FARWELL ".MAXWELL.
727
:assigned to Peirce, and notice thereof had been given to the company. McConnell had no longer any interest or right of property in the claim thus assigned, and the garnishment was therefore unavailing. ,ment will therefore be entered in favor of the intervenor, Joseph G. ,Peirce, and an order directing the payment to him of the money paid into court by the insurance company. Also judgment in his favor .against plaintiffs for costs.
FARWELl. et al.
'V.
MAXWELL, (GRAFF, Intervenor.) April 21, 1888.)
{OJ)'cuit (70ltTt, S. D. Iowa.
1.
ASSIGNMENT FOR BEl!\EFIT OF CREDITORS-PREFERENCES.
Under Code Iowa, § 2115, providing that no general assignment of property for the benefit of creditors shall be valid unle,ss it be made for the benefit of all the creditors, etc., a general assignmentfor the benefit of all creditors will , not be held invalid because the debtor executed a to one of the creditors a few hours before he made the-assignment, unless It appear that at the time he executedthe former he had for,med the intention of making the,geueral assignment. , SAME.
:2.
Under Code Iowa, § 2115, providing that no general assignment of property fortha bene,fit of cre,ditors shall be :valid unless it be made for the benefit of all the creditors. etc., a general assignment for the benefit of all creditors will not be held fdr the reason that the debtor on the day of making the assignment delivered to his wife certain notes due him, it that such n,otes were, by previous agreement, to operate as security for sums borrowed by the debtQr of his wife. " Where a debtor made a general assignment of his property for theben-jt of all his creditbrs, with the intent, that, the property be sold to the best, ad· vantage fOJ: the payment of his debts, yet that after such payment thero would be a large surplus left for himself, there being no evidence of an intent oubis part to secure delay in the sale, or a compromise with his creditors, such assignment will not be !:leld void as in fraud of creditors, The fact that a debtor inciuded in the list of creditors in making a general assignment of his property for their benefit, the names of his sons and daughter, who, according to the evidence, had helped him in his business with a general understanding that they shouldbe remunerated, does not ofitself invalidate such assignment as fraudulent, even though it may prove that such children have no claim. ' '
:So
SAME-FRA.UD-DELAYING CREDITORS.
4. SA.ME-INCLUDING CmLDREN AS CREDITORS,
At Law.
Intervening petition.
W. W. Moracman and Wright, Baldwin & Haldane, for plaintiff.
W. P. Hepburn, for intervenor. SHIRAS, J. On the 21st of April, 1887 ,Adam Maxwell, a merchant <llirrying on business at Clarinda, Iowa, executed. a deed of assignment for the benefit 'of his creditors to Valentine Graff. The plaintiffs, to whom Maxwell was indebted for goods' sold on credit, brought suit to re-cover the il1110unt due, and,havingjudgment therefor,they now seek to
728
J'EDER4L REPORTER.
