AUGUST f1. CALLOWAY.
381
enjoined the officer not to violate 8 law of the state by assessing taxes on exempt property. The state was neither a nominal nor real party defendant. An order will be entered overruling the motion to commit respondents notwithstanding the return. If complainants desire to take issue with any of the averments in the return they will have leave to do so within five days; otherwise respondents will be discharged from the citation, at complainants' costs.
AUGUST
et ai.
'l1. CALLOWAY
et aZ. May 15, 1888.)
(Oircuit Court, 8. D. Gef)7'gia,
w:
D.
1.
AsSIGNMENT FOR BENEFIT OF CREDITORS- V ALIDITy-PREFERENCES-SuavIVING PARTNER.
The supreme court of Georgia having held that the laws governing voluntary assignments with preferences must be strictly construed against the assignee, and the law being that a surviving partner cannot make such an assignment unless both he and the partnership are insolvent,an assignment preferences made in by a surviving partner, which does not on its face show the fact of such Insolvency, is void. Un4er act Ga. Oct. 17, 1885, § 1, requiring that a person making an assignment with preferences shall attach to the deed a full and complete inventory and schedule of all debts. setting forth in detail the nameH and residences of aU his. creditors. and the amounts due them. the schedule must show the nature of each obligation, and not merely its amount.
2.
SAME-SCHEDULE.
In Equity. Bill for injunction and receiver. Alexander Proudfit, for plaintiffs. HIJrdeman & Davis, Dessau & Bartlett and Bacon & Rutherford, for defendants. SPEER, J. The bill before the court is filed by the general creditors of the late firm of Winship & Calloway, to set aside an assignment made by Joel T. Calloway, surviving partner, with preferences to certain creditors. Emory Winship, of the firm, died on the 6th day of April, 1888; ,Six days thereafter Joel T. Callowa)T, as surviving partner, made What purported to be a deed of assignment to W. P. Baldwin, as assignee. The assignment conveyed to Baldwin, to be held in trust for certain ferred creditors, all the property of every kind owned, possessed, clairl,led, or to which the said firm of Winship & Calloway was in any mannerentitled. It consisted of the stock of goods, principally ready-made clothing, hats, etc., store fixtures, furniture, safes, desks, claims, notes, books pfaccounts, a,ndchoses inaction. The assignee was empowered to convert the assets into cash by making sales by wholesale or retail, or by publicor pr,ivatEl. sale,as in his discretion will be for the best interest of the creditors ofthe said Winship & Calloway; and in like manner to collect up the choses inactionbyauit, by compromising the
8&2
FEDERAL 'REPORTER;
!:lame; sale of the'Wholetor of any part theroofj'lasin his discretion,:maybe best for said interests as aforesaid. The deedo'em'powered theassigneoto pay all expenses he:may have in.. 'curted in the trust; including clerk's hire, rent, storage, etc.; to pa,·himse'lfjUstand reasoliable compensation, to-wit, 5 per cent. on the amountcrtroeived and paidoui; to pay Harqeman & Davis, of Macon, Ga., the sum of It is not stated in the deed of qssignment,or i9the schedule attached, for what purpose this amount was to be paid. The other preferences to the Exchange Bank of Macon, $1,431.07; to Mrs. Lizzie A. Winship, $1,780 principal, and $2,249 interest; E. P. Strong, $832; to R. K. Davis the sum of$312.34; to A. W. Mann thesum 0[$309, jS.; Rupel, $1,326; C. with interest; August Bros., B. Cowe, Son & Co., $54; J. A. Scriven & Co., $84; Gus Nussbaum, $36.50; $1,715.44,; Brower, of New York, $305;W. P. Baldwin, $327.2'4. These are preferred creditors, and are to be paid in fuU, in the order stated. It is stated in the deed that afuU statement of these debts are in the schedule attached. The debts of Mrs. Wipship' I4id, M4;sWing are statecf to be trust debts, due by Emory Winship, as trustee and guardian, respectively. The assignee is thereafter empowered, from the, balance oftbeproceeds of the property and choses in action assigned, to'pay the other creditors of Winship & Calloway,with. out preference, ratably in proportion to the amount of debt due each. Schedule B; annexed to theassignment, is stated to be a full and cominvlmtQi-y of all the of every of the firmot Winship.& Calloway, at the time of the execution of the deed of assignment. Certain accounts are stated ,in this form: ' When Due. April 15th. " ....
Na;ne. Trogan Shirt &: Collar Co.
Addreee. New York.
Amount.
f6M.1lO
Certain other debts are described as follows: Note. April 28th· Vorhl,j, MlUer &;
Rupel.
Ic,ne,nDatt.o.1
.401.92
. ·1'he debts more particularly described are as follows: March 15, 1886, Mamie Lee Wing, $700; being note payable to E. Winship, guardian; April 2, 1886, Mamie Lee Wing, $35.50. Mamie Lee Wing, balance due on ledger, $344.36. February 4,1869, Lizzie A Winship, $1,500, -being note payable to E. Winship, trustee; credited May 22, 1876, 810; February 27, 1882, $5. April 5, 1874, Lizzie A.Winship, $280, -being note payable to E.,Winship, trustee for wife; .credited February 27, 1882, $5. Again: ExchnngeBank, balance due on demand note, $168.36, November 4,1886. May 17,1888, to the same note, indorsed by L. W. Hert, $200. June 9,1888, to the same note, indorsed by P. Cook, $150. Overchecks, $912.71.M:ay 28, 1888, secured by Exchange Bank stock of E. Winship, $468.93; and June 27 , 1888, $612.
AUGUST II. CALLOWAY.
883
L. A.Winship, due by cash-book, Macon, Ga., 840. Again: City taxes due the city of Macon for 1888, .$175;· state and county taxes not yet assessed. It. will be observed that :there is a large class of debts. in thescliedule which have no other description save the date when due, the name of the creditor, his address, and the amount. Another large class is described in the same manner, save that the word "note" is written above the date. Another class, all ofwhich have been herein set out with ticularity,where. the description gi ves some understanding of the nature and character·of the debt. The preferences enumerated in the body of the assignment ·are described with but little if .any more amplitude than in the schedule. The a\i'erments of the bill charge illegality anL. fraud in the assignment, and that it is void as to the creditors; The answers deny the fraud, and the affidavits taken in support of bill and answers furnish no evidence to justify the charge of fraud or attempted deception set out in the bill. .Indeed, it is rarely the case where the evidence offered upon the part of the plaintiffs, under averments of this character, is so significantly freeJrom inculpatory facts. It is quite true that upon the parte showing of the creditors to their solicitor that the averments were proper and legitimate.. It is equally true that the evidence leaves th6 good nume of Winship & Calloway free from any imputation of intentional dishonesty. It was strongly insisted in· the argument, by the solicitor for the. plaintiffs{that under section 1907 of the Code ofGeorgia, and the cognate sections, a surviving copartner has no right to make preferences upon existing. liabilities. It was replied that section 190'7; 'hich denies to the surviving partner the power to bind the firm by a new contract, or to revive one already for any cause extinct, or to renew an existing liability,or to change its dignity or its nature, was intended to operate and to be of effect between the partners themselves. Upon careful consideration, the court is of the opinion that the latter is the correct construction of the statute. It was further insisted that a surviving partnel' had no power to make an assignment with preferences ... under the general law and under the law of Georgia. 'l'his has long been a disputed question, but the weight of authority leads to the following conclusion: As a surviving partner has the entire title alldsole eontrol of the property, and represents the power of the former partners, and as. they could have assigned the property for the benefit of creditors, so the surviving partner has, at least in case of insolvency, in order to wind up, the same power, and can transfer property to an assignee for S. 18; the benefit of the partnership creditors. Shanks. v. Klein, 104 Jt}mer8onv.Se.nte'l', 118 U. S. g, 6 Sup. Ct. Rep. 2 Bates, Partn.732, and cases cited I Burrill, Assignm. § 89. It will be observed that all ofthese authorities and text writers stress with great care the limitations. of the power conceded. The general doctrine is accurately stated in Burrill on Assignments, BUpra, in the following language: "The supreme court of the United States :has recently held that a sole surviving partner of an insolvent firm, .who is himself insolvent, may make a generalassignmea*
384
FEDERAL REPORTER.
of all the firm's: assets for the benefit of all joint creditors, with preferof them." Citing Emerson v. Senter, supra. This, in the opinion of that court in Emerson v. Senter, Mr. Justice HARLAN renderingthe uecision, is stated with the additional proviso: "If the local law does not forbid." Thelaw of Georgia authorizes, in certain cases, assignments by insolvent debtors with preferences to certain creditors. The act of the General Assembly of 1881 and the act of 1885. construed in pm'i materia, define and restrict the general power of assignment with preferences. This power it seems was more liberal before these enactments. The title of the act of September, 1881, (Laws Ga. p. 174,) is act for the better protection of creditors in cases of voluntary assignment by insolvent debtors." The act of October 17, 1885,is "An act defining voluntary assignments; also providing that a sworn schedule of creditors shall be filed with the deed of assignment, and giving jurisdiction to courts of equity." The supreme court of the state has repeatedly held that this legislation must be construed with great strictness as against the assignor, and in behalf of the creditors. In Crittenden v. Coleman, 70 Ga. 296, it uses this language: "The act of 1881 is a great remedial statute,. and must be construed liberally in behalf of creditors, for whose protection it was enacted, and strictlyagai.nst the debtor and assignee." In tha t case the schedule required by the statute had been made out and folded in the deed of assignment. The court held that, unless this schedule be attached to, not loosely folded with, the deed of assignment, the entire policy and.forceof the statute would be destroyed. To this extraordinary extent has the supreme appellate tribunal of the state gone in the effort to protect the general creditor against the power of the debtor to defeat the creditor's claim, or to prefer a'favored creditor, whose demand upon the general principles of right and equity possesses no superior claim to satisfaction.; In the well-considered case of Turnipseed v. Schaefer, 76 Ga. 109, the court says: "In concluding what we have to say on the law of this case, it Jl1ay be well to remind the profession and the commercial community that,while preferencesin assignments are allowed, they are tolerated .ratherthan encouraged, as is manifest from the drift of our legislation. from 1881 down to-the present day." There they held that a schedule could not be amended, and that, since no assignment was valid which was not accompanied by a sworn schedule contemplated by law, the assignment was literally void, A very full schedule had been attached, but it was held not to be sufficient, and the supreme court say that the difference between a schedule which is not full and complete and no schedule at all is a difference in degree only, and should not vary the application of the rule prescribed by the statute. There are numerous cases of equivalent purport, but these cited- are sufficient to indicate the construction placed upon this local statute by the supreme court of the state, and it is .ofcourse superfluous to say that, in the construction of a statute ofthischaracter, the federal court is controlled by the decisions of that tribunal. Now, let us. consider, and, if possible, determine, if the deed of assignment, with the schedule thereto attached, is sufficiently conformable to the
AUGUST ". CALLOWAY.
886'
statute to 'withstand the assault which has been 'made upon it. In the first place, there is not anywhere in the deed or the schedules any affirmation or indication oUhe ins<;llvency of the firm at the time of the assignment, or of the insolvency of the surviving partner, who, under the law of Georgia, (Code, 1907,) is primarily liable for the debts of the concern.. It will be borne in mind that, under the general law, the surviving partner cannot assign unless the partnership estate is insolvent, and unless he himself is insolvent. To that extent only has the trustee of this class been permitted to escape a rateable distribution. Bates, Purtn., supraj. Emerson v. Senter, 118 U. S. 3, 6 Sup. Ct. Rep. 981. The local law would seem to restrict assignments with preferences to cases of insolvency.. There Can be, no doubt that this the intention of the legislature in the acts of September 28, 1881, and October 17,. 1885. In fact, the language of the last statute is expressly confined to assignments of insolvent persons, firms, and corporations, and it is an act defining voluntary' assignments. It may be true that other assignments were permitted formerly, but it seems the right has been repealed. While repeals by. implication are not favored, it is well settled that where two acts are not in all respects repugnant, if the latter covers the whole subject of the. earlier, and embraces new provisions which plainly show that it was intended as a substitute for the first, it will operate as a repeal. King v.· Cornell, 106 U. S. 396, 1 Sup. Ct. Rep. 312. It is contended by Mr·. Davis, counsel for defendants, in his very able and candid argument, that the right of voluntary assignment existed prior to the legislation of . 1881 and 1885. This is true, but these enactments, with the decision of the supreme court construing them, so limit and restrict the right of· assignment with preferences that it would be difficult ,to draw an assign-, ment with preferences to creditors by a solvent person which could re-.: ceive the consideration of a court. If the perSOll be solvent, preferences are altogether' unimportant. The law is not concerned with questions about which there can be no disputed right and no occasion to invoke its interposition. Clearly, this assignment had in contemplation the. acts of 1881 and 1885, the last of which is the conclusive definition of the general assembly of that degree of toleration extended to instruments of this general character. It would seem indisputable, upon a familiar principle of construction, that the instrument should conform to the statute. Now. it is true, as insisted, that a deed need not be in any particular form if substantially correct. This may not be denied, but when a deed or other draft of instrument or document.is jntended to conform to the statute it must substantiallv conform. If it he an affidavit to evict an intruder, it must he alleged' that the offender is an intruder. If it be an affidavit to obtain an attachment, the grounds of attachment must be substantially set forth. If it be a proceeding by a person who relies upon the fact that be is a citizen of another state, it must be made. to appear that he is such citizen. This principle is especially hIe where the statute is so strictly and rigidly,construed in favo!; of general right and against actions in derogation thereof. Whenever an act is in of common law, and should be strktIycon,l:ltrued and strictly. v.35F.no.6-25
FEDERAL' REPORTER.
party seeking the benefitof it must bring himselfclearlywitbin notonly the'spirit and meaning, :but the letter, of the act. He can take nothing by intendment. BaU v. Lastinger, 71 Ga..678. After very careful consideration the court is very clear that since this law is so strictly and rigidly construed 'by the supreme court, since these assignments with preferences are regarded with great disfavor and merely tolerated, since they are in ,derogation of common right, and the common equity which every croo.itor has to an equal, share, of the assets of the debtor, that, adopting the policy of the decision of the supreme court as the rule, we must hold that every essentiaI'o! the law is requisite and must be made to appear in the instrument. Since it does not appear that the late firm was insolvent, and that tIhesurviving partner, as such, was insolvent, the deed must be helda..nullity and of no effect. It is true, however, that the assignment is void for another reason. Section 1 of the act of OctobtJi'i, :1885, requires that a person making an aSsignment such as this must prepare and attach to the deed a full and complete inventory and schedule, of all indebtedness of every kind of such, insolvent person, firm, or eorporation, at the time of the assignment, whic.h inventory or schedule shall set forth in detail the names, all the amounts due, and the 'residence of each of the creditors of said assignor. The schedule attached, to the assignment before the court fails rtttedyto comply with these requirements. It is not enough to set forth the names and residence of creditors, and the amount due each, but there ,must be a full and complete inventory and schedule of the indebtedness. Now, Schedule B, while it is headed a full and cOmplete inventory and schedule of all indebtedness of every kind, is :nothing of the sort.. It is simply ,a statement of the amount of the debt, the datej .name and residence of the creditor. In a few cases it appears that the word "note"is written abOve the date. but, with the exception of thedeptsroMiss Wing and to Mrs. Winship and to the Exchange Bank, there ia:nothing like a full and complete inventory of the debts. Not an item of account is speoified.. It might be argued that debts not specified as notes would be considered as accounts,' but in a case of this sort, in of the supreme court quoted above,"nothing·is taken by intendment," because the whole proceeding is in derogation of com.. mon right., Take, for instance, the demand of Messrs. Hardeman & D!J.vis.· We all know, because it has been developed in the· evidence, that this was. a fee as counsel· for. drawing. the asSignment, and perhaps for'other legal services; butj so far as it appears from the face of the assignment or from the atteIhptedinventory, it might be the price of ·a consignment of trowsets. It does ,not differ in any respect, save in amount; £rom the accounts of August Brother or of Gus Nussbaum, on the same This may seem la' trivial criticism,but it is substantial and most 'important in the light of the repeated decisions of the supreme court pfGeorgia, and especially of ;the case of Turnipseed v. &haefer. 76 Ga. 109, where, as already stated, they held "the difference between a schedule which is not full and complete and no schedule at all is a difference in degree only, and should not vary the application of the rule pre-
AUGUsT 't7; 'CALLOWAY.
