892
J'BDDAL UPOBDB t
vol. 51.
BICltBAM
eta!.
17. LAKE
et al. I
(l)Iatrict Ooun, N. D.Mi88iBstppi. December Term, 1883.) hulL"" ,An
J'OK BBl'lBJ'I'l' OJ' ClUIDITOBII-V.u.mITT-PaOVIllIOl'l J'OR ATTOBNlIYII"
,
L
in Missi881ppi for the benefit of creditors empowered the 88IIp,ee,,, proper exeoution of the trust, tt to employ competent attorney8 "to defenaa!ld 'proteot the tru8t oreated herein,'and this assignment, U the lame be .;The rule announced by the, 8tate lupreme court (MatU8on Y. Judd, 69 Mlsll. 9Il), such a provilion avoid8 the assignment if intended to provide paymeDt to be rendered after the conveyance is executed and reoorded, and for which the grantors are,llable; but that it does not avoid the deed, II it i80nly t.o ,aI/ply to aerv10es rendered to the a88igneein, defending the assignment , 'Held that. on anisslle as to the validity of an attachment i88ued on the .grOUM' .tbatthe assiglllilient was fraudulent in law, the oourt could not deolare that the a8signment vol4, and the question as to the purpd8eof the assignor waifor the jury. L 8.um"';;TmlD, ,"FILING CJ1lIMB. for the bene:il.t of direoting that oreditors named in a,oertaill. lIohedule 8hould be preferred in their order, further directed ,that ali the oreditors named iIi lIooertain other scMdu1.e should be paid ratably, and that, if the "ny oredito;rB hadbeen omitted from tbelatter sobedule, such acoidentaiomill!lion should not debar them from sharing In the distribution, but that 8uchcteditorB; if their claim. were unsecured by oollaterals, or otherwise, should be entitled, to share iu ,the distribution "upon proper preseutation of their aocounts; It ' 'J;teld, that the failure to fix, any definite time within which suoh omitted creditors; must file theirolaimllreudered the assignment void. SA.ME-ExQL"QSIOJll OJ"BBCUBIliJ> CREDITORs.
The faoHhat omitted creditors, whose debts were seoured by collaterals or othwere<'excluded .from , the benefit of the assignment, was also fatal to its validity; for, in a general assignment, creditors holding security cannot be entirely. ,8h)lMuh I'lla8?nable tiD;le must be fix,ed \yithin whioh ther may oome forward spd' acooulltfor theIr secu:i'ities and present theba1anoe of theIr' claims, or surrender, 8haFe in any surplus fund which may remain. PEI;I',l'S. , ' '.' "
'
In Miaaiesippi a general assignment for the benefit of creditor8, whioh provides .for tb;'e,payment .I)f fiotiti()us Ol:',simulateddebts, is frauduleu.t and void; and on an 8l\ to,t,he validity of. sll stta,opmentsl;lui)ltto be sustained on the ground that the de'bOOr has madeafraudUlentas8ignment; the question as to whether any of the deb1jS iPl'Ov;id\\ld .for are is for the jury to determine. I. OJ', GBA.JTOR, .',' . ". . '. "When proVides for the payment of a simulated debt,tbe presumption is·tlia1ftilegrantor1diew·it, if the debt was created by him; but the presump, tion;llI rebuttable, anll,OJ1 aulsllue. as to the Validity of ap atta.ohment 80ught to be 8ust8i»ed on th,e ground,that'the debtor has made a fraudulent assignment, it i8 a question !l'orthe Jury Whether,,the grantor knew, or had reasonable cause tOl!:now, ! .' tnl!'lthe .. SA.ME-PaOtINOII OJ' .cOURT ANI) JURl'. Wbel'& an &ttacbmept ill sought, to be sustained on the ground that the debtor hasD;lade, assignment i8 frauduleJ1.t in law, the faot that the aSSignment is, on its faoe" construotively fraudulent' and VOid, will not warrant the oourt in directblg'a'verdiet for tbe:attaehing creditor, whIm it appears that the attallhment was in fact issued before the making of the assigpment: fort to sustain the attaohment, it is necessary for the jury to find that, at the time toe attaohment was illlIued, defendant contemplated makipg the as8ignment.
