne v. Adams, 18 id. 245; Hartford v. Nichols, 1 Paige, 220; Chapman v. Roberts, 6 id. 627; Wills v. Cowper, 2 Ham, 124; Loving v. Paire, 10 Iowa, 282.
The deed of assignment recites that, “ whereas, the said Sackett, Davis & Co. are indebted to divers persons in divei’S sums of money, and their assets, although amounting in value to about three times their said indebtedness, can not immediately be made available for the payment of the same,” etc. And it empowers the trustees, in their discretion, “to carry on the said jewelry business, of the parties of the first part, for such time as the said trustees may deem for the best interests of the «’editors, and necessary for the purpose of preventing shi’inkage and loss, and of closing oixt and liquidating the same to the best advantage.” In this feature the case is analogous to Van Nest v. Yoe et al. 1 Sanford Ch. 4, where, in a very well-reasoned opinion, the Vice Chancellor held the deed of assignment void, as tending to hinder, delay and defraud creditors.
The placing of property in the hands of assignees for any other purpose than to enable them to distribute it or its proceeds among creditors, must necessarily have the effect to, in some degree, hinder and delay creditors in the collection of their debts. And when the assignor has, or thinks he has, more property than is necessary to pay his debts, the assignment can only be presumed to be intended for his own benefit, for, in that contingency, he alone is to be profited. In the case referred to it is cogently said by the Vice Chancellor: “Ho assignment was ever made by a debtor who supposed himself to be solvent, with a view or for the purpose of selling and converting his property into money more speedily than it could be done by process of law. If such were his design, he would effect it himself without the intervention of an assignee. The real object is to gain time—to prevent the speedy sale and conversion which an execution would inevitably accomplish.” And, again, he says: “The debtor who, believing himself more than solvent, places his property beyond the reach of the process of the law, whatever may be the pretence under which he cloaks the act, in the language of the Statute of Frauds, ‘hinders’ and ‘delays,’ and ultimately defrauds his creditors. It is no answer to this argument to say, that the debtor provides an ample fund for the payment of the debt, and that the creditor is ultimately to be paid in full. The law gives to the creditor the right to determine whether his debtor shall have further indulgence, or whether he will pursue his remedy for the collection of the debt. The deferring of payment is, generally, an injury to the creditor, and he may be overwhelmed with bankruptcy for the want of the fund which is locked up by the voluntary assignment of his debtor. It is mockery to such a creditor to say, that the assignment is made for the benefit of creditors.” See also, to the same effect, Kellogg v. Slawson, 15 Barbour, 56.
Manifestly, the carrying on the jewelry business, in view of the assignors’ supposed solvency, “for such time as the trustees may deem * * * necessary for the purpose of preventing shrinkage and loss, and of closing out and liquidating the same to the best advantage,” could only be designed to prevent a sacrifice of the assignors’ property and business that would result from the enforcement of the payment of their debts by the ordinary process of law; and this, as well as the further clause in the deed of assignment authorizing them to “make, sign, indorse and guarantee any and all bills of exchange, promissory notes or other commercial paper, * * * for any new indebtedness or liability which may be contracted in so carrying on said business,” and to lease or mortgage the real estate, etc., clearly vests power in the trustees to hinder, delay, etc., the creditors in the collection of their debts. They are not compelled, unless upon a request of a majority of the creditors, to close out and make final settlement of the business, at any particular time. Their judgment of what is “for the best interests of the creditors, and necessary for the purpose of preventing shrinkage and loss, and of closing out and of liquidating the same to the best advantage,” is to control. And, although it might appear as clearly as anything could, that the “ best interests of the creditors” required the business to be closed up, still, this alone is not sufficient, for they are also to have in view, before acting, what is “necessary for the purpose of preventing shrinkage and loss,” etc., etc.
Nor does there appear any limitation upon the trustees, other than what their own judgments may impose, to prevent their incurring new debts in the business, and incumbering the property to its full value for their payment, indefinitely in the future, or to prevent their exhausting the property assigned in the payment of such debts. They have power to carry on the business, to create debts and give notes, etc., therefor, and to sell and convey and mortgage the real estate.
But we have frequently held that a debtor is only allowed to place his property beyond the reach of his creditors by making a general assignment of all his property, when he does so for the benefit of the creditors, by devoting it fairly to the payment of his debts, and not with a view to his own advantage. Nesbitt et al. v. Digby et al. 13 Ill. 387; Phelps et al. v. Curts et al. 80 id. 113; Hardin v. Osborne, 60 id. 93.
