R. and A. Dawes against Cope assignee of Barker and Annesly

[Philadelphia, Saturday, December 21, 1811.] *R. and A. Dawes against Cope assignee of Barker and Annesly. The general principle with regard to the assignment of personal chattels, is, that where the deed contains an absolute immediate assignment, it is necessary that possession should accompany and follow it, otherwise it is fraudulent both at common law, and under the statute of 13 Eliz. But only such possession is requisite, as the nature of the thing admits of; therefore in the case of goods shipped for a foreign port, the delivery of the bill of lading and policy of insurance will answer in the first instance, provided the claim of the assignee is followed up with reasonable diligence. If it is not, the assignment becomes invalid as against creditors. Where the deed or conveyance is conditional, or to take effect at some future time, the retaining of possession according to the intent of the deed is not fraudulent. This was an action for money had and received, which was tried before the Chief Justice at Nisi Prius in June last, under an agreement between the parties, for the purpose of ascertaining whether the plaintiffs had a right to or in a certain quantity of tobacco and sugar, shipped by Barker and Annesly in the ship Favorite to Cadiz, or to or in the proceeds or any part thereof, whether the same were in money, bills, notes, or any other thing of value. By the report of the Chief Justice the material facts were these: In the latter part of January 1808, the plaintiffs, through friendship to Barker and Aunesly, indofsed three notes for them to the amount of 5500 dollars; and in order to indemnify the plaintiffs, Barker and Annesly put into their hands at the same time, the bills of lading and policy of insurance, on 100 hogsheads of tobacco and 100 boxes of sugar, which they had shipped on the 2d of November 1807, on board the ship Favorite bound to Cadiz, and consigned to Richard W. Meade. The bills of lading and policy of insurance were indorsed by Barker and Annesly in blank. On the 20th of February 1808, Barker and Annesly executed a formal assignment of this property to the plaintiffs, in which it was provided, “that if remittance should have been made in any article of goods or bills whatever, prior to this date, it should be for the purpose of liquidating the aforesaid indorsements, and the balance, after paying the amount of the indorsements, to be returned to Barker and Annesly.” The plaintiffs on the 26th of February wrote to Mr. Meade informing him of the assignment, and letting him know that they should look to him for the proceeds of the goods; but they did not forward a copy of the assignment, nor any duplicate of the letter; and there was no evidence that the letter was received, although it was put, in the letter bag of a ship bound for Cadiz, a lew days after it was written. About the 17th of March 1808, Barker and Annesly received a letter from Meade, informing them that part of the goods were sold, and authorizing them to draw on Berthon and Son *of London for 1500Í. sterling. This fact was communicated to Abijah Dawes by Barker, who proposed to draw for 1500Í. sterling in favor of the plaintiffs, if they would pay the difference between this sum and the amount of the indorsements which they had paid; but’this was refused. The plaintiffs afterwards consented that Barker and Annesly should draw on Berthon and Son for 1500Í. sterling, the money for the bill not to be paid until advice should be received of its having been honored in London; and it was understood that the notes to be received for this bill by Barker and Annesly should b.e handed over to the plaintiffs. Barker and Annesly accordingly, on the 4th of April 1808, sold to Samuel Bettle a bill for 1400Í. sterling on Berthon and Son, and took his written engagement to pay for it on the terms above mentioned; but, although they were frequently called upon by the plaintiffs, they always evaded the delivei’y of this engagement, alleging by way of excuse, that they had not got the notes. Before the money became due by Bettle, Barker and Annesly stopped payment, and made a general assignment to the defendant for the benefit of their creditors. Notice was given to the defendant of the plaintiffs’ claim, and at his request notice was not given to Bettle. Afterwards the defendant received all the money for the bill except 1500 dollars, which was discounted by Bettle against a debt due to him by Barker and Annesly. The plaintiffs it appeared never looked to the residue of the property after intelligence of the 1500Í. was received. It was further in evidence, according to the report of his Honor, that in the latter end of February 1808, the creditors of Barker and Annesly were called together by a private notice. The plaintiffs did not attend, nor did it appear that the meeting was known to them, although the special assignment to them was known to at least one of the creditors who attended. The assignment however was not mentioned at the meeting; but in estimating the propriety of Barker and Annesly’s going on with their payment, considerable stress was laid upon their Cadiz adventure; and they were accordingly permitted to go on by the creditors, one of whom said he would have stopped them if he had known of the assignment. Subsequent to this meeting, another