John P. Hudson et al., appellants, v. Enoch Maze, appellee, 3 Scam. 578

Scates, Justice, delivered the opinion of the Court: Hudson and Sellers brought an action of replevin for the “ store books of account, lately kept and used by Samuel McFarlan, merchant, at Scottville, in said county, at and after the 24th April, 1841: to wit, one day book and one ledger.” The first count of the declaration is for taking and detaining; the second count for unjustly detaining. The defendant pleaded non cepit to the first count; and to the whole declaration, he pleaded property in one J. M. Palmer, and also property in one Jas. McFarlan. Issues were joined on these pleas.

The plaintiffs proved the indebtedness of one Jas.

McFarlan to them by two promissory notes, in the sum of $610.84 cents; and to secure the payment of this, they proved an assignment by the said McFarlan to them, of all his “ store books and accounts, so far as that they may select and collect the amount of said notes, with expense; said books to be subject to the order of Hudson & Sellers, from the date of said notes, and considered as their property.” The defendant, to show property in Palmer, proved the execution of a deed of trust, made by said McFarlan to him, of all his personal property, articles of stock, and household furniture, mentioned in a

schedule annexed to the deed; also all the notes and accounts mentioned in another schedule, together with the books of his late mercantile house at Scottville, in trust to sell and collect the same, and pay the creditors of said McFarlan, as follows: first, to pay the expense of the trust, and Enoch Maze $154; secondly, to pay Hudson & Sellers $212, a debt for which Witt is security for McFarlan, (being no part of the debt first above mentioned as due the plaintiffs); thirdly, to pay Robert McFarlan $500; and then to pay the remaining creditors.” Said trustee was authorized to compound with the creditors.

Palmer was not a creditor, but accepted the trust under this deed, which was made on the 31st March, 1842, and after the assignment of the books to the plaintiffs. Palmer paid no considera1tion for said deed. The possession was delivered to Palmer, and he delivered these books to the defendant, as his agent. Palmer had no notice of the transfer to the plaintiffs, nor had they ever had possession of the books. The defendant objected to the reading of this deed in evidence, but it was admitted. The issues were tried by the Court, and found for the defendant. These decisions are assigned for error.

The plaintiffs offered no proof under the issue of non cepit. The evidence, both of the plaintiffs and the defendant, shows, if the assignments be good, that the property is not in McFarlan. It is objected that the issues were found generally for the defendant. I think in this case it is sufficient; for, although the property is shown not to be in McFarlan, yet, if it be in Palmer, it will prevent a recovery by the plaintiffs. The verdict is substantially responsive to the issues and proofs; and if the technical objection had been urged in the Court below, it might have been corrected.

It would not subserve the purposes of justice, to reverse it here upon such an objection. The substance and object of the transfer of these books to the plaintiffs, appear to be for the purpose of permitting them to select such notes and accounts against McFarlan’s debtors as to enable them to obtain payment of their debt of $610.84 cents.

I cannot construe this contract as transferring the property in the books themselves, the paper and binding; nor, as assigning over all the accounts and debts charged in those books, unless it would require the whole of those debts, accounts, and the books themselves, to satisfy their claim. The object, it seems to me, was to give them a right of possession for the purpose of such selection. The possession remained with the assignor, until he delivered it, under the deed of trust to Palmer, and afterwards came lawfully to the defendant, as Palmer’s agent.

Under these circumstances, we are of opinion that the plaintiffs should have made known their right, and demanded the possession from Maze, before they brought suit; as, upon demand, he might have delivered up the possession, which was lawful in him, until made tortious by a refusal. We would not wish to be understood as laying down a rule, that replevin would lie in no case of a lawful possession, until demand. If Maze had held the possession, claiming right or title in himself, it might change the case.

But in this particular case, he was the mere gratuitous bailee, without interest or charge, holding possession lawfully for the bailor; and, for aught that appears, ready and willing to deliver it to him who might show right. It seems unjust to condemn him to pay cost, for a lawful act, and gratuitous service. This Court has decided, in the case of Howell et al. v.

Edgar et al., that a failing or insolvent debtor may make an assign-meat preferring creditors, if there be no bankrupt, insolvent, or attachment laws interfering, and the assignment be fairly and bona fide made, without onerous conditions amounting to fraud. It is objected that there was no good and valuable consideration to support this deed. I do not regard the true consideration as passing from the trustee. The indebtedness to the creditors, for whose benefit this assignment is made, is the true consideration, and sufficient to support it. But there is still a much graver question arising to this deed.

It is objected that it is in fraud of the bankrupt law. This subject has been lately discussed by Judge Story, in a case in Massachusetts, where he stayed the proceedings of a creditor on a trustee process under their attachment laws, because, if allowed, it would be a fraud upon the spirit and equity of the bankrupt law, by making it a race of diligence to obtain an unequal distribution of the assets. There are many decisions to the same purport. The case in this Court, referred to above, recognises the same principle. This assignment was made after the bankrupt law took effect.

Its object appears, to us, to be, to make an unequal distribution of the assignor’s effects, contrary to the spirit and intention of the act. We should not feel warranted in drawing this conclusion from the language of the assignment, describing certain property set forth in two schedules, if it were not for the recitals in the deed, that said McFarlan, from losses, disappointments, and embarrassments, finds-himself unable to meet his various liabilities. It would seem from this, that he was in failing or insolvent circumstances.

I should have no hesitation in saying that this assignment would be void, as-a fraud upon the bankrupt act, if it were questioned by a creditor, seeking, under that law, for an equal distribution. But in this-case, the plaintiffs are asserting a superior and prior legal right under a contract, and it is in no sense a proceeding under the bankrupt law, claiming the equity of a pro rata distribution under its provisions. I cannot go the length to say that the mere existence of such a law upon the statute book, will make these assignments void.

But its provisions will only operate to affect this, in favor of those who proceed under it, to claim the benefit of its equity. I think it is good, as to that objection, unless some proceeding be had to distribute the effects under that act. It is further objected, that this assignment is fraudulent, on account of the clause empowering the trustee to compound with creditors. While courts have sustained assignments preferring creditors, they have ