THAYER, District Judge,
after stating the case as above, delivered the opinion of the court.
There are some allegations in the bill which are sufficient, no doubt, to show that Wellington was actuated by a fraudulent purpose, as regards some of his creditors, in malting the alleged bill of sale to Cranston, as agent or trustee of the Union National Bank; hut there are no allegations which tend to show that the bank either had knowledge of or participated in any such fraudulent design; nor is it claimed by the appellants that the bill can be maintained on the ground that it is a proceeding to cancel and annul a conveyance which was contrived by the parties thereto with an intent to hinder, delay, or defraud creditors. The sole contention is that the averments contained in the bill of complaint are sufficient to show that the “bill, of sale or conveyance,” as it is described in the complaint, was, in legal effect, a “general assignment for the benefit of creditors,” within the meaning of the Colorado statute on that subject; and it is said that the purpose of the suit was to have it adjudged to be a general assignment, and that the demurrer should have been overruled, and that Cranston should have been compelled to account for the proceeds of the assigned juoperty precisely as if it had been in form a general assignment for the benefit of all of Wellington’s creditors. The question to be considered, therefore, is whether this view is tenable.
The provisions found in the Colorado statute which are most material to the discussion of the question in hand are sections 1 and 3 of an act passed in 1885, which are now sections 169 and 171 of Mills’ Annotated Statutes of Colorado. They are as follows;
“169. Any person may make a general assignment of all liis property for the benefit of his creditors by deed duly acknowledged, which, when filed for record in the office of the clerk and recorder of the county where the assignor resides, or if a non-resident, where his principal place of business is in this state, shall vest in the assignee the title to all the property, real and personal, of the assignor in trust for the use and benefit of his creditors.”
“171. No such deed of general assignment of property by an insolvent, or in contemplation of insolvency for the benefit of creditors, shall he valid, unless by its terms it be made for the benefit of all his creditors, in proportion to the amount of their respective claims.”
It will' be observed that this statute contemplates voluntary action on the part of an insolvent debtor. It does not compel him to relinquish the possession or control of his property to an as[9]*9signee or trustee for the benefit of his creditors, when he becomes unable to pay bis debts. The act gives him permission to make a transfer of that nature, with certain prescribed formalities, and it proA-ides for the due administration of his estate when it has been thus assigned. It declares, in substance, that such deed of assignment shall be invalid unless it is made for the benefit of all of the debtor’s creditors. In this latter clause, declaring the invalidity of the conveyance, the reference is manifestly to an instrument. executed in the mode and manner prescribed by section 169, and intended by the assignor to be administered under the assignment act. This statute differs materially from laws which have been enacted in some other states on the subject of assignments, which declare, in effect, either that “all voluntary assignments or transfers of property for the benefit of creditors shall be void unless made for the common benefit of all creditors,” or that “no general assignment by an insolvent person for the benefit of creditors shall be valid unless made for the benefit of all creditors,” or that “every provision in any assignment hereafter made, providing for the payment of one debt in preference to another, shall be void,” or that “every voluntary assignment of property by a debtor for Ms creditors shall he for the benefit of all of the «'editors of the debtor.” :’fatutos of tlie latter nature differ so essentially from the one now ' question, and are to such extent indicative of a different public policy, that decisions made thereunder are of little value in construing the Colorado statute. More weight, we think, ought; to be given to decisions of the supreme court of Colorado, which foreshadow the construction that the act in question will probably receive in that state. In the case of Campbell v. Iron Co., 9 Colo. 60, 10 Pac. 248, the court was called upon to construe a previous statute of Colorado on the subject of assignments That contained provisions A'ery similar to those found in the existing law which is above quoted. With reference thereto, the court said;
“Tlie general rule Is that statutes in derogation of tlie common law are to he strictly construed. Certainly, a proper regard for this rule forbids the enlargement of a statute by construction so as to include common-law principles not clearly Avltliin its language and spirit. * * * Experience demonstrates the extreme danger of interfering by legislation with the debtor’s jus disponendi so long as lie retains dominion over his property, and a. careful and skillful attempt by statutes to guard all Hie equitable rights of creditors might result in untold disaster to the business world. Accordingly, legislative bodies—our own included-have exercised extreme caution in dealing Avith the subject of assignments, and have left untouched many of the principles relating thereto which prevailed at common law.”
Bee, also, the observations made Avith reference to the same subject in May v. Tenney, 148 U. S. 60, 69, 13 Sup. Ct. 491.