of the creditors secured about 10,000 dollars that was due to him, *by means of attachments. Barker and Annesly made their general assignment on the 2d of November 1808. The jury found a verdict for the plaintiffs, for 5033 dollars 33 cents the amount received by the defendant from Bettle, with interest from the 9th of November 1808, when it came into his hand, to be calculated by the parties. The case came before this Court upon a motion by the defendant for a new trial. B. Tilghman and Tilghman in behalf of the motion. The contest is betwreen the general creditors claiming under a general assignment to the defendant, and a single creditor claiming under a partial assignment. The former have the most equity, and therefore if there is a doubt, it should operate in their favor. Brown v. Heathcote, 1 Atk. 161. The rule of law with respect to the assignment of goods, is now perfectly settled. If the assignment is absolute, and to take effect immediately, possession must accompany and follow it, or it is fraudulent both under the statute of 13 Eliz. and at common law. Hamilton v. Russel, 1 Cranch, 309; Wordal v. Smith, 1 Camp. 332. The want of possession is not a mere badge or evidence of fraud, to be left to the jury under the direction of the court, but under a sound construction of the statute it is a legal fraud, which the court itself should determine. Wilt v. Franklin, 1 Binn. 517. It is not intended to argue, that in every such ease there must be an actual tangible possession. If an assignment is made of goods at sea, the possession of the paper documents is in the first instance sufficient; but this imperfect possession is allowed by the law, merely from the necessity of the case; it passes for nothing the instant a better possession can be obtained ; and hence it is incumbent upon the assignee to follow up his claim, and to obtain actual possession as soon as possible. If he omits to take the requisite steps, if he foregoes possession when he might have commanded it, particularly if his claim is kept secret to the injury of other creditors, the law says his title shall not prevail against them. The intention of the party is not material. Moral fraud it is not necessary to impute. But such omissions are in effect so pernicious to the ^community that the party is, without any fraudulent intention, sufficiently culpable to forfeit his right. The plaintiffs kept their assignment secret. They mentioned it but to one person, who seems to have understood the nature of the confidence reposed in him, by not stating it at the meeting of the creditors. They wrote but one letter to Meade, of which he was not bound to take notice, because it was not accompanied by notarial copies of the documents; and they took no pains whatever to forward a duplicate, or to ascertain the fate of the original. Here was in the outset a palpable omission to follow up their claim, and to take the steps which were requisite to give them a higher degree of possession than they then had. But further, in March 1808 they were informed that a part of the fund might be realized by bills of exchange. If the assignment was good, the fund was theirs, the letter of advice was theirs, and recourse should have been immediately had to the fund. But instead of this they resorted personally to Barker and Annesly, and they left the direction and disposition of the fund to them. What was their duty, but to demand from them the letter of Meade, to demand a bill upon Berthon and Son for the exact amount of their claim, and in case they had been refused, to assert by public advertisement, their authority over the fund. Every other part of the property assigned was most clearly abandoned by the plaintiffs; and the only question is, what sort of possession had they of this portion to which it is said they did look. Was it the best they could obtain? If it was not, the law is decidedly against them. Now it is clear that they might have taken the course we have suggested ; that it was the natural course; that they might have demanded the engagement from Bettle, or given him notice not to pay to any but themselves; that they might have given notice to Bertbon and Son; in fact that they might have done any thing, but what they did do, namely leave the whole control of the business to Barker and Annesly, as much as if they had never made the assignment. It is impossible to say that Barker and Annesly were the plaintiffs’ agents, because in reality they were themselves the principals. It would be a new doctrine to assert that the assignor may retain possession under color of being agent to the assignee. *Were not the general creditors injured? Certainly they were. The secrecy of the assignment prevented the debtors from stopping payment, gave them a false credit by appearing the owners of the fund at Cadiz, and of the bills in Philadelphia, and ultimately enabled one creditor to secure his whole debt by attachment. The law requires publicity in such a transaction ; at least the publicity of possession; and if the assignee by preventing it does injury to the general creditors, it vreakens his own equity, and fortifies theirs. The jury must have gone upon the ground that nothing but actual fraud would defeat the assignment. The case certainly demands another hearing. Drinker and Condy in support of the verdict. It is of some importance that