..
At Law. Action by Bickham & Moore against Lake & Austin, in which an attachment was levied upon defendants' property. Among the grounds of attachment alleged in the affidavit was the following: "That they [defendants] have assigned or disposed of, or are about to lThi8 l'.ase, cited in Este8 v. Bpain, 19 Fed. Rep. 716, is now published 01 reques&, the opinion not haVing been heretofore received for publioation.
BICKHAM V.,LAKE.
893
assign or dispose of, their property or rights in action, or some part thereof, with intent to defraud their creditors." Defendants did in fact make an assignment of their property shortly after the issuance of the attachment. . The deed of assignment was read to the jury, and the question now arises on plaintiffs' motion to instruct the jury that the same is fraudulent in law, and, on the proofs, also fraudulent in fact. Denied. SuUi1Jan & Sullivan, for plaintiffs. Slack.& Lrmgstreet and Lamar, Mayes & Branham, for defendants.
HILL, District Judge. The questions now presentE>d for decision arise upon plaintiffs ' motion asking the court to instruct the jury that the deed of assigrlnlent read to the jury is fraudulent in law, and, from the proof, frauduleqt, iI). fact: . For tbe;reason that the assignment contains the following provision: "For the proper execution of this trust, said second party may also employ and retairt:competent attorneys to defend and protect the trust created herein, and t:Iiis8ssignment, if the same be assailed, and pay them a just and reasonable com,pensation for their services." . This provision, it is insisted, renders the assignment on its face void and fraudulent, and will of itSelf sustain the attachment.. Without stating I might place upon the effect of this clause in the assignment,hlld there been. no ruling upon the question by the supreme court gfthestate, I will conform my ruling to that of th,e supreme court of the :which had been rendered prior to the execution of tbis asupon which the or their attorney who drew the cQn,VeyanCEj, had a right to rely. The ruling of that court will be fopnd of lv!(Lttison,.v. Judd, !);9 Miss. 99, in which it is,held thQ.t,if provision is .intended to provide payment for services to be rendered after the conveyance is executed and placed on record,and for;wbi<:'b: the grantors are liable, it will render the conveyance fraudulentaIld; but if it is intended only to apply to services rendered to in defending the assigQrnent, if attacked, it does not render thfl fraudulent and void. Therefore tbis ground to sustain the motion will be overruled, and the jury will be instructed to consider the relation to the purpose of executing the ,deed. ,The, llSsignll,lent, after providing for the payment of the costs and expe.t1sesincurred in executing the trust, contains the following provisions: "Said second party shall next, with reasonable diligence, out of and with the residue of. said proceeds of said sales and collections, payoff and discharge in full the several debts due from said Lake & Austin, and set forth and described ill Schedule C,hereto annexed and made a part hereof. He shall payoff and discharge said' debts in full in the order in which said creditors, and the said debts due them, are written and numbered, and according to the priority in said Schedule C given. If the said proceeds of such sales and collections 86 insufficient to payoff and discharge in full all and singular the said debts in said Scbedule C, Bet forth and described in the order, and according to ,the therein given, then be shall payoff anddiseharge in full the debt
894:
FEDERA.l'..REJi!ORTER 1
Orst and, ,thEIR the second"and 80 continue, and payoff as manro! said llebts as said'prQceedsshall besutlieient so: tu do.!" due'tQ creditorsmeritioned in "0; ',provides tbat the ; distribute. alIthe :of the money"iii 'his h'arids'to'ari'rlainong 'all the'6therC'reditorS of f...ake& Aus.:. tin, mentioned and described in Scba<lule A, except that those named in QC",hn are ,also set put in . S chedule A)asprMerted creditors shall receiv'e' notlling'ftil'ther oroth&r'than tbesums provided in section 4 in the assignment, ratably and in proportion to their respective dei, :