subject the proceeds of. the assigned property to the payment of their judgment, on the ground that the assignment is void as against creditors. TheJirst objection made to the assignment is that a preference was in fact given to Valentine Graff by the execution of a chattel mortgage on the stock of goods on the same day that the deed of assignment was executed. The statute of Iowa requiresasa condition to the validity of a general assignment that it shall be made for the benefit of all creditors, preferences being expressly forbidden. Under the statute it has been held by the supreme court of Iowa, that if an insolvent debtor, with the intention of disposing of all his property for the benefit of his creditors, mortgages his property, or a part thereof, to one creditor, and also executes an assigttment,-the conveyances being parts of one general disposition of his property,-iIi such case the assignment will be held void, because in effect the giving of the mortgage is the giving of a preference in connection with the assignment. The fact that the debtor executes a mortgage to one creditor, and immediately after makes a general assignment, does not necessarily invalidate the latter. It must appear that the debtor, at the time of the giving of the mortgage, has the intention of disposing of his property for the benefit of his creditors, and with that the mortgage to secure one or more of his creditors, completing the transfer of his property by' the execution of the deed of assignment. VanPattenv. Burr, 52 Iowa, 518\ 3 N. W. Rep. 524. From the evidence in this case it appears that Valentine Graff was security for Maxwell for over $2,100; that on the 21st day of April, 1887, Maxwell applied to Graff to aid him in raising an additional amount with which to meet claims then pressing. him; that Graff declined to aid him in raising the Sum needed, and insisted on being secured against loss by reason of his then existing liability; that Maxwell agreed to give him a mortgage on his stoek in trade, this agreement being made in the forenoon; that'sbout 1 o'clock the mortgage was executed and delivered to Graff; that between 4 and 5 o'clock of the same day the deed of assignment was executed, Graff being named as assignee. Maxwell testifies that when he agreed to give the mortgage to Graff, and when the same was executed, he did not intend to make an assignment, and aside from the fact that the mortgage and assignment were executed within a few hours of each other, there is nothing in the evidence tending to show that when thf' m,ortgage was executed, Maxwell intended to execute the assiginnent. On the contrary, the facts· sustain Maxwell's testimony in this particular, and it must be held that when the mortgage was executed" Maxwell did not contemplate making an aSRignment. The mortgage'and deed of assignment do not, therefore, form parts of one general disposition of the debtor's property, and the execution of the former does not invalidate the latter. The next objection urged against the' validity of the assignmentis th9.t. in fact it was to hinder and delay creditors, and thereby secure an advantage to the assignor. In support of this objt'ction, reliance. is.. had upon the telltimony of Maxwell to the effect that when he made the assignment he believed that he had property enough to pay his debts.
FARWELL'll. MAXWELL.
729
and leave him a 8urplusof $5,000 or more. Conveyances, in fact mada to hinder and delay creditors, are voidable at the option of the latter, no matter in what form the conveyances may be clothed. Creditors have the right to subject the property of their debtors to the payment of the debts justly due them, and to use the usual legal process to that end. If the debtor , for the purpose of defeating or delaying the creditor in the collection of his claim, transfers his property to another, such transfer is a fraudulent aet on part of the debtor. Even though the conveyance by the debtor may be ostensibly for the benefit of creditors, yet if in fact the intent of the debtor and the necessary result of the conveyance is to hinder and delay creditors, it may be voidable by them. Thus, if a person having property more than sufficient to pay his debts if sold by nary judicial process, but not being able to readily convert it into money, should execute a general assignment, ostensiby for the benefit of creditors, but in reality for the purpose of delaying the seizure and sale of his property by judicial process, it might be that snch an assignment would be held invalid, on the ground that it was not executed for the protection and benefit of creditors, but in reality for the purpose of delaying them. Ogden v. Peters, 21 N. Y. 24; AngeU v.Rosenbury, 12 Mich. 242; Van Nest v. Yoe, 1 Sandf. Ch. 4. Counsel for plaintiffs, in a very able argument, has sought to show that this case falls within the rule recognized in these authorities, and it is not to be denied that they give strong support to his contention. The evidence. however, in the pres-ant case, fails to show that Maxwell had any intent to unjustly hinder or delay creditors in making the assignment. He testifies, it is true, that he thought he had enough property, if it was not sacrificed to pay his debts infull and have a surplus of from $5,000 to $8,000, to be returned to him, that he wishedf.(l make the surplus .<:: large l1S .sible. I!1 view 01 the real "tate of his aflitirs it is difficult to see how he hltvedeluded himself into believing that any surplus could be realized/after paying his debts; yet he testifies that he did so believe, and it is doubtless true that he believed that if he made the assignment his property would be sold to better advantage than if it was seized and sold under executions. In fact, the motives that actuated Maxwell in making the assignment. are very clearly set forth in the following answer made by him in giving his testimony: "I want further to say to my motives in making the assignment, 1 wanted to make my funds go as far as possible. I thought I had property enough to pay my debts, and have property left. 1 could not decide any better way, and was compelled to do something, and this was the safest, fairest, and best way for all parties,-my creditors and myself, too,-and it was to pay all my debts, in the quickest, and least expensive way, that made me assign." The argument for plaintiffs is that the assignment was made in reality in the interest of the debtor, and adversely to the creditors. If this were true, as a matter of fact, there would be force in the argument based thereon, but the evidence fails to sustain the assumption of fact. To validate a conveyance of property bya debtor, it must appear that it was tuade to defraud, hinder, or delay creditors. The fact that the convey-
7.80
FEDERAl.