this is a motion for a new trial; that the merits have been tried, and that in the opinion of the jury the claim of the plaintiffs is just. The defendant’s motion cannot succeed unless he establishes a very clear case in law or equity. The general creditors have not as much equity as the plaintiffs. They claim under a voluntary general assignment for ,the payment of debts previously contracted without an eye to such security. The plaintiffs on the other hand, never trusted to the personal credit of Barker and Annesly, but took the assignment at the moment they gave their assistance. It was an act of friendship, not diminishing the general fund for the creditors, because no more was taken away by the conveyance, than was given by the endorsements. The case stands clear of any color of fraud with a view to gain a preference over the other creditors. The object was to secure the repayment of money then in effect advanced; and there cannot be a greater paradox, says Lord Mansfield in Foxcroft v. Devonshire, 2 Burr. 941, than that a man should be guilty of a fraud in lending his money with no other prospect but the chance of being repaid it. In many respects the case resembles Brown v. Heathcote, 1 Atlc. 161, where the superior equity of a creditor under the same circumstances with the plaintiffs, was in terms recognized by Lord Hardwieke, and enforced against the general creditors *under a commission. He expressly states the distinction in point of equity between a creditor obtaining security for an old debt, and one obtaining security as the condition of his making an advance. Still further under the head of equity. The defendant, though a trustee for the creditors, stands in the place of the assignors, and must therefore take subject to all equitable liens against them; As. against Barker and Annesly the plaintiff’s equity is undeniable. Then as to the statute of 12 Eliz., it cannot be questioned that where from the nature or situation of the thing assigned, possession cannot be taken, the want of it is neither fraud, nor a badge of fraud. Edwards v. Harben, 2 D. & E. 594; Ryall v. Rolle, 1 Atk. 176. Possession isyer se of no consequence; because if the continuance of it in the assignor is consistent with the deed, the deed is nevertheless good. Edwards v. Harben; Barrow v. Paxton, 5 Johns. 258. It is material only when the deed of the parties makes it so; and the deed of the parties can never make it material that such possession shall be taken, as the nature and situation of the thing will not admit. It seems to be conceded that the delivery and indorsement of the bill of lading and policy were in the first instance sufficient. "We contend that the claim was afterwards followed up to a sufficient degree. Notice to the consignee was put in train for delivery. Nothing more was necessary. A copy of the assignment and documents were not requisite, because they were no better evidence of the right to receive the fund, than the assertion in the letter. If however they would have been necessary had no new circumstance intervened, yet a new circumstance did intervene to change the nature of the plaintiffs’ duties; namely the letter from Mr. Meade. From the moment the 15007 might be drawn for, they pursued this part of the fund unremittingly, and in the only way in which it could be pursued. The bill could be drawn only by Barker and Annesly, and hence they immediately required them to draw, and to hand over the notes which should be given in payment. This was the only possession that could be taken of the fund. They repeatedly demanded the notes. They were not given. The demand was eluded. The possession k,y Barker and Annesly was '^retained against the will of the plaintiffs. And here lies the fallacy of the defendant’s argument. If the assignee endeavors to obtain possession, and it is circumvented by the assignor, it is not the fault of the former, and can in nowise prejudice his deed. It is only where the person who ought to have possession, assents to its being kept from him, that the law considers the transaction as a fraud upon the general creditors. "Were the creditors injured? If they were, it was their own fault; at least it was not the fault of the plaintiffs. If they trusted to the Cadiz adventure, why did they not ask for the bills of lading, the policy of insurance, and the other documents? Their call for these papers would have shown that Barker and Annesly had already disposed of the property. It was laches not to call for them. But what were the plaintiffs to do ? They did not know of the meeting, and of course could not disclose their security to the creditors. They did not keep it secret, it is plain from the evidence; and the evidence is perfectly natural, because they had no motive for keeping it secret. The statute of 13 Eliz. is in principle confined to assignments upon a secret trust, of which in some cases possession is sufficient evidence, though in others it is not. It may be explained. Twine’s case, Moore 638, pi. 878, the leading decision, was a case of most manifest fraud, and it was a criminal proceeding to punish the fraud. The modern cases have gone too much upon a simple fact of possession in that case, instead of attending to the circumstances which clearly evinced a fraudulent trust contrary to the statute 13 Eliz. [MAJORITY — Tilgbman C. J.] Tilgbman C. J. This is