":PI1O'Vidool hoWever,. that if the name or names ,of any creditor ofLllkl) & 4l1stiol;J/Lve heen omitted from bclledu!e A., that accidelltaland unintentional omission of the name of such creditor shall not to debar and them from. shari ng in noW here pr()\>ldeilfbr 'creditors whosedllbts in Schedule A, but be unsecured by collateralsor otherwise,,8rohflreby include(li,. ScheduleA;, and who are not mentioned BCJ'ib,l1d all ,C. hereto ltflnexed' and ,hall,upon pres. entation of their accounts 'against saidflrm of Lake,& AusUn to said seeond part)' 8S 8ssignt'e herein, share fairly and ratably ill the distribution provlded:forsaid creditors ,whose names and debts are provided in Schedule A, and,Wllose nameS not pref.erred herein." It is insisted that thtl assignment is fraudulentllOd void, ror the reasontbat no'time is fixed in which these omitted creditors shall present theirclBiUil!l, and thattbe: assignee may, llnder postponepayrnent to the unsecured creditors for an indefinite time, and authoriti$nre referred to to sustain this position. The authorities refE'rred to: all are in casell in which a release of the balance of the deht is'provided fori and' iil whicbno time was fixed for presenting the claim with therelell.'le, and in which no distribution' could :be made until it who would, Or who' would not, accept the. terms. So farils it relates to thecreclitors whose names are setout in Schedules A aude, the direction IS that the payments be matie :with reasonablediligence,---thatis, as soon as the money shall be realized from the sales and collectiohs,.:-a.nd that is directed to be done with reasonable dispa.tch. The difficulty arises with regard to the creditors whose Mmas are omitted, andwhoarlfentitled to the distriblHionprovided for among the creditors whose are set forth in Schedule A. No time is fixed for their presentation·· aild· either the: distribution must be postponed up.tj1 the a,ssiguee Shllllllscertain whether or not 1;111 those omitted creditors have presented theill.claims, or have declined to do so, which is ·all indefirtitetime,or,iHhe distribution is made, those who had not presentedtheir be debarred. from anything under the the cases refetl-lilA Jo and relied llpon were Ii relea'se of the balance o(thedemand was a condition' for payment, th'e reason of the rule wiltappJy to tbe defect in .the assignment. ,AsheJd by the supreme court of this state in the case of Mayerv,'tBhf.elds, 59 Miss. 107, thel'eshould be a time fixed for the
BICl{HAM
v.
LAKE. ,
895
too long a time.; ,This is necessary in <>rder tpat the distribution ahall be made within,a,l'eitson" able time, andfQI1 tbe benefit of the omitted creditors. There is atl9ther vice .in: the assignment which, though not in argument,is,in fatal to this assignmep.t, andtbat. is that it ,excludes fropt payment creditors' WllO hold oral'eno.t otherwi.se This illl a general assignment, purporting to, audit is admitted, conveying all the assignor's property andtissets, while theal:l$ignor has a rigM to prefer one <;reditor over another, he has no right to exdudeany frOm participation in any surplus ,wbich may remain, rI'):)eholding. :of co11aterals, or boldingany other st'curity, is of tb e dept. Tbecreditor may sue and9btain ju(lgment, and baveE>;xecuijpn ,but, as ,a matter of cOIlil'se, must aCcD,unt fotor. ,reo. turn The co11atera18 maY' be insufficient, and Qf but. little value, or,they,may not be due and a conhence; 'iJ).a conveyance of tqis ,kind" there must be, a given;'""""";not too long nor too Ilhort,:-inwhicb the credor othersecuritie$-, can corne. forward and itor account for his securities, and present his claim for any· blilance tbat may remain, or surrender them to the assignee, and share in any Sl,Irplus fund which may remain. The want of this provision, I am satisfied, renders this aSl;lignment fraudulent and void in law. n is insisted that the proof shows that the secured debts in Schedule C, or some of fictitious and simulated, ,and therefore the court should instruct the jury to return a verdict in favor of the plaintiffs. ' Whether any'or these debts are fictitious or simulated is a question to be determined by the jury from the evidence. ,I am satisfied thatunQer our which require the cour'tsto construe them favorably in thewomotion of the rights of creditorS and