ance,wasmade to prevent a. sacrifice ofthe property, does not necessarilyshow,tha·t it was made to hinder or delay creditors. It is the duty of a debtor,when he finda hiIpself insolvent, to, make the best disposition of his creditors may realize the full value his' property possible., so thereof. The real interest of the debtor and of the creditors is identical in this particular; and so long as the disposition of the property is made for the purpose oJ realizing its value, it cannot be said that stich sition is adverse to the of the creditors. To make it such it must appear that the iutent of the debtor in making the conveyance was t() hinder and delay the creditors. In the case it wholly fails .1() appear that such was the intent of the debtor, or that in fact such has been the result. The plaintiffs obtained judgment against Maxwell at thiaterm of. court; and when the judgment was rendered, the property had been sold by the. assignee, and the money is in hand to meet the judgment, if the plaintiffs ;have a right thereto. In making the ment, Maxwell made no attempt to restrict or control the sale of his property. He oo.nveyeddt to his assignee with the intent that it should, as speedily as· possible, be converted into money, and the proceeds be applied in payment Qf his debts. There is no evidence in the case frOm which it can be inferred that he expected or hoped for· a delay in selling the property,_ or that he intEjndeq. to use the fact of the assignment as a means of forcing a :w;ith his creditors. His intent in making property sold to the best advantage, the the.assignment was to proceeds to be applied to the payment of his debts. It was not his intent to secure delay in thel!aleof his, pr9perty. If in fact his property would be sold to' better adyantage-that is for a better. price-by the a,ssignee tha,n it would if it had been sold piecemeal on executions in favor of the creditors, then the latter would be benefited by the conveyance. It will not do to hold that, because Maxwell believed in making the assignment that by such disposition of his property it would he sold to the best advantage l and realize enough to pay his creditors in full, leaving a considerable surplus to be returned to him, the assignment is thereby rendered fraudulent as to creqitors. It is not a fraud upon creditors for an insolvent debtor to make such of his property as to insure the sale thereof for the largest possible price, and the application thereof to the payment of all creditors, in proportion to the sums due them, even if the debtor, has the hopeor belief that the property may sell for enough to .leave him a surplus after paying his debts in full. The debtor has the right to prevent a sacrifice of his property, in his own interest ,as well as in that of his creditors, if he can do so without unjustly hindering or delaying his creditors. Each case must, of course, be determined in the light of the facts pertaining thereto. Under the statutes of .Iowa, an insolvent debtor has the right to make a general assignment for the benefit of his creditors, even if by so doing he prevents a from making a levy upon his property, and thereby ..securing a preference over other creditors. Such an assignment cannot be defeated at the suit of one or more creditors, unless it be shown that in the making thereof the assignor sought to hinder, delay, or defraud
MAXWELL.
