Willey v. Reynolds

51 S.W. 972, 2 Indian Terr. 350, 1899 Indian Terr. LEXIS 26
CourtCourt Of Appeals Of Indian Territory
DecidedJune 12, 1899
StatusPublished

This text of 51 S.W. 972 (Willey v. Reynolds) is published on Counsel Stack Legal Research, covering Court Of Appeals Of Indian Territory primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Willey v. Reynolds, 51 S.W. 972, 2 Indian Terr. 350, 1899 Indian Terr. LEXIS 26 (Conn. 1899).

Opinion

Thomas, J.

The sole question to bo determined here is whether or not the deed of assignment executed and delivered by C. E. Willey & Son to Herbert Kneeland, interpleader, is fraudulent and void upon its face as to Reynolds, Davis & Co., attaching creditors. If it is, the plaintiffs and appellees will have judgment for fendants, their debt, and sustaining the attachment, against the de-C. E. Willey & Son, and also in their favor and against the interpleader upon his interplea. If it is not, the defendants will have judgment against the plaintiffs upon the attachment issue, and the interpleader will have judgment for the goods attached or their proceeds.

It is contended by appellees that the deed of assignment was void as to them because it did not. fix the amount due any of the creditors, except to the attorneys who drew th'e deed; and the case of Waples-Platter Co. vs Low, 4 C. C. A. 205, 54 Fed. 93, — apparently the authority upon which the judgment of the trial court was based, — is cited to sustain this contention. That was an Indian Territory case, decided by the United States circuit court of appeals for the Eighth circuit, and the issues involved were similar to those involved in this cause, but the facts were different. In that case Low executed a deed of assignment to one Hancock, as assignee, in which he preferred Colbert La Flore for the sum of §1,500, when he was only indebted to him in the sum of $500, and at the trial Low testified that he knew at the time he preferred Colbert that he only owed him §500, and his only excuse was that he secretly intended thereby to secure the payment, not only of the §500 he owed Colbert La Flore,, but. also of §1,000 that he owed to one William La Flore, who was in no way connected in business with Colbert; and Judge Sanborn, in delivering the opinion of the court, said: ‘ ‘There were three questions that, under some phases of this case, it might be necessary for the jury to de-cs) [354]*354termine in this action. They were: (1) Was the defendant, Low, about to sell, convey, or otherwise dispose of his property with the fraudulent intent to cheat, hinder, or delay his creditors, at the commencement of the action? (2) Was the order of attachment delivered to the deputy marshal before or after the assignment to the interpleader was delivered and accepted? (3) Did the interpleader have any knowledge of or part in the defendant’s scheme to cheat, harder, or delay his creditors (if he had any such scheme) before lie accepted the assignment? If the jury answered the first question in the affirmative, the plaintiff: would be entitled to a verdict against the defendant, regardless of either of the others; but an affirmative answer to this question would not authorize a verdict or judgment against the interpleader, unless an affirmative answer was also given to one of the two other questions presented. In other words, to warrant a vordict against the interpleader, the jury must have found, not only that the defendant was about to sell, convey, or otherwise dispose of his property with the fraudulent intent to cheat, hinder, or delay his creditors, when the action was commenced, but they must have also found either that the order of attachment was delivered to the marshal before the delivery and acceptance of the assignment had been completed, or that the interpleader, before or at the time of his acceptance of it, participated in, or was aware of, the intended fraud. Thus, it will be seen that the issues between the plaintiff and the defendant and those between the plaintiff and the interpleader were not identical, and, to prevent confusion and error, it was imperatively necessary that the court should keep the broad distinction between them clearly in mind, and should carefully and distinctly present it to the jury in its charge. * * * The fact that defendant in his assignment preferred Colbert La Flore for $1,500, when he knew he owed him but $500, with the intent to subsequently direct the application of the surplus, $1,000, [355]*355to the payment of another debt, not preferred by the assignment, was conclusive evidence against Low of the fraudulent character of this assignment. It may • bo admitted that where an assignor, by mistake, or through ignorance or uncertainty as to his liability, erroneously but in good faith states the amount of his liability to some creditor too high, the assignment may yet be sustained (Farwell vs Maxwell, 34 Fed. 727), though it will bo noticed that the assignment in this case just cited was not one giving preferences, and stands 'upon a very different ground from a preferential assignment like that in the case at bar, where the assignee is required by statute to give a bond conditioned that he will ‘sell the property to the best advantage, and pay the proceeds thereof to the creditors mentioned in said assignment according to the terms thereof.’ Mansf. Dig. § 305; Rice vs Frayser, 24 Fed. 460, 464. * * * If upon such a state of facts such a preference is a lawful exercise of the power of the assignor,, no reason is perceived why a preferential assignment securing a single creditor, to whom the defendaiit owes but a dollar, for an amount equal to the entire value of his assets, might not be sustained upon the testimony of the assignor, subsequently given, declaring to what creditors, and to what amounts, he intended to apply the proceeds of his property. * * * It is sufficient to say that the assignment is not void upon its face, since its vice does not there appear, and hence the assignee may have received and accepted it in good faith, without notice of the intended fraud of the assignor; but, so far as the assignor is concerned, when he knowingly prefers a creditor in his assignment for an amount far in excess of the debt he actually owes him, for the express purpose of creating a secret trust in the surplus above his debt, to the end that he may subsequently dispose of it according to his own secret intention, which he may change at any moment, he thereby presents conclusive evidence of his fraudulent iqtent in making the [356]*356assignment, upon every principle applicable to sucb instruments. Nothing is better settled than that the assignment in this class of cases, where preferences are permitted, as at common law, and by the statutes of Arkansas, must definitely fix the rights of the parties beneficially interested, and that nothing shall be left to the discretion or further control of the assignor. In Averill vs Loucks, 6 Barb. 470, where a preferential assignment provided that the debts should be paid in the order provided in schedules to be filed within 60 days after its date, Judge Paige declared it void because it did not fix definitely the rights of the parties, but reserved to the assignor the control over the proceeds of his property. To the same effect are Pierson vs Manning, 2 Mich. 444, 450; Grover vs Wakeman, 11 Wend. 187: Lukins vs Aird, 6 Wall. 78; Mackie vs Cairns, 5 Cow. 547; Seaving vs Brinkerhoff, 5 Johns. Ch. 329; Barney vs Griffin, 2 N. Y. 365; Gazzam vs Poyntz, 4 Ala 374; Wiswall vs Ticknor, 6 Ala. 179. To give judicial sanction to an assignment making such a preference as this in question would enable assignors to force compromises with their unpreferred creditors by presenting exaggerated statements of their preferred liabilities, would permit the creation and execution of secret trusts, and would enable assignors to control at will the proceeds of their proporty after assignments had been made; and these are the very vices in assignments against which courts have constantly guarded, and must continue to guard, the public.