If we adopt the rule of strict construction .thus announced,-in the interpretation of the statute in question, so as to make it applicable only t:o those transfers of property which are clearly within the spirit as well as within the letter of the assignment act, then we think ilia (.“no difficulty will he experienced in reaching the conclusion that the hill of sale involved in the present suit was not; rendered invalid by the provisions of the Colorado statute, although [10]*10it operated to transfer all of the debtor’s property to a third party for the purpose of paying a portion only of his debts. It is apparent from the allegations of the bill of complaint that the debtor did not intend to proceed under the assignment act, or to take advantage of any of its provisions. Moreover, it is not charged, nor is it claimed, that the attachment writ was sued out by the bank in pursuance of a secret agreement between it and its debtor, by virtue of which the writ was to be subsequently released, and a bill of sale executed, so as to enable the parties by that device to evade the provisions of the assignment act. The bill shows affirmatively that the. creditor for whose benefit the bill of sale to Cranston was made had secured a valid lien, in good faith, and in the mode provided by law, upon all of the assigned property, before the bill of sale was executed; and it is a fair inference from the •facts stated in the bill of complaint that the parties agreed upon a dismissal of the attachment suit,’ and the execution of the bill of sale, solely for the purpose of preventing a possible sacrifice of the attached property by a judicial sale.
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THAYER, District Judge,
after stating the case as above, delivered the opinion of the court.
There are some allegations in the bill which are sufficient, no doubt, to show that Wellington was actuated by a fraudulent purpose, as regards some of his creditors, in malting the alleged bill of sale to Cranston, as agent or trustee of the Union National Bank; hut there are no allegations which tend to show that the bank either had knowledge of or participated in any such fraudulent design; nor is it claimed by the appellants that the bill can be maintained on the ground that it is a proceeding to cancel and annul a conveyance which was contrived by the parties thereto with an intent to hinder, delay, or defraud creditors. The sole contention is that the averments contained in the bill of complaint are sufficient to show that the “bill, of sale or conveyance,” as it is described in the complaint, was, in legal effect, a “general assignment for the benefit of creditors,” within the meaning of the Colorado statute on that subject; and it is said that the purpose of the suit was to have it adjudged to be a general assignment, and that the demurrer should have been overruled, and that Cranston should have been compelled to account for the proceeds of the assigned juoperty precisely as if it had been in form a general assignment for the benefit of all of Wellington’s creditors. The question to be considered, therefore, is whether this view is tenable.
The provisions found in the Colorado statute which are most material to the discussion of the question in hand are sections 1 and 3 of an act passed in 1885, which are now sections 169 and 171 of Mills’ Annotated Statutes of Colorado. They are as follows;
“169. Any person may make a general assignment of all liis property for the benefit of his creditors by deed duly acknowledged, which, when filed for record in the office of the clerk and recorder of the county where the assignor resides, or if a non-resident, where his principal place of business is in this state, shall vest in the assignee the title to all the property, real and personal, of the assignor in trust for the use and benefit of his creditors.”
“171. No such deed of general assignment of property by an insolvent, or in contemplation of insolvency for the benefit of creditors, shall he valid, unless by its terms it be made for the benefit of all his creditors, in proportion to the amount of their respective claims.”
It will' be observed that this statute contemplates voluntary action on the part of an insolvent debtor. It does not compel him to relinquish the possession or control of his property to an as[9]*9signee or trustee for the benefit of his creditors, when he becomes unable to pay bis debts. The act gives him permission to make a transfer of that nature, with certain prescribed formalities, and it proA-ides for the due administration of his estate when it has been thus assigned. It declares, in substance, that such deed of assignment shall be invalid unless it is made for the benefit of all of the debtor’s creditors. In this latter clause, declaring the invalidity of the conveyance, the reference is manifestly to an instrument. executed in the mode and manner prescribed by section 169, and intended by the assignor to be administered under the assignment act. This statute differs materially from laws which have been enacted in some other states on the subject of assignments, which declare, in effect, either that “all voluntary assignments or transfers of property for the benefit of creditors shall be void unless made for the common benefit of all creditors,” or that “no general assignment by an insolvent person for the benefit of creditors shall be valid unless made for the benefit of all creditors,” or that “every provision in any assignment hereafter made, providing for the payment of one debt in preference to another, shall be void,” or that “every voluntary assignment of property by a debtor for Ms creditors shall he for the benefit of all of the «'editors of the debtor.” :’fatutos of tlie latter nature differ so essentially from the one now ' question, and are to such extent indicative of a different public policy, that decisions made thereunder are of little value in construing the Colorado statute. More weight, we think, ought; to be given to decisions of the supreme court of Colorado, which foreshadow the construction that the act in question will probably receive in that state. In the case of Campbell v. Iron Co., 9 Colo. 60, 10 Pac. 248, the court was called upon to construe a previous statute of Colorado on the subject of assignments That contained provisions A'ery similar to those found in the existing law which is above quoted. With reference thereto, the court said;
“Tlie general rule Is that statutes in derogation of tlie common law are to he strictly construed. Certainly, a proper regard for this rule forbids the enlargement of a statute by construction so as to include common-law principles not clearly Avltliin its language and spirit. * * * Experience demonstrates the extreme danger of interfering by legislation with the debtor’s jus disponendi so long as lie retains dominion over his property, and a. careful and skillful attempt by statutes to guard all Hie equitable rights of creditors might result in untold disaster to the business world. Accordingly, legislative bodies—our own included-have exercised extreme caution in dealing Avith the subject of assignments, and have left untouched many of the principles relating thereto which prevailed at common law.”