To make such a deed valid the debtor’s property must be unconditionally and without restriction transferred to the assignee, with a general authority to him to receive, hold and dispose of it for the equal benefit of all the creditors in the order of preference, if any, provided for. McIntire v. Benson, 20 Ill. 500.
In Vernon v. Morton et al. 8 Dana (Ky.) 263, the court says: “If the intention in executing the deed be to hinder and delay creditors, it will vitiate the whole deed, though it be made upon a good consideration, or for the just and equitable purpose of securing an equal distribution of the effects among all the creditors.” And again: “ When it appears on the face of a deed of trust that the motive for making it was to prevent a sacrifice of the property, a bad motive is shown,—a motive to obstruct the ordinary process of law, or the subjection of the property to the payment of the debts, which vitiates the whole deed.” To the same purport is, also, Ward v. Trotter, 3 Monroe, 1.
So, we have held a deed of assignment void because of a clause therein authorizing the sale of the goods and property assigned on a credit. Bowen v. Parkhurst, 24 Ill. 257; Pierce v. Brewster, 32 id. 268; Whipple v. Pope, 33 id. 334.
The principle applicable here is precisely the same as in the last mentioned cases. There the sale on credit was prohibited because it would involve the tying up of the assets, and hence compel a hindrance, delay and postponement of the claims of creditors.
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Mr. Justice Scholfield
delivered the opinion of the Court:
Although the deed of assignment was executed in Rhode Island, yet its validity and effect, as an instrument for the conveyance of real estate located here, must be determined by our law. Story’s Conflict of Laws, sec. 364; Rorer on Inter-State Law, pages 139, 204; Cutter v. Davenport, 1 Pick. 81; Osborne v. Adams, 18 id. 245; Hartford v. Nichols, 1 Paige, 220; Chapman v. Roberts, 6 id. 627; Wills v. Cowper, 2 Ham, 124; Loving v. Paire, 10 Iowa, 282.
The deed of assignment recites that, “ whereas, the said Sackett, Davis & Co. are indebted to divers persons in divei’S sums of money, and their assets, although amounting in value to about three times their said indebtedness, can not immediately be made available for the payment of the same,” etc. And it empowers the trustees, in their discretion, “to carry on the said jewelry business, of the parties of the first part, for such time as the said trustees may deem for the best interests of the «’editors, and necessary for the purpose of preventing shi’inkage and loss, and of closing oixt and liquidating the same to the best advantage.” In this feature the case is analogous to Van Nest v. Yoe et al. 1 Sanford Ch. 4, where, in a very well-reasoned opinion, the Vice Chancellor held the deed of assignment void, as tending to hinder, delay and defraud creditors.
The placing of property in the hands of assignees for any other purpose than to enable them to distribute it or its proceeds among creditors, must necessarily have the effect to, in some degree, hinder and delay creditors in the collection of their debts. And when the assignor has, or thinks he has, more property than is necessary to pay his debts, the assignment can only be presumed to be intended for his own benefit, for, in that contingency, he alone is to be profited. In the case referred to it is cogently said by the Vice Chancellor: “Ho assignment was ever made by a debtor who supposed himself to be solvent, with a view or for the purpose of selling and converting his property into money more speedily than it could be done by process of law. If such were his design, he would effect it himself without the intervention of an assignee. The real object is to gain time—to prevent the speedy sale and conversion which an execution would inevitably accomplish.” And, again, he says: “The debtor who, believing himself more than solvent, places his property beyond the reach of the process of the law, whatever may be the pretence under which he cloaks the act, in the language of the Statute of Frauds, ‘hinders’ and ‘delays,’ and ultimately defrauds his creditors. It is no answer to this argument to say, that the debtor provides an ample fund for the payment of the debt, and that the creditor is ultimately to be paid in full. The law gives to the creditor the right to determine whether his debtor shall have further indulgence, or whether he will pursue his remedy for the collection of the debt. The deferring of payment is, generally, an injury to the creditor, and he may be overwhelmed with bankruptcy for the want of the fund which is locked up by the voluntary assignment of his debtor. It is mockery to such a creditor to say, that the assignment is made for the benefit of creditors.” See also, to the same effect, Kellogg v. Slawson, 15 Barbour, 56.
