Estes v. Gunter (122 U.S. 450)/Opinion of the Court

by Stephen Johnson Field

United States Supreme Court

122 U.S. 450

Estes  v.  Gunter

It appears from its opinion in the record that the court below held the assignment of Gunter for the benefit of his creditors to be fraudulent and void on these grounds: (1) Because of the execution of the trust deed to Hall to secure the sureties on his note held by the Bank of Sardis; (2) because of the payment of the $900 to his wife, shortly before the assignment, for a debt which he claims to have owed to her; (3) because he permitted her to take money from the cash-drawer; and (4) because more supplies than usual were taken from the store to his house shortly before the assignment.

The answer to these objections is readily given, and it appears to us conclusive. The laws of Mississippi allow an n solvent debtor to make a general assignment of his property, in which one or more of his creditors may be preferred to others. The assignment is not invalid, therefore, because of the preferences given. In Eldridge v. Phillipson the supreme court of that state said: 'The right to make a preference results from the dominion which the owner has over his property; it is a part of his proprietorship. The law has not said he shall divide his estate ratably among his creditors. It has left to him the discretion to act as he will, provided only he acts with the honest intent to pay a valid debt, and does not, under cover of such a disposition, stipulate for a benefit to himself.' 58 Miss. 270, 280.

Nor did the deed to Hall to secure the sureties on the assignor's note affect the validity of the assignment, though made in contemplation of it. Such security might have been provided in the assignment itself. The assignor had a right to use his property to protect parties who had become his sureties, as well as to pay existing debts. Until the assignment he could dispose of his property in any way he may have thought proper, so that he did not thereby defraud any of his creditors.

The court below seems to have concluded that the two instruments, the assignment and the deed to Hall, should be considered together; and, as the deed contained a proviso that the grantor was to remain in possession of the property until the note matured, and the sureties should request the trustee to take possession of the same, there was such a reservation for the benefit of the grantor as rendered the assignment invalid. The deed was in fact a mortgage of the property to secure against a prospective liability, and in such cases it is usual for the grantor or mortgagor to remain in possession of the property until the maturity of the obligation and a sale of the premises. Standing by itself, the deed was not open to any serious objection. And even that reservation was defeated by the assignment, which included the property in question with other property of the assignor, and provided that the assignee should take possession of the same and sell and dispose of it with all convenient diligence. The assignment was subsequent to the deed, and carried all that could in any way be considered as a benefit secured by the deed to the assignor. The creditors were not, therefore, in any way hindered or defrauded by the alleged reservation.

There is nothing in Gunter's payment to his wife of the $900 which can affect the validity of the assignment. Gunter's testimony is all that there was on the subject, and he testifies that she received the money from her grandfather, and that he borrowed it from her, and used it. His statement is not contradicted. Under these circumstances, he was not blameworthy in paying to his wife the amount he had used belonging to her. But, as counsel well observes, if that payment were fraudulent, it would not vitiate a subsequent assignment. A fraudulent disposition of property does not of itself impair a subsequent general assignment. The assignee may sue for its recovery, and, if successful, it will be for the benefit of the creditors precisely as if it had been included in the assignment. Wilson v. Berg, 88 Pa. St. 167; Reinhard v. Bank of Kentucky, 6 B. Mon. 252.

The same observation may be made as to the alleged taking of money by Mrs. Gunter from the cash-drawer, and of his sending supplies from the store to his house. She was a clerk in the store, and took the money from the drawer in the course of business, and supplies for Gunter's house were generally taken from the store. It was quite natural, therefore, that he should take needed supplies before the assignment was executed. There is no evidence that the supplies were excessive or unreasonable, but, even if they were, that fact would constitute no ground for setting the subsequent assignment aside.

From a consideration of the whole case, we are clear there is no just r ound shown by the record for disturbing the assignment. If follows that the decree below must be reversed, and the cause remanded for further proceedings in accordance with this opinion; and it is so ordered.

Notes