731
creditors, ahd intent must be established by fair eviqase, the .facts developed in the evidence fail to dence. In the such wrongflll, ,purpose on part' of the assignor. ' , , Ris also cl!\imed that the fraudulent character of the assignment is by the fact that Maxwell included in the rest of his debts, sums alleged to be due to his two sons and for services rendered by them in carrying on the business of the father. It is not disputed that the sons and daughter had for years aided in the business, acting as clerks. It does not appear that there was any agreement as to the amount of remuneration to' be paid. The father and the sons and daughter testify that there was a geutJral understanding that the children were to be remunerated. Whether in fact any legal claim existed in favor of the 1)hildren is, to say the least, very doubtful; but, on the other hand, a strong equitable claim certainly existed in favor of the children as betWeen them and their father. They had given years of time in aid of the business, and it is entirely reasonable to suppose that there was a 'general understanding that they were to be benefited thereby by receiving an advancement from the father. When the assignment was made, itappears that Maxwell discussed the question with his attorney, whether he should list the children among his creditors, and was advised that it would do no harm, as it would be for the court to determine whether they were entitled to share in the proceeds of the assignment. The evidence does not show that the claims of the children were included in the list of creditors for the purpose of enabling Maxwell to secure to himself any share or portion of his property, nor that they were included for the purpose of enabling Maxwell to force or secure a compromise with his creditors. The question is narrowed down to the proposition whether placing the names of the children among the list of creditors with a statement of the amounts that might be due them, if they can claim to be creditors, should be held to show fraud in making the assignment, and thereby defeat it. The question of the legality of the claim of the children is open to investigation and decision in the court wherein the assignment was filed. The creditors are not bound, nor is the assignee, by the act of Maxwell. The fact that he included in the list of his creditors the names of his sons and daughter, does not necessarily show an intent on his part to work a fraud upon his creditors. Whether they have a just claim is an open question. Before the children can title themselves to a share in the proceeds of the property, they must establish the validity of their claims. If their names had not been included in the list of creditors, they would have still had the right to file their claims with the assignee; and including them in the list does not confer any advantage on them, nor disadvantage upon the creditors. Under the facts disclosed in the evidence it cannot be held that the act of Maxwell iIi including the names of his children in the list of creditors, even if it should be ultimately held that they are not creditors, constitutes a fraud invalidating the assignment. A further objection to the assignment is based upon the fact that on -the day of its execution, Maxwell took out of his safe, notes of the face
73.2
FEDERAL REPORTER.
value of $250, and handed them to his wife. He testifies that in September previous he had borrowed from his wife $27.5, which money had come to her from a legacy left her; tha.t he told her at that time she could to be added" as have as security the notes then on hand, and they were obtained, to secure the repayment of the sum due; that the notes were put in a bundle, and placed in the safe as her property; that on the day he executed the mortgage to Graff, but before the exect-twn of the assignment, he took the notes from the safe, and gave them to his wife; that about $100 bas been realized from them, and that there is not value enough in them to pay the amount borrowed from hiswife. It is not disputed that the money was borrowed by Maxwell as stated, and the only point that can be made is that the giving the notes to the wife, was perferring her over other creditors. If the testimony of Maxwell is true, that he set apart the bundle of notes in September preceding the day ofthe assignment, then the giving the security was not part of the general disposition of his property in contemplation when he made the assignment; and this would be true, even though some notes were subsequently added thereto, for that would only be carrying out the agreement made in September. While the mode of the transfer of the notes in question is certainly amenable to criticism, and probably could not be sustained against creditors who might have attached the same while not in the actual possession of Mrs. Maxwell, yet that does not justify the court in holding that the transaction is a fraud of such a nature as to defeat the assignment. It appflaring, therefore, that the assignment to Valentine Graff is valid and binding, it follows that judgment must be entered in favor of the garnishee and intervenor; and it is so ordered.
UNITED STATES .". HUGHES
et ale
(Diatrict Oourt, N. D. Tea;aa.
March 28, 1888.)
The duty of jurors to find a verdict. Duty of each to consult with the others, and allow the views of his fellow-jurors to influence his mind in reaching his final conclusion. ' SAME-REASONABLE DOUBT.
OF JURORS.
2.
Amount of proof required to convict. A reasonable doubt deflned. 1
8.
SAME-CREDIT OF WITNESSES.
Elements affecting credibility of witnesses. Judged of by jurors as they would judge of it in an important matter in every-day life.
'A reasonable doubt is one for which a sellbible man can give a good reason, based on the evidence or want of evidence. It is such a doubt as a sensible man would act upon, or decline to act upon, in his own concerns. .U. S. v. Jones, 8l Fed. Rep. ns. The,guilt. of an accusell i.s proven beyond a reasonable doubt when, upon the entire comparison and consideration of all the evidence, the minds of the jurors are in that condition that they can say from the evidence they have and feel an abiding conviction to a moral certainty of the truth of the charge. A reasonable .doubt does not consist of possible or conjectural doubts not growing out of the evidence, but is one which, when considering the evidence alone, leads the juror to hesitate, and upon which he would refuse to act.