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Related

Lukins v. Aird
73 U.S. 78 (Supreme Court, 1867)
Barney v. . Griffin
2 N.Y. 365 (New York Court of Appeals, 1849)
Caton v. Mosely
25 Tex. 374 (Texas Supreme Court, 1860)
Van Hook v. Walton
28 Tex. 59 (Texas Supreme Court, 1866)
Seaving v. Brinkerhoff
5 Johns. Ch. 329 (New York Court of Chancery, 1821)
Mackie v. Cairns
5 Cow. 547 (Court for the Trial of Impeachments and Correction of Errors, 1825)
Butt v. Peck
1 Daly 83 (New York Court of Common Pleas, 1860)
England & Lee v. Reynolds, Devoe & Co.
38 Ala. 370 (Supreme Court of Alabama, 1862)
Brown v. Knox
6 Mo. 302 (Supreme Court of Missouri, 1840)
Platt v. Hedge & Co.
8 Iowa 386 (Supreme Court of Iowa, 1859)
United States Bank v. Huth
43 Ky. 423 (Court of Appeals of Kentucky, 1844)
Rice v. Frayser
24 F. 460 (U.S. Circuit Court, 1885)
Halsey v. Fairbanks
11 F. Cas. 295 (U.S. Circuit Court for the District of Massachusetts, 1826)
Waples-Platter Co. v. Low
54 F. 93 (Eighth Circuit, 1893)
Farwell v. Maxwell
34 F. 727 (U.S. Circuit Court for the Southern District of Iowa, 1888)

Cite This Page — Counsel Stack

Bluebook (online)
51 S.W. 972, 2 Indian Terr. 350, 1899 Indian Terr. LEXIS 26, Counsel Stack Legal Research, https://law.counselstack.com/opinion/willey-v-reynolds-ctappindterr-1899.