887
scribed by the statute." See, also Fort v. Tobacco Co., 1 S. E. Rep. 223, (Oct. term, 1886.) , ,. It is besides very strongly persuasive of the invalidity of this deed that there was a reservation of $500 for counsel fees fdr drawing the instrument and for other professional services to the assignor. The Code provides, § 195.3a, "that an assignment by auebtor, where any trust or benefit is reserved to the assignor or any person for him, is void." This question was decided hy the supreme court of Maryland as late as 1885, where they held, under 8 statute in some respects similar, "that an assignmentforthe benefit of 'creditors is rendered void by the reservation of a reasonable fee for drawhig the instrument." , Wo,lfsheimer v. RivinU8, 64 Md. 230. It is true that the Judges BRYAN and RITCHIE dissented, but theqecisions of that courtr;mk high aS8uthority. It was certainly a benefit reserved to the asaignor that he was thus enabled to compensate counsel whose work was essential to carry out his contemplated project. If he employed Messrs. Davis & Hardeman to draw, the deed, in the a1>sence of. this reservation in the assignment he would have been bound to pay them for their services; therefore it was 8 benefit to him to be relieved from that obligation by that preference indicated in the deed. For the reasons enumerated, the court, after much deliberation, is compelled to hold the assignment as null and void. 'The surviving copartner having parted with the actual custody of the stock, and confessing his illability to pay the debts,it would be under the generallaw a proper case for the appointment of a receiver; and under the Georgia statute of October, 1885, before adverted to, it is expressly provided that no creditor of a person, firm, or corporation, making an assignment for the benefit ofcreditors, shall be required first to rAduce his debts to judgment before' he 'shall be entitled to ask the remedial aid of a court of equity. The courts of equity of the United States can administer the right of the creditor to proceed without judgtnent, thus granted by the legislature of Georgia. It iEI therefore adjudged ,that an injunction be granted against the assignee, and others acting in concert with him, in accordance with the prayers of the bill, and that a receiver be appointed to wind up the affairs of the late firm of Winship & Calloway, and to settle with the creditors in accordance with the priority of their respective claims, under the direction of the court; and the cause will proceed regularly, as USual in equity.
.'
FEDER4L REPORTER.
HORSFORDCt
al,
'V. GUDGER
d
iU.
«(Jircuit (Jourt, W. D. North Oarolina. May Term, 1888. 1. EQUI'1'Y-LACHES. An ancestor of part of the defendants conveyed certain lands in Tennessee to plaintiffs: ancestors in 1796, the deed being proved and recorded in New York, where,the parties resided.' Shortly thereafter the vendees delivered to the vendor a duplicate of the deed, the latter agreeing in writing indorsed on the original deed to have such duplicate recorded in the proper office in Ten· peliverthe same to a party there, or to the vendee's order, ,all of which he failed to do.J:l.eld that, no proceedings having been brougllt'to perfect the title In stich vendees during the vendor'!! life·time, although he lived for nearly 40 years after the transaction, ,8 bill filed nearly 100 years ,thereafter, when all the parties had been dead for many years, charg. ing such upon information and belief. with fraud iil failing to have such duplicate deed recorded, would not be susta.ined on demurrer as against onein possession of the land for nearly 25 years under tax title, withcolor of , title. , ' 2.SAME-PtEADING-DEMtJRRER.
,
When a bill shows upon its face that plaintiff, by reason of lapse of time and his own laches, is not entitled to relief, the obJection may be taken by de· murrer.
In Equity. OI;l demurrer,to bill. Andrew Fuke and Thea. F. Davidson, for complainants. Gudger & (}q,rter and M. E. Carter, for defendant Gudger. Chas. A.Moore and P. A. O/!!mmings, for other defendants. " , DICK, J. The .first cause assigned in the demurrer is,the bill shows its face "that the plaintiffs, and those under whom they claim, have l:!een guilty of gross in delayipg for so long time to prosecute their .claim, and that lapse of tim,e since the cause of action stated in the bill -arose has been so great, this court, under the law rules and practice of tbesame, will rerus.e its; 'The principle in equity is well settled by many authorities that "when the bill shows upon its face that the plaintiff, by reas.0Il ;onapse of time, and of his own laches, is not entitled to ,the may be taker py demurrer." Speidel Y. Henrici, 120 lI!:8., 37J, 7 s,up. Ct. Rep. B10.'The requisites of a bill to prevent such fatal to, the claim of plaintiffs are clearly stated in Badgerv. Badger, 2 Wall. 87, and I will proceed to considerthe principles therein announced, and apply them to the facts in this calle a's admitted by the demurrer. A demurrer only admits facts that are well pleaded. Mere averments of a legal conclusion are not admitted by a demurrer unless the facts and circumstances set forth are sufficient to sustain the allegation. Gould v. Railroad Co., 91 U. S. 526. A bill for relief on the ground of fraud must be specific in its statement of the facts that constitute the fraud alleged. A charge, in general terms, that a tram:action was fraudulent is not sufficiently definite; the particulars must be set forth in detail. Fraud is a conclusion of law. The things done or omitted constituting the fraud must be so stated upon the face of the bill that the court may see that they are fraudulent, if proved or
·