Nathaniel Hempstead against Jamb Stars

June, 1809. Nathaniel Hempstead against Jamb Stars. A. on the eve of a failure, Ktade a gene-ralassignment of his effects, and gave mi-mediate possession, to /». one ot his ere-ditors, mtrust to satisfy the AbtSandl%ei'°-ritoVious! erf ditor spetifi-over'die1 sur shoui<!bean\e to the credo tors g nerally. C and 1) spcfíallv" ña-med, soon af-terwards attached those hands* of ⅛? as tue property ot .1 ftekl, that this conveyance was not by law gaiust'the1 at-taiAmeut oí creditors. MOTION for a new trial. This was an action of trover, for certain goods, wares, anc] merchandise, specified in the declaration, The defendant pleaded the general issue, * ° On ⅛6 tr’ab b appeared, that the plaintiff was an °®cer> aB<* bad taken the goods in question as the pro-petty of Francis Hazard, by virtue of three attachments against him. The defendant claimed them as his proPertyi !>? virtue of the following bill of sale from Hazard: “ Know all men by these presents, that I, Francis Hazard, of the town of Men-London, in the county of Menu-London, and state of Connecticut, for the consideration Df one thousand dollars, received to my full satisfaction of Jared Starr, of said town of Mew.London, have sold, transferred, bargained, assigned, and conveyed to the ,.ay jare¿ Starr, his heirs and assigns for ever, and by _ ^ 3 these presents, do bargain, sell, transfer, assign and , . convey to the said Jared Starr, and his heirs and assigns ^or ever> the dry goods, groceries, hardware, crockery ware and wet goods now in my store or stores in JV'ew-_ 1 London, a schedule or inventory whereof is hereunto annexed, for him the said Jared Starr to have and to hold the same to his and his heirs’ own proper use and behoof for ever. And 1 hereby covenant to and with the said Jared Starr, that I have good right to bargain and sell the same, and bind myself and my heirs for ever, to warrant and defend the above bargained property and goods to him the said Jared Starr, his heirs and assigns for ever. Always provided, and these presents are upon condition, that whereas Jared Starr, Daniel Douglass, Josiah Douglass, Reuben, Langdon, Stephen Holt, Henry Truman, and Charles Hazard, all of said Mew-London, have severally, at my instance and request, endorsed my notes of hand, and are liable to pay money on my account, the said Jared Starr for about the sum of two thousand dollars, the said Daniel Douglass for about the sum of fifteen hundred dollars, the said Josiah Douglass for about the sum of six hundred dollars, the said Reuben Langdon for about the sum of three hundred dollars, the said Stephen Holt for about the sum of one hundred and fifty dollars, the said Henry Truman for about the sum of fifteen hundred dollars, and the said Charles Hazard for about the sum of two thousand dollars. And whereas also I am justly indebted to Ebenezer Learned, of said Mew-London, in the sum of one hundred and fifty dollars, or thereabouts, for money lent, and afto to Mrs. Jane Stewart, of said Mew-London, for money lent to the amount of one hundred and fifty dollars, or thereabouts, and to Jeremiah F, Jenkins, of Providence, for goods sold for him on commission, for about the sum of three hundred dollars, and also to Amos Cross, of Westerly, for money which 1 have borrowed of him to the amount of three hundred dollars, or thereabouts. Now, if I -well and truly pay each of said notes, and save the endorsers thereon, and every of them harmless from the payment of any money on said notes, which they may endorse to continue and run said old notes, and also '.veil and truly pay to each of said pet „ons to ,vhom I am indebted for borrowed money, and fot goods sold on coir.mUsion, such sums as I respectively owe them, then the above and foregoing ir.stiument to be void; otherwise, lu be and remain in full io p nver and virtue. It being. However, always unci ’ st..od. and it. is my intention therein, that the residue or surpsus oi property, if any, after pr.y-ing and discharging the above-mentioned debts to endorsers, and those who have lent me money, shall be for the use and benefit of all my creditors generally. In witness whereof, I have hereunto set my hand and seal, this 5th day oí March, 1808. “ Francis Hazard.” This bill of sale was executed at the time it bears date, on the eve of Hazard's failure; and the goods specified therein were actually delivered to the defendant, and deposited in his store, before the morning of the next day, and before the service of the attachments by the officer. Mr. Cieaveland, the attorney for the creditors, named as plaintiffs in the attachments, then went to the defendant’s, store, and informed him of their several demands, and that he should direct the officer ,to seize those goods as the property of Hazard. After this, in the forenoon of the same day, Hazard drew orders on the defendant, in favour of most, or all those creditors, who were named in the bill of sale, which were immediately accepted by the defendant conditionally “ to be paid as far as said goods should avail on the sale thereof.” In the afternoon, the attachments were levied; but the goods were not removed from the defendant’s store. It was admitted, that the creditors named in the bill of sale, and in the attachments, were bona Jide creditors. The goods were sold by the defendant. On those facts, the court, ⅛ their charge to the jury, instructed them, that if a debtor, on the eve of a failure, make a bill of sale, or conveyance of his effects to one of his creditors, therein directing him to convert the same into money, and pay himself and certain other favourite creditors therein named, with this condition annexed, that if any surplus should be left, after discharging the debts due to such favourite creditors, it should be applied to the discharge of his debts due to his creditors generally, such bill of sale or conveyance, is by law fraudulent, and invalid, against the legal attachments of creditors. They, therefore, directed the jury to find a verdict for the plaintiff; which was accordingly done. The defendant excepted to this direction of the court to the jury; and thereupon moved for a new trial, which motion was reserved for the consideration of the nine judges. Goddard and Law, in support of the motion. 