Hutcheson v. Peshine

16 N.J. Eq. 167

• Court: New Jersey Court of Chancery
• Decided: February 15, 1863
• Status: Published

Opinion

The Chancellor.

It is clear that a general assignment by a debtor of all his property, real and personal, under the insolvent laws of Virginia or of any other state, can pass no title to real estate in New Jersey. The point has been more than once 'expressly adjudicated. Lessee of McCullough's heirs v. Roderick, 2 Hammond 380; Rogers v. Allen, 3 Ohio 488; Osborn v. Adams, 18 Pick. 247.

The rule rests not only upon the acknowledged pi'inciple of law applicable to all assignments, voluntary as well as legal, that the title and disposition of real estate are exclusively subject to the laws of the country where it is situated, which alone can prescribe the mode by which title to it can pass; but upon the further reason, that the laws of one state will not be permitted to contx'ol the trust, the action of the trustee, and the disposition of the trust property in another, the subject of the trust being real estate.

This principle appears to bo recognized by the statutes of Virginia under which the conveyance was made. They provide that the debtor shall, previous to his discharge from imprisonment, in addition to the general assignment for the benefit of the execution creditors, make a conveyance to the sheriff of all his real estate not within the state of Virginia, upon the same trusts as those created upon the general assignment.

It is under a deed thus executed, and which the bill alleges is made, acknowledged, and recorded, in conformity with the laws of this state, that the complainant asks relief. Bo far as the formalities of execution are concerned, it will be assumed for the purposes of the present inquiry, that the deed is a valid instrument. It is nevertheless apparent upon its face, that tho deed in question is not a voluntary conveyance. It was executed by a debtor under arrest to the officer in whose custody he was detained, in order to obtain his discharge under the insolvent laws of Virginia. The execution of tho deed was by those laws a prerequisite to his obtaining his discharge. It is merely ancillary to the general assignment, burdened with the same trusts and designed to carry the assignment into effect. Independent of those trusts and of the provisions of the statutes of insolvency, the deed is without consideration and void as against the grantor. It is not pretended that there is any other consideration for tho conveyance. The sheriff to whom the conveyance was made, was not a creditor of the grantor, but a mere trustee.

Then will this court lend its aid to carry those trusts into effect? It is impossible to distinguish the ease from that of an assignment under the insolvent laws of another state. The deed was executed for the purpose of carrying the trusts of the assignment into effect, and in compliance with the requirements of the statute. In Osborn v. Adams, 18 Pick. 248, the Supreme Court of Massachusetts say: “ We can take no notice of a trust created by proceedings under the statute of the state of Connecticut; we can no more take notice of a trust created under a foreign government, than we can of a will not proved nor recorded in this commonwealth.”

This court, therefore, cannot recognize the trusts thus created for the purpose of carrying them into effect.

But aside from this difficulty, admitting that this court might recognize the trusts thus created, it is obvious that the trusts created under this assignment, are in direct conflict with the policy and with the express provisions of our laws. Our statute requires that every conveyance or assignment made by a debtor of his real or personal estate, in trust for his creditors, shall be made for their equal benefit in proportion to their several demands. The deed in question is made in trust for the payment of the execution creditors only, and then in trust for the debtor himself. It not only gives a preference to the execution creditors in Virginia, but utterly excludes others from all participation in the trust funds. It surely cannot be required that this court should administer trust funds growing out of the sale of real estate situated in this state, in direct conflict with our laws, to the prejudice of creditors residing here.

It is urged that the objection to the validity of the assignment does not lie in the mouth of the assignor, nor of creditors having liens prior to the assignment, and can only proceed from some creditor who is prejudiced by the assignment. This is not so. The objection is not merely that the assignment is fraudulent as against subsequent creditors, but that it is illegal and inoperative as a transfer of real estate, and that the trusts under it will neither be recognized nor executed by the courts of this state.

In Rogers v. Allen, 3 Hammond 485, already referred to, in taking the benefit of the insolvent laws of Pennsylvania, Allen had made an assignment of all his real and personal estate, including a tract in the state of Ohio, for the benefit of his creditors. The trustees made sale of the lands, and the purchaser went into possession. Allen, the assignor, brought an action of ejectment, and recovered. A bill in equity was thereupon filed by the trustees setting out the facts, alleging that the other property assigned wag insufficient to pay the debts of Allen, and praying a decree to sell the land for the benefit of the creditors. The demurrer was sustained and the bill dismissed. The court say, as no title passed by the deed, we do not see any principle upon which any equity can be created to be enforced here.

This case is in no wise affected by the principle of the decision in Frazier v. Fredericks, 4 Zab. 162. That was a voluntary assignment of personal property, and governed by principles entirely distinct from those which control the present inquiry.

The bill must be dismissed.

Uote. The reporter is indebted to Joseph P. Bradley, Esq., for a copy of the opinion in this case, delivered May Term, 1861, but as yet unpublished. Its importance, it is believed, will be found to justify its publication at this time.