a dispute between the plaintiffs, assignees of a particular part of the property of Barker and Annesly, and the defendant the general assignee for the benefit of all the creditors. There is no doubt of the assignment to the plaintiffs having been good in the beginning. The question is, whether they have conducted themselves in such a manner as to lose the benefit of that which was originally good; in other words, whether they have committed a fraud, in point of law, by permitting Barker and Annesly re^a'n the possession of the assigned property, and thus deceiving the general creditors. In order to form an opinion, it will be necessary to state the evidence with some minuteness. [Here the Ohief Justice stated the facts.] The general principle with regard to the assignment of personal chattels, is, that where the deed contains an absolute immediate assignment, it is necessary that possession should accompany and follow it, otherwise it will be fraudulent under the statute 13 Elizabeth, and indeed at common law. But where the deed or conveyance is conditional, or to take effect at some future time, the retaining of the possession according to the intent of the deed, is not fraudulent. These principles are adopted by the Supreme Court of the United States in the ease of Hamilton v. Russel, 1 Cranch 309, and the United States v. Hooe et al. 3 Cranch 73, and I consider them as having been adopted by this Court subject however to exceptions, as all general rules are. The first and strongest ground of exception is, necessity; such as exist in the present case. The assignment was made in this city, of goods in Cadiz. To deliver possession was impossible. In such ease, all that is required is to deliver such possession as the nature of the thing admits of. The defendant’s counsel concede, that the delivery of the bills of lading and policy of insurance was sufficient in the first instance, but they say that the plaintiffs were bound to follow up their claim with reasonable diligence, and in that I agree with them. It is insisted that attested copies of the assignment should have been sent to Meade. It would have been more regular to do so, but I cannot think that it was essential. The letter of the plaintiffs, if it had reached Meade, would have apprised him of their claim, and no prudent man after receiving such a letter, would have parted with the property without further inquiry. But the circumstance of the plaintiffs holding no further correspondence with Meade, is accounted for, when we recollect that in a very short time, advices were received of the sale of part of the goods, and a sum being lodged in London, at the disposal of Barker and Annesly, more than sufficient to satisfy the plaintiffs. The whole proceeds of the assigned property, amounted to something upwards of 30,000 dollars. The overplus after indemnifying the plaintiffs, was the property of Barker and Annesly. *There was no impropriety, therefore, in the plaintiffs relinquishing all but what was sufficient for their purpose. They seem to have eonsidei’ed the 1500Í. mentioned in Meade’s first letter as the sole object of their intention. As to the rest, they may be said to have relinquished it. Now in what manner ought they to have acted to get hold of this 1500Í. ? It is contended by the defendant, that they should have written to Berttion and Son, giving them notice of the assignment, and ordering them to pay to none but themselves. But this would have been attended with great and unnecessary delay. Why not draw the money at once through the medium of Barker and Annesly? It does not appear, that so far as this 1500Z. was concerned, the plaintiffs intended to leave any kind of possession in Barker and Annesly, after the bill was sold. On the contrary, the notes given by the purchaser were to have been delivered to the plaintiffs, and that they were not delivered was not their fault, for they frequently applied for them. It is in favor of the plaintiffs, that they came forward to assist the defendant without hope of gain, and that in the commencement of the transaction, they trusted not to the general credit of Barker and Annesly, but to the particular fund which was pledged to them. We must not suppose that this affair was kept secret by collusion, for the jury were told, that in such case, their verdict should be for the defendant. Another singular circumstance is, that the assigned property changed its form, so as to elude the grasp of the plaintiffs. It w»as difficult to be laid hold of; very different indeed from the common case of visible, tangible effects, capable in their nature of being reduced to immediate possession. This is a strong circumstance, and distinguishes the case from those which have been adjudged fraud per se, in all of which possession has been retained by the assignor, with the consent of the assignee. It is very true that the general creditors may have suffered from not having received notice of this assignment at their first meeting in February 1808. Had they known of it, they would probably have insisted on an immediate assignment from Barker and Annesly. But this is not to be imputed to the plaintiffs, because there is no evidence of their having been informed of the meeting. Besides, had the creditors inquired closely into the affairs of Barker and Annesly, it would have ^een f°un(l that *the property