1. There ought, at any rate, to be anew trial; because the case should have been left to the jury as a question of Jact. The court should not have directed the jury positively, that this assignment was fraudulent in law; but should have submitted it to them to say whether it Was fraudulent in fact. In Estwick v. Caillard, 5 Term Refi. 420. Grose, J. at the trial, left it to the jury to consider, whether a fraudulent transaction was proved; and the whole court sanctioned this direction, by refusing to set aside a verdict in pursuance of it. The ground they proceeded upon was, that there were no extrinsic circumstances to show that any fraud was intended. But if it was a mere question of law whether the'conveyance was fraudulent, why should inquiry be inade respecting extrinsic circumstances, and an intention of fraud ? So, in Ingiiss et al. v. Grant, S Term Refi. 530. Lord Kenyon stated, as the ground of the decision of the court, that the transaction was perfectly fair at the time, and without any fraudulent intention, and that the grantor acted honestly in executing the deeds. These are circumstances proper for the jury to consider, and decide upon. 2. But admitting that it was competent for the court to direct the jury peremptorily on the question of fraud., we contend that the direction given was incorrect. Here we are relieved from most of the circumstances relied upon, in other cases, as badges of fraud. The property «was actually delivered; the creditors were not only bond fide, -but meritorious creditors; they were Senders of money, endorsers, and those who had intrusted goods to sell on commission. The only questions, which can arise, are, whether a debtor may, in this state, give a preference to any of his creditors; and whether a transfer to a trustee for certain creditors, is valid. It is the policy of our law to give a preference to the ■vigilant creditor. If a debtor will not voluntarily give up his property to satisfy a debt when demanded, the law will compel him to do it, by attachment. What is done voluntarily by the party, ought to avaii as much as what Is done compulsorily by attachment. That the preference in this case was given on the eve of a failure can make no difference; for we have no statutes of bankruptcy, nor does the common law recognise the principles of such statutes. {[Swift. J. said he considered it as settled, that a debtor may prefer his creditors; and the counsel did not pursue the argument on that point.] No -reason can be given why an assignment to trustees for the benefit of creditors should not be as valid as to the creditors themselves, except that the ass.ent of the creditors is wanting, or that the assignor retains some control over the property. As to the first of these, i't is sufficient to observe, that the assent of the creditors will be presumed until their dissent be shown. In The Countess of Gainsborough v. Gtfford, 2 Pi Wms. 424. 430. the assignee did not know «£ the assignment; but this was held to be no objection to its validity. Atkin v. Itarwrck, I Sira. 165, is to the same effect. The Chief Justice said, that in such case, the contract does not stand open tiü larremeni, but is complete, unless there is art actual disagree ment. But from the statement of the principal case, it appears, that there was an actual assent of the creditors, as they took orders in their favour, drawn by Hazard on the defendant. In the next place, what control had Hazard over this property, after making the assignment ? We answer confidently, none at all. No part of it was ever to revert to him, or be subject to his direction. By the terms of the deed of assignment, it was to be applied, in the first place, to the payment of the claims of certain creditors therein named, and then, if there should be a surplus, it was to go to the creditors generally. The defendant had a perfect right to sell it, or control it at pleasure, until his own debt, and the debts of the other creditors, were paid. Cleaveland and Gurley, contra, relied principally upon this ground: That Hazard made a general conveyance of his effects for the benefit of all Ms creditors, and that some of those creditors dissented, and attached. The conveyance, of course, could not be valid with respect to any. In the cases cited by the counsel for the defendant, all the creditors assented, (or it was so presumed,) and claimed the benefit of the assignment. They also contended, that this general conveyance, upon the eve of a failure, was a fraud upon the attachment law of this state. Where the object is to evade that law, the act is void, just as it would be in England¡ if it operated as a fraud upon the bankrupt law. Brown’s Executors v. Burrell, 1 Root, 252. and Hovey y. Clark} ibid, were cited. [Swiít, J- said, the case of Hovey v. Clark was incorrectly reported: No sort of inference ought t° be drawn from it.] There was a particular inventory of the several articles appended to the.bill of sale, which it is unnecessary to insert here. [MAJORITY — By the Court.] By the Court. The bill of sale is not on the race of it fraudulent, although the whole transaction may have been a fraud as against creditors. The facts disclosed on the motion do not warrant the decision of the court, that the bill of sale and conveyance was by law fraudulent against the attachment of creditors, nor the charge to the jury on that point. New trial to be granted.