Manifestly, the carrying on the jewelry business, in view of the assignors’ supposed solvency, “for such time as the trustees may deem * * * necessary for the purpose of preventing shrinkage and loss, and of closing out and liquidating the same to the best advantage,” could only be designed to prevent a sacrifice of the assignors’ property and business that would result from the enforcement of the payment of their debts by the ordinary process of law; and this, as well as the further clause in the deed of assignment authorizing them to “make, sign, indorse and guarantee any and all bills of exchange, promissory notes or other commercial paper, * * * for any new indebtedness or liability which may be contracted in so carrying on said business,” and to lease or mortgage the real estate, etc., clearly vests power in the trustees to hinder, delay, etc., the creditors in the collection of their debts. They are not compelled, unless upon a request of a majority of the creditors, to close out and make final settlement of the business, at any particular time. Their judgment of what is “for the best interests of the creditors, and necessary for the purpose of preventing shrinkage and loss, and of closing out and of liquidating the same to the best advantage,” is to control. And, although it might appear as clearly as anything could, that the “ best interests of the creditors” required the business to be closed up, still, this alone is not sufficient, for they are also to have in view, before acting, what is “necessary for the purpose of preventing shrinkage and loss,” etc., etc.
Nor does there appear any limitation upon the trustees, other than what their own judgments may impose, to prevent their incurring new debts in the business, and incumbering the property to its full value for their payment, indefinitely in the future, or to prevent their exhausting the property assigned in the payment of such debts. They have power to carry on the business, to create debts and give notes, etc., therefor, and to sell and convey and mortgage the real estate.
But we have frequently held that a debtor is only allowed to place his property beyond the reach of his creditors by making a general assignment of all his property, when he does so for the benefit of the creditors, by devoting it fairly to the payment of his debts, and not with a view to his own advantage. Nesbitt et al. v. Digby et al. 13 Ill. 387; Phelps et al. v. Curts et al. 80 id. 113; Hardin v. Osborne, 60 id. 93.
To make such a deed valid the debtor’s property must be unconditionally and without restriction transferred to the assignee, with a general authority to him to receive, hold and dispose of it for the equal benefit of all the creditors in the order of preference, if any, provided for. McIntire v. Benson, 20 Ill. 500.
In Vernon v. Morton et al. 8 Dana (Ky.) 263, the court says: “If the intention in executing the deed be to hinder and delay creditors, it will vitiate the whole deed, though it be made upon a good consideration, or for the just and equitable purpose of securing an equal distribution of the effects among all the creditors.” And again: “ When it appears on the face of a deed of trust that the motive for making it was to prevent a sacrifice of the property, a bad motive is shown,—a motive to obstruct the ordinary process of law, or the subjection of the property to the payment of the debts, which vitiates the whole deed.” To the same purport is, also, Ward v. Trotter, 3 Monroe, 1.
So, we have held a deed of assignment void because of a clause therein authorizing the sale of the goods and property assigned on a credit. Bowen v. Parkhurst, 24 Ill. 257; Pierce v. Brewster, 32 id. 268; Whipple v. Pope, 33 id. 334.
The principle applicable here is precisely the same as in the last mentioned cases. There the sale on credit was prohibited because it would involve the tying up of the assets, and hence compel a hindrance, delay and postponement of the claims of creditors. But if the property may be held until new debts are incurred and then mortgaged to secure their payment, or sold and the proceeds devoted to their payment, it is equally clear that the creditor is hindered, delayed and postponed in the collection of his debt.
The suggestion that, as to such new debts, the trustees would only bind themselves, is entirely outside of the language of the deed of assignment. It indirectly but clearly recognizes the right of" the trustee to make new debts, which shall become charges upon the property, and by necessary implication to secure the same by mortgage, or pay the same out of sales of the property, and it is by its own terms that, so far as affects the question under consideration, it must stand or fall.
It is not necessary that we should, at present, question the right of a failing debtor, in his deed of assignment, to authorize his assignee to continue to carry on the business to which the assigned property has been devoted, when this is limited to disposing of the stock on hand, and such incidental business as may be reasonably requisite thereto. But this business is not thus limited. The deed here authorizes the trustees to carry on the business generally, for which purpose they are invested with “ full and uncontrolled power, in their discretion,” and the only attempt at limitation is that in respect of the time which the business may be carried on, which we have before commented upon.
And this distinguishes the cases referred to and relied upon by counsel for appellants, from the present case. None of them sanction the doctrine that trustees may be invested with “ full and uncontrolled power ” to carry on business. Nor could a doctrine, so at variance with reason, receive our sanction, even if announced by respectable courts.
The court below properly held the deed void as against creditors, and its judgment must therefore be affirmed.
Judgment affirmed.