for the detection of fraud, ncti,tious or simulated debts to be paid in au assignment like the present, it is a fraud, upon the right of credit?rs, {lDd attachment. ' The questiQn,8s to the rights of whose dehts are valid under such an assignment is decided differerltly in different ,I, that, in those states where this right. is maintained in favor of bona fide creditors, the assignee is held to be a 'purchaser for value withoul9otice. The, opllosite doctrine prevails in this state, and I think it must follow that a general assignment the present, providing for the payment of fiatitious or ,sitnulateddebts, is fraudulent and void for all purposes. The question is, what are. simulated and fictitious debts? '1'0 be held such, the debt must be fabricated and trumped up;,must have no consideration to support it, a pretense,and :nothing more. For the assignment to be rendered void on this ground, theconveYllnce, debt, or assignee debt Ulust have been inserted by the grantor with a knowledge that it was not a real and valid debt, or that he was so careless and negligent in ascertaining whether or not it was a fictitious debt as to estop him from denying his knowledge ,ofits invalidity ,and not an honest mistake. When .debts are provided in the assignment to be paid which are not valid, and are simulated debts.
REPORTER,
'the; presumption is that the grantor knewit"ifrit
a debtcrellted by him, and for the reagon that a man is prestitlled to know his own liability, but, like all other presumptions, are subjectt6 be rebutted by evidence, and are not conclusive. The questions as to whether or not these debts as stated, oran1 of them, are simUlated and fictitious, and whether or not the defendants knew, or hadrell:Sonable cause to know, their invalidity, ate for the jury, so that the 'motion asked cannot be given on the ground last stated. Had the aSsignment been executed before the issuance of the attachment, I would feelit my duty to sustain the motion and give theinstructions asked j but it .is, admitted that the attachment Was issued before the assignment was executed. To sustain the attachment on tAe ground that the assignment is in law. fraudulent, the jury must be sa.tisfied that, at the time the was issued,the defendants; or one of them, must have contemplated making the assignment. . This Inust be determined' by; the Jury· from the evidence, and therefore the motion to give to' the jury the peremptory charge to return a verdict for the plaintiffs is overruled, but the jury will be instructed as to the rules to be obserVed in making their verdict. '.
je
UNITED STATES CCf7'C'Wlt Court, So
WOLTERS
elal. 5,
IJ..
CaM;fomm.
1.
The "recei1tbig, keeping, and paying out" of money by the61.erk under an executiO>n issued .on a judgment in an action under the inter,nal Jl/.WS, {or which Itev. § 828; allows the c!el'k 1 per centum commissiou, (2 inCalif(lrnia, by section for which the government ill liable ; and . 840,) is a service rendered the . commissions areto.lJe paic:l,un!ler section 8216. through the collector of internal revenue, i/lto the treasury, as are the clerk's fees, that are taxed and included in t1ie and collected' from the defendant. U. S. v.Cigars, etc.,' Feci. Rep. disapproved.
CtllRxB oJ'OoURT-FlllEB IN REVENUE CA.SBs-How
PA.ID.
2.
S.SUIE.
skSS 889, 842,844,857, providing for the retention of fees by' 6lerks and other omeers until the maxirnumof..their compensatio>n; is reached, apply to fees other .those for which the government is responsible, and whiCh are to be paid out of the treasury undel' the P!OVillions of section . .... . ' .
Services l'llndered the government by the clerk or other officer of the 'oourt in suits by it, for which the law fixes certain fees, render the government liable there.for, Whether it suoceeds in collecting its legl.timate costs from the defendant or not.
At Law. Action by the United States against Henry Wolters and others;. Heard on the application of the clerk of the court for the distribution money paid into the registry of the in satisfaction of a judgment in favor of the government. M. T.Allen, U. S. Atty. Ross, District Judge. In this action, which arose under the internal revenue laws of the United States, a judgment was recovered on the 19th