Turnipseed v. Schaefer

76 Ga. 109

• Court: Supreme Court of Georgia
• Decided: May 1, 1886
• Status: Published

Opinion

Hall, Justice.

Owing to the practical importance and widely extended application of the principles involved in this and two other records returned to the sainé term of this court, to the mercantile and commercial affairs of the community, We have postponed their determination, that we might have time to consider them maturely, and now present the result of our deliberations, without further apology for a delay which seemed to us necessary for their elucidation.

1. The first section of the act of the general assembly, .approved September 28, 1SS1, requires that, in voluntary assignments by insolvent debtors for the benefit of creditors, the assignor shall, in all cases, prepare and attach to the deed, or instrument by which the assignment is made, “ a full and complete inventory and schedule of all the assets of every kind, held, claimed or owned by such insolvent person, firm or corporation at the time of the execution of such deed, or other instrument of assignment, which inventory or schedule shall be sworn to by the person making the assignment, and in case of assignments by firms, the oath may be made by any member of such firm, or in cases of assignments by corporations, by the chief officer of the corporation;” and it is thereby further enacted (§2) that the affidavit therein previously provided for may be made before the officer in whose presence the deed of assignment is executed, and that the person or persons making such affidavit shall, upon indictment and conviction for filing a false, deceptive or incomplete schedule of assets, be liable, to the pains and penalties prescribed by law for persons convicted of perjury, and that no deed or other instrument of assignment by insolvent persons, firms or corporations shall be valid, unless accompanied by the sworn schedule required by the first section of the act. Acts 1880 and 1881, p. 174; Code, Add., p. x., §1.953 (d), (e).

In addition to the protection afforded to creditors against partial assignments by insolvent debtors, and to prevent them from suppressing or misrepresenting the extent and character of their liabilities,, the legislature, by an act approved the 17th of October, 1885 (Acts, p. 100), declared, §1, that, “ in all cases of voluntary, assignments,” made after the passage of the act, “ by failing or insolvent debtors for the benefit of creditors, it shall be the duty of the person, firm or corporation making such assignment to prepare and attach to the deed, or instrument by which such assignment is made, at the time of executing the same, a full and complete inventory and schedule of all indebtedness of every kind of such insolvent person, firm or corporation at the time of the execution of such instrument or deed of assignment, which inventory or schedule shall set forth in detail the names of, the amounts due to, anc the residence of each of the creditors of such assignor, and which inventory or schedule shall be sworn to by the person making the assignment; ” and in case of assignments by firms, etc., shall be sworn to by a member thereof. Section 2 declares, “ that no deed or other instrument of assignment by insolvent persons, firms or corporations shall -be valid, unless accompanied by the sworn schedule required by the -first section of this act.” The assignment in question was made after this last act went into efféct; and the uncontradicted averments in the bill, which were fully sustained by the proof, show that there were omissions of assets, as well as creditors from each of the-sworn schedules attached thereto; but to this it is replied, that the creditors omitted were only such to an inconsiderable amount, as compared with the'entire amount of assignor’s indebtedness; that it was doubtful, at best, whether some of them were creditors at all, and that the. assets omitted from the other inventory were trifling in value and amount, and were omitted from oversight and forgetfulness, without any intention whatever, on the part of the assignor, to palm off a false, deceptive or incomplete schedule, as was evident from a general clause in the deed of assignment authorizing and empowering the assignees to take, hold and recover, not only the property and assets embraced in the schedule, but everything else belonging to the assignor at the making of the deed; and in addition thereto, the assignor, upon discovering the omissions, stood ready and willing to supply them by an amended schedule duly verified, and actually did so.

We.have held that the act of 1881 is a remedial statute, and should be strictly construed as against the assignor and'his assignee, and liberally in favor of creditors. Crittenden Bros. et al. vs. Coleman & Co. et al., 70 Ga., 293; Coggins vs. Stephens &c Co., 73 Ga., 414. The act of 1885, being of the same character as the other act, and being in furtherance o'f the same policy, is subject to the same rules of construction. It is true, that in the first of the cases above cited, the schedule was made subsequently to the execution of the deed of assignment, and instead of being attached, was loosely folded away with it; in the other case, there was no attempt to make out and attach any inventory or schedule whatever. In point of principle, we can see no difference between these cases and one in which the schedule, made out and attached, is neither “ full ” nor “ completg.-’^ T^e purpose the. act was intended to accomplish, and the rights it was designed to secure to creditors by affording them facilities to detect and expose fraud in such transactions, as clearly set forth by the court in its opinion in the first of the above cited cases, will condemn such schedules as those now under consideration, as well-as that then passed on. The difference between a schedule which is not full and complete and no schedule at all is a difference in degree only, and should not vary the application of the rule prescribed by the statutes.

2. For the first time, we are asked to lay down a rule as to what may be safely omitted from such schedules, either by oversight or inadvertence, and without any intention to do so on the part of the assignor, or purpose to mislead creditors by filing a false, deceptive or incomplete schedule.