shipped to Cadiz was subject to some lien, because the evidences of the property were out of their possession. Upon the whole, although the plaintiffs may not have followed up their right with the greatest possible diligence, yet I cannot say, that they have been guilty of such gross negligence as to forfeit it. They are not brought completely within the range of those principles which stamp a case with legal fraud, although they have approached very near it. My opinion is against a new trial. [CONCURRENCE — Yeates J. Brackenridge J.] Yeates J. I concur in the opinion which has been delivered. I think the cause went properly to the jury and that the law was correctly stated to them by the Chief Justice. The bill of lading for the tobacco and sugar, which went to Cadiz, consigned to Nichard Meade, was dated 2d November 1807, and the assignment was made to the plaintiffs, for a highly meritorious consideration, on the 20th February following. They informed Meade hereof by letter dated 26th of the same month. It is true, that it was unaccompanied by any certified copy of the assignment, invoice or bill of lading, or by any letter from Barker and Annesley on the subject. Such a measure would have been prudential, but I am not sensible that it was absolutely necessary. The possession of the articles at Cadiz beyond sea was consistent with the assignment. I can see no circumstances in this case, from which I can feel myself warranted to infer a legal fraud within the true meaning of the statute of 13 Eliz. And as to actual fraud in the plaintiffs during any part of the transactions, it has not been insinuated against the plaintiffs by the counsel of the defendant. If the general creditors of Barker and Annesly have been deceived by the representations of themselves or others, they cannot attribute the deception to the plaintiffs. I am of opinion that judgment be rendered for the plaintiffs upon the verdict. Brackenridge J. It cannot be contended but that more might have been done in this case, to give publicity to the interest which the plaintiffs had acquired in the property of their debtor by a special assignment previous to the *assignment made for the use of the creditors generally. The property being insui’ed, and the policies of insurance delivered to them, they could have had notice of this assignment placed in the office in some way, for the use of those who might conceive themselves to have an interest in this property. They might have obtained a writing by letter signed by the debtor, and accompanying the assignment to themselves, which letter so signed with the handwriting of the debtor, they could have transmitted with a duplicate, at least a copy of the assignment to themselves, to the consignee of the property abroad in whose hands it was. They could at least have transmitted to the consignee abroad a duplicate of their own letter. A presumption arises that they had not used due diligence or care in transmitting their own letter, since it appears not to have been received, at least not in due time; not until the property had passed out of the hands of the consignee abroad to a third party. But on finding that the property had passed out of the hands of the consignee abroad, and that the debtor interfered' with it in such a manner as to impede the payment that was intended, and to baffle the special assignees' in recovering satisfaction from this fund, perhaps greater publicity might have been given to this amongst merchants, than would seem to have been done. They could not well but have heard that creditors were meeting, and that a general assignment was spoken of long previous to the time it took place. This would have prevented that undue advantage which one of them would seem to have taken of the others, from his knowledge of a particular property in a distant place, and which by attachment he secured for himself. The question will be, shall this want of vigilance, this defect of diligence, this neglect, amount to such gross negligence, as will bar in equity the lien which they had on the special fund, and turn them round to take fro rata amongst the general creditors? In other words, whether it will amount to what in law is called a constructive fraud. Bid they suffer the debtor to continue in the visible possession of this whole fund, covered by their policy, so as to give him a false credit during the time from the special assignment? The inclination of my mind has been that they did, and in consequence of this, might justly be considered as having lost the lien which their Special assignment gave them. Considerations of general policy would seem to me to warrant this. Sic utere tuo ut alienum non Icedas. The strictness to which the law has been carried in case of levies made under prior and subsequent writs of execution, where the possession of the property levied on has not been immediately or visibly changed, would by analogy seem to bear upon this. Hence it is, that I would have been much better pleased to have had the verdict the other way ; and if the majority of the Court had been willing to have gone the length of a new trial, I would have gone with them with more satisfaction and acquiescence of mind, than in giving judgment on the verdict. New trial refused, and Judgment for plaintiffs. [Cited in 5 S. & R. 285; 5 W. 485; 2 Wh. 306; 12 H. 12; 6 C. 542; 3 Phila. 178.]