Griffin et al. v. Marquardt et al.

Griffin et al. v. Marquardt et al. Assignment for the Benefit of Creditors. An assignment for the benefit of creditors which directs the trustee forthwith to take possession of the property, and sell the same, without delay, for the best price that can be procured, is valid. A direction to pay accommodation indorsers the sums for which they ■ are respectively liable, does not invalidate the assignment; in such case, the holders are, in fact, the cestuis que trust. The court of appeals cannot re vérse, upon a consideration of the evidence, on which the question of bona fides was determined in the court below. Appeal from the Supreme, Court at general term, in the second district. (Reported on a former appeal, 17 N. Y. 28.) This was an action by a judgment - creditor of Marquardt, to set aside, as fraudulent and void, an assignment for the benefit of creditors, executed by Marquardt to Judson, the other defendant. The case was tried before the court# without a jury; and the complaint was dismissed—the judge holding that there was no fraud in fact in the assignment sought to be impeached. The judgment having been affirmed at general term, the P^h^iffs this appeal. *The facts are sufficiently stated in the opinion of the court. Parlcer, for the appellants. Blunt, for the respondent. [MAJORITY — Wright, J.] Wright, J. The plaintiffs’ complaint was dismissed at the special term; the judge holding that the assignment of Marquardt was not fraudulent. Upon the whole evidence, he found the assignment to have been made in good faith, and without any fraudulent intent, and as these were questions of fact purely, his finding is not open to review here; the question of fraud in fact was disposed of at the special and general terms, where alone it could be examined and reviewed. The plaintiffs’ counsel points us to a part of the testimony of the assignor, which it is claimed conclusively establishes a fact fatal to the assignment, and as matter of law, entitled the plaintiffs to judgment. In the course of the examination of the assignor, as a witness, the question was put to him: “ Why did did you make an assignment ?” He answered, “ I made the assignment for the purpose of gaining time to pay my creditors. * * * I wanted to protect my indorsers; I made the assignment to pay my debts.” This testimony is singled out as establishing a fact that, it is alleged, neither was or could be controverted, viz., that the assignment was made with the fraudulent intent to hinder and delay the assignor’s creditors in the collection of their debts. There is no force in the suggestion; had Marquardt testified, unqualifiedly, that his sole purpose in making the assignment was to gain time to pay his creditors, it would not have been testimony so conclusive in its nature as to have constrained the judge ■who tried the cause, regardless of all the other evidence in the case, to find against the bona fides of the assignment. The short answer is, that what we are pointed to was mere evidence, addressed to the judge, establishing no fact conclusively, but to be weighed and considered with the other evidence in the case, in passing upon *and determining the question of an actual fraudulent intent. That it was the testimony of the assignor, gave no conclusive character to it, in the establishment of a fact. The only question open for discussion in this 'court is, whether there is anything in the deed of assignment itself which, in judgment of law, renders it invalid as against creditors. The property is conveyed to the assignee, in trust to pay deb;ts, and he is directed to 11forthwith take possession of the said premises, and sell the same, without delay, for the best price that can be procured.” If this direction operated to vest any discretionary power in the assignee, not legally incident to his trust, nor to be, on the application of creditors, at all times controlled by the courts, it would be our duty to pronounce the assignment fraudulent. But it does not; the duty imposed by law on an assignee, is to proceed, without unreasonable delay, in the execution of the trust confided to him; and if he errs in this respect, in the exercise of the legal discretion incident to his trust, the courts may correct the error. All that the direction, fairly interpreted, means, is, that the assignee should proceed to sell and convert the assigned property into money, without unnecessary or unreasonable delay; and it cannot be construed into an attempt on the part of the assignor, to exempt the assignee from his proper legal responsibility to those for whom he was to act. Nor are the trusts to pay the indorsers or sureties of the assignor, the sums for which they were severally liable, invalid. It appears from the assignment itself, that some of the indorsed notes were not due at the time the assignment was made, and were held and owned by corporations or persons other than those to whom the money was directed to be paid. But these were trusts to pay the debts or obligations of the assignor, for which the indorsers or sureties were severally liable, and there can be no doubt, that the holders and owners of the claims designed to be protected, might compel an appropriation of the assigned property to their payment. This being so, the provision has the same effect as if the holders were named the cestuis que trust in the instrument. "There seems to be nothing in the provisions or trusts contained in the deed of assignment to characterize it as fraudulent, and the court below has found that there was no fraud in the fact. The judgment of the supreme court should be affirmed. Judgment affirmed. See to the same effect, Jessup v. Hulse, infra 168. A provision which is merely in affirmance of the legal obligations of the assignee, will not affect an assignment. Grant v. Chapman, 38 N. Y. 297.