Bee, also, the observations made Avith reference to the same subject in May v. Tenney, 148 U. S. 60, 69, 13 Sup. Ct. 491.
If we adopt the rule of strict construction .thus announced,-in the interpretation of the statute in question, so as to make it applicable only t:o those transfers of property which are clearly within the spirit as well as within the letter of the assignment act, then we think ilia (.“no difficulty will he experienced in reaching the conclusion that the hill of sale involved in the present suit was not; rendered invalid by the provisions of the Colorado statute, although [10]*10it operated to transfer all of the debtor’s property to a third party for the purpose of paying a portion only of his debts. It is apparent from the allegations of the bill of complaint that the debtor did not intend to proceed under the assignment act, or to take advantage of any of its provisions. Moreover, it is not charged, nor is it claimed, that the attachment writ was sued out by the bank in pursuance of a secret agreement between it and its debtor, by virtue of which the writ was to be subsequently released, and a bill of sale executed, so as to enable the parties by that device to evade the provisions of the assignment act. The bill shows affirmatively that the. creditor for whose benefit the bill of sale to Cranston was made had secured a valid lien, in good faith, and in the mode provided by law, upon all of the assigned property, before the bill of sale was executed; and it is a fair inference from the •facts stated in the bill of complaint that the parties agreed upon a dismissal of the attachment suit,’ and the execution of the bill of sale, solely for the purpose of preventing a possible sacrifice of the attached property by a judicial sale. As the bill does not aver that the attachment was sued out by the preferred creditor in pursuance of any such secret arrangement between the debtor and creditor as is last indicated, it is fair to presume that the agreement to release the attachment lien, and to substitute a bill of sale therefor, was entered into in perfect good faith, in the belief that the attached property could by that means be sold to much better advantage.
In view of these considerations, we are unable to hold that the bill of sale executed by the insolvent debtor was invalid, and we are equally unable to give it effect as a deed of general assignment, according to the prayer of the bill. We think that the assignment act in question was not intended to deprive an insolvent debtor of that dominion over his property which appears to have been exercised in the present case, and that it would be unwise to give it such effect. As the bank had secured a lawful preference by its superior diligence before the bill of sale in its favor was executed, no creditor of Wellington was prejudiced by the conveyance. That conveyance made the same disposition of the proceeds of the attached property which the law would have made if the attachment suit had been regularly prosecuted to final judgment. At common law the debtor had an undoubted right to enter into such an arrangement with his creditor as appears to have been made in the present instance, and we know of no sufficient reason why the assignment act should receive a construction which will interdict such arrangements in future, if they are entered into in good faith, and are not conceived with a view of evading the provisions of the assignment law. Certain it is that the transaction in question was not expressly prohibited by the assignment act, and was not opposed to the policy of any other statute of the. state of Colorado.
In conclusion it will not be out of place to observe that, as the Colorado statute invalidates a deed of general assignment by an insolvent debtor, unless it is made for the benefit of all of his creditors, no reason is perceived, if the appellants are right in their con[11]*11tention, why they did not have an adequate remedy at law to reach the assigned property at the time this proceeding was instituted. In May v. Tenney, supra, it was held that in Colorado a general transfer of property “by a debtor for the benefit of a preferred creditor does not, if found to be in violation of the policy of the state as expressed in its legislation, become a general assignment for the benefit of all creditors without preference, but is- entirely void. A ccording to that view of the case, it follows that, if the bill of sale to Cranston was within the provisions of the assignment act, it was a void instrument, and in that event the property conveyed was subject to attachment in Cranston’s hands, and he might have been compelled to account for the proceeds thereof by garnishment process. But, be this as it may, our conclusion is that the bill of complaint did not show that the conveyance to Cranston was within the purview of the assignment act, and, so holding, the decree of the circuit court is affirmed.