From the very nature of the subject, it is impracticable, if not impossible, to lay down any rule upon that subject. Generally speaking, the requirements of the law and the conditions it prescribes should be closely followed; at least an honest effort should be made to carry it fully into effect according to its purport and intent. While the omission of some slight and unimportant article of little or no value from the schedule of effects, or some one or more creditors •whose claims amounted to a trifle, and which would be' probably overlooked or forgotten by the most careful,, deliberate and painstaking person in preparing his schedule,, might not have the effect of invalidating the assignment,, yet in a case where one party claimed that assets amounting to nearly three thousand dollars were omitted, and the assignor conceded, after these omissions had been brought to his notice by the evidence adduced on the trial, that assets, to the amount of nearly thirteen hundred dollars, had been omitted from one schedule, and sundry creditors, whose undisputed demands were shown to aggregate more than $1,000, were omitted from the other, and sought to supply the omission by then amending his schedules in both respects, we think that the consideration pressed would hardly avail to maintain the assignment. In point of fact, we know that these assignments, especially where they contain preferences to certain favored creditors, are hurriedly made up and executed, especially since the passage of the act by the same legislature which passed the assignment act of 1881, and which was approved on the same day that act was approved, w'hich enables the holder of any matured debt against trading corporations, or traders, or firms of traders, where he has made a demand for his debt and payment has been refused, to file his bill and have the assets of his debtor placed in the hands of a re^ ceiver for collection, and which prohibits a creditor, after the appointment of a receiver, from acquiring a preference by judgment or lien, on any suit or .attachment, under proceedings commenced after the filing of the bill, and. declaring that all mortgages and assignments executed, after that time to pay or secure existing debts shall be ■ vacated, etc. Acts 1880 and 1881, pp. 124,125. Code,. §§3149(a) to 3149(g). The haste resorted to m this case is probably deducible from the fact that an assignment was executed between these parties only a short time before that in question was made, and which, owing to their ignorance of the act of 1885, contained no schedule of creditors, and fearing the appointment of a receiver by some disappointed creditor when this was discovered, they lost no time in vacating that and in hurrying u'p the other. This may not be so, but the attending circumstances might render this view not altogether improbable.

3. We cannot agree with the ingenious view, so urgently pressed and plausibly maintained by the eminent and able counsel for the defendants, that unless these omissions of assets and creditors were intentional, and designed for the purpose of making the schedules false, deceptive or incomplete, they would not avoid the assignment. It is true that such design, purpose or intention is a pre-requisite, by the act of 1881, to‘the indictment-of the person or persons making the affidavit to the schedule of assets, in order to subject him or them, oh conviction, to the pams and penalties of perjury. Usually in proceedings against a person for violating a criminal or public law, it is essential, in order to sustain the indictment, to prove both the act .and guilty intent of the- accused; for a crime or misdemeanor consists in a willful violation of the public law. in which there'must be a union or joint operation of act and intention, or criminal negligence. This is the rule for determining the affiant’s liability on a criminal prosecution. Not so, however, where the question in issue'is the validity of the assignment.- This criminal-clause is not in the act of 1885, which provides for the schedule of creditors, but both acts declare, in unmistakable language, that, unless these schedules are “full” and “complete,” the assignment shall not be valid. No provision is made by either of them for perfecting a schedule which is not ‘Tull” or “complete," and by that means upholding the assignment.

That this course has been pursued in some of our sister states, notably in New. York, Indiana, and perhaps others, under their peculiar statutes, we are well aware. In those states insufficient assignments may be completed at'the instance of the assignor, of the assignee, or the court to which , they, are returned, and in some of them on the application of the creditors. This is a matter of statutory regulation (and may be, perhaps, a good one); at all events, these courts find express authority for their judgment in the provisions of their own state statutes. There are no such provisions in our law, and until the legislature shall so authorize us, we must decline to exercise the power, of allowing these schedules to be amended. This* would be too great a stretch of judicial legislation for any court to venture on; it would not be a legitimate exercise of power in construing or interpreting a legislative act, but an addition to one by the arbitrary action of the court.

.4. The general clause in the assignment, conveying to the assignee such property of the .assignor as was left out of the schedule of assets, so far from sustaining the position of counsel for which it was invoked, is rather adverse to it; at all events, it contravenes the policy of the legislature in enacting the laws in question, as was clearly indicated by this court in its judgment rendered in the case of Crittenden Bros, et al. vs. Coleman <& Co., tit supra. The law looks with distrust upon such’ sweeping clauses in deeds, especially where particularity of detail is requiréd. Ever since Twyne’s case, it has been, if not a recognized axiom, at least a well-settled principle thatfraud lurks in generalities.”

5. In concluding what we have to say on the law of this case, it may be well to remind the profession and the commercial community that, while preferences in assignments are allowed, they are tolerated rather than encouraged, as is manifest from the drift of our legislation from 1881 down to the present day. The principle here announced is emphasized by the acts above cited, and this provision of the act of 1885, to-wit, “ No assignment shall be set aside, except upon a direct proceeding filed for the purpose, and no creditor of the assignor shall obtain any priority or preference of payment out of the assets assigned on any judgment rendered after the filing of the bill, in case the deed of assignment is set aside and decreed to be void.” The act goes further, and carries fully into effect the policy proclaimed in sections 1945 and 1946 of the Code, as well as in art. 1, §2, par. 6 of the constitution of 1877 (Code, §5023), by throwing wide the doors of the court of equity to creditors of every class and description, whether they have a lien or not, and inviting them to enter and avail themselves of its remedial process and aid, that facilities may be afforded them to “ detect, defeat and annul any effort to defraud them of their just rights,” and that they may be enabled to reach the property <! concealed ” from them by their debtors.

Each of the positions taken in this case will be amply sustained by the authorities cited in the able and exhaustive briefs of counsel, found at the end of the reporter’s statement. As there must be a reversal of the decretal order excepted to in this case, it is certainly unnecessary, and might be improper, to pass upon the other questions made, at least so far as they affect the rights of contesting creditors to the property assigned, and the equities which may exist between themselves and others. The deed of assignment must be set aside for the reasons already given; and that the fund may be preserved for future adjudication and distribution among those who shall appear entitled to it on the final hearing of the bill, the injunction must be ordered and the receiver appointed, as prayed, and upon such other terms as may appear equitable and in accordance with law.

Judgment reversed.