has been held applicable where an assignment provided for payment of a sum which the assignor had applied for as a loan, and had reason to believe was upon the way to him, but which he had not yet received. As such sum would not belong to the assigned assets, but must be repaid from them, the effect was an indirect reservation of the sum from the estate for the individual benefit of the assignor.-Sheldon vs. Dodge, 4 Den., p. 217; see, also, to nearly the same effect, Barnum vs. Hempstead, 7 Paige, p. 568. 6. Provisions have often been inserted in assignments tending to enable the debtor to exercise a future preference between his creditors. These are held to avoid the instrument. Examples are, where the assignment preferred the creditors who should be named in a schedule to be thereafter made out and affixed (Averill vs. Loucks, 6 Barb., p. 470); where it directed that in a certain contingency debts enumerated in a later class should be preferred to those mentioned in an earlier one (Sheldon vs. Dodge, 4 Den., p. 217); and where it directed that if certain creditors should refuse to release the assignor, then such creditors should be preferred to them as the assignors should appoint.-Hyslop vs. Clarke, 14 Johns., p. 458. 7. The endeavor to empower an assignee to impose conditions upon creditors, before paying their demands, has frequently been held ground for avoiding the assignment; as where certain creditors are directed to be preferred upon the condition that they execute releases of their demands (Hyslop vs. Clarke, 14 Johns., p. 458; Austin vs. Bell, 20 id., p. 442; Grover vs. Wakeman, 11 Wend., p. 187; Armstrong vs. Byrne, 1 Edw., p. 79; Lentilhon vs. Moffat, 1 Edw. Ch., p. 451; Searing vs. Brinckerhoff, 5 Johns. Ch., p. 329; Hone vs. Henriquez, 13 Wend., p. 240; Gasherie vs. Apple, 14 Abbott's Pr., p. 64); or where the assignment authorizes a surplus to be divided among those who will execute a release.-Grover vs. Wakeman, 11 Wend., p. 187; Mills vs. Levy, 2 Edw., p. 183; but see De Caters vs. De Chaumont, 2 Paige, p. 490; Hastings vs. Belknap, 1 Den., p. 190; see, also, upon the same principle, Berry vs. Riley, 2 Barb., p. 307; Bellows vs. Partridge, 19 Barb., p. 176; Oliver Lee & Co's Bank vs. Talcott, 19 N. Y., p. 146; Bank of Silver Creek vs. Talcott, 22 Barb., p. 550; Jewett vs. Woodward, 1 Edw., p. 195; Van Nest vs. Yoe, 1 Sandf. Ch., p. 4; Spaulding vs. Strong, 36 Barb., p. 310. 8. Directions to an assignee to deal with the estate in a given way, in order to increase the amount to be realized from it, are another class of frauds upon creditors; that is, they are held to be fraudulent and to avoid the assignment wherever they operate to delay a sale. At one period their tendency was not fully perceived. Therefore, where in an assignment made by proprietors of a foundry, the trustee was directed to conduct and carry on the establishment for the benefit of the creditors, to sell the manufactured articles, to work up and sell those unmanufactured, and in general, to sell all the property as soon as it could conveniently be done without a sacrifice, it was held that these directions were not necessarily fraudulent. But this view has been disapproved by the later cases, which go upon the general ground that the creditors have a right to a prompt sale and distribution of proceeds, whether a sacrifice is the result or not. Without their consent the debtor cannot carry on his business through the medium of an assignee for the purpose of increasing the ultimate fund. He may direct, in general terms, a sale of the property, and to what debts and in what order the proceeds shall be applied; but beyond this he can prescribe no condition whatever as to the management or disposal of the estate.-Dunham vs. Waterman, 17 N. Y., p. 9. To the same effect are Van Nest vs. Yoe, 1 Sandf. Ch., p. 4; 2 N. Y. Leg. Obs., p. 70; Schlussel vs. Willett, 34 Barb., p. 615; 12 Abb. Pr., p. 397; 22 How. Pr., p. 15. 9. Akin to the last mentioned provisions are clauses which empower the assignee to sell upon credit, with a view thereby to realize a larger price for the assets. As this necessarily protracts the ultimate distribution until the term of credit expires, such a sale is held a fraud upon the right of the creditors to have the assets converted into money, and the money divided without delay.-Rogers vs. De Forest, 7 Paige, p. 272; Barney vs. Griffin, 2 Comst., p. 365; 8 N. Y. Leg. Obs., p. 68; and 9 id., p. 106; Nicholson vs. Leavitt, 2 Seld., p. 510; and 6 id., p. 591; Burdick vs. Post, 2 id., p. 522; Houghton vs. Westervelt, Seld. Notes, Nos. 1, 32; Porter vs. Williams, 5 Seld., p. 142; and 12 How. Pr., p. 107; Lyons vs. Platner, 11 N. Y. Leg. Obs., p. 87. As in the case of clauses conferring other powers on the assignee, so in respect to the terms in which the power to sell is expressed, if they do not necessarily import discretionary power to sell upon credit, inconsistent with the legal duty of his trust, but may be construed as consistent with an immediate conversion into money, the assignment is not rendered invalid.-Kellogg vs. Slauson, 1 Kern., p. 302; Whitney vs. Krows, 11 Barb., p. 198; Southworth vs. Sheldon, 7 How. Pr., p. 414; Bellows vs. Partridge, 19 Barb., p. 176; 12 N. Y. Leg. Obs., p. 219; Clark vs. Fuller, 21 Barb., p. 128; Nichols vs. McEwen, id., p. 65; Wilson vs. Ferguson, 10 How. Pr., p. 175; Clapp vs. Utley, 16 id., p. 384; Meacham vs. Stearns, 9 Paige, p. 398; Wilson vs. Robertson, 21 N. Y., p. 589; 19 How. Pr., p. 350; Ogden vs. Peters, id., p. 23; Griffin vs. Marquadt, id., p. 121; Schufeldt vs. Abernethy, 2 Duer, p. 533; 12 N. Y. Leg. Obs., p. 173; Murphy vs. Bell, 8 How. Pr., p. 468. And a clause forbidding the assignee to sell upon credit, though superfluous, does not affect the assignment.-Carpenter vs. Underwood, 19 N. Y., p. 520; Van Rossum vs. Walker, 11 Barb., p. 237; Stern vs. Fisher, 32 Barb., p. 198. 10. In addition to the protection thrown around the rights of creditors by the principles embodied in the adjudications above mentioned, it was found necessary, in eighteen hundred and sixty, for the Legislature of New York to interpose in their behalf; and to enact that assignments shall be in writing and acknowledged and recorded; that the assignor shall deliver to the County Judge a sworn schedule containing an account of the creditors, stating their residences, the sums due them respectively, the consideration of each debt, and any collateral security held for it, and containing also an inventory of all the debtor's estate, stating incumbrances upon it, vouchers and securities appertaining to it and its value; that the assignee must file a bond with sureties for the faithful performance of his duty, and that an accounting may be compelled, in due season, by legal proceedings for that purpose.-Laws of N. Y., 1860, Chap. 348. This Act has been deemed directory merely (Evans vs. Chapin, 12 Abbott's Pr., p. 161; 20 How. Pr., p. 289; Fairchild vs. Gwynne, 14 Abbott's Pr., p. 121), at least in so far as it requires an inventory and bond (Juliand vs. Rathbone, 39 Barb., p. 97); but it appears to be the better opinion that a compliance by the assignor with the prerequisites imposed by the statute to be performed upon his part is essential to the validity of the instrument.-Fairchild vs. Gwynne, 16 Abbott's Pr., p. 23; rev'g S. C., supra; Cook vs. Kelley, 14 id., p. 466. It is proper to say here that the case of Billings vs. Billings, 2 Cal., p. 113, of frequent reference in this and preceding notes, particularly to Sec. 3432, ante, was rendered on an assignment made prior Insolvency, what. Certain transfers not affected. What debts may be secured. 3450. to the passage of the Insolvent Act of eighteen hundred and fifty-one, or that of eighteen hundred and fifty-two, of this State. A debtor is insolvent, within the meaning of this Title, when he is unable to pay his debts from his own means, as they become due. NOTE.-See Herrick vs. Borst, 4 Hill, p. 650; Curtis vs. Leavitt, 15 N. Y., pp. 9, 199; compare this section with Sec. 3077, and note, ante; 2 Bl. Comm., pp. 285, 471; 2 Kent's Comm., p. 389; La. Civ. Code, Art. 1980; 3 Dowl. & R., p. 218; Sudg. Vend., p. 487; 3 Gray, Mass., p. 600. 3451. The provisions of this Title do not prevent a person residing in another State or country from making there, in good faith and without intent to evade the laws of this State, a transfer of property situated within it; nor do they affect the power of a person, although insolvent and within this State, to transfer property to a particular creditor for the purpose of paying or securing the whole or a part of a debt owing to such creditor, whether in his own right or otherwise. NOTE.-Ackerman vs. Cross, 40 Barb., p. 465; Hall vs. Arnold, 15 id., p. 599. This makes Secs. 3432 and 3449 perfectly consistent, and harmonizes the authorities cited from California and other Supreme Courts. Forbes vs. Scannell, 13 Cal., p. 242; Cacheaux vs. Cutter, 6 Cal., p. 514; Morganthau vs. Harris, 12 Cal., p. 245. 3452. An assignment for the benefit of creditors may provide for any subsisting liability of the assignor which he might lawfully pay, whether absolute or contingent. NOTE. "Subsisting liability."-Barnum vs. Hempstead, 7 Paige, p. 568; Lansing vs. Woodworth, 1 Sandf. Ch., p. 43. "Which he may lawfully pay." The principal and lawful interest of a usurious debt may be provided for.-Murray vs. Judson, 9 N. Y., p. 73. A general provision for the payment of debts will not include demands void for usury. But if an intention is clearly expressed that the usurious debt shall be paid, the principal and lawful interest will be payable. Pratt vs. Adams, 7 Paige, p. 615; Green vs. Morse, 4 Whether absolute or contingent."-Cunningham vs. Freeborn, 11 Wend., p. 241; Kellogg vs. Barber, 14 Barb., p. 11. A provision authorizing the payment of debts "due and to grow due," from the assignor to the assignee, cannot be made to cover debts not in existence, and will not therefore invalidate the assignment. Van Dine vs. Willett, 38 Barb., p. 319. 3453. Except as otherwise specially provided by statute, an assignment by an insolvent debtor, for the benefit of creditors, may give a preference to one or more creditors or classes of creditors in the following cases, and in no others: 1. Judgments may be preferred to debts not in judg ment; 2. Debts which are liens or charges upon the assigned. property, or upon some part of it, may be preferred to debts which are not such liens or charges; 3. Debts for money or other property lent without interest may be preferred to debts for money lent upon interest, or for property sold; 4. Debts due from the assignor by virtue of a trust may be preferred to debts which are not thus due; and, 5. Debts for personal services performed within six months next before the assignment may, to an extent not exceeding one hundred dollars to any one person, be preferred to other debts not within any of the preceding classes. must be 3454. A preference, in an assignment for the ben- Preference efit of creditors, can only be given absolutely, and absolute. without reserving any power of revocation. 59-vol. ii. NOTE. It must be absolute (Barnum vs. Hempstead, 7 Paige, p. 568; Boardman vs. Halliday, 10 id., p. 223; Strong vs. Skinner, 4 Barb., p. 546; Sheldon vs. Dodge, 4 Den., p. 217; Lentilhon vs. Moffat, 1 Edw., p. 451; Grover vs. Wakeman, 11 Wend., p. 187), without reserving power of revocation.-Averill vs. Loucks, 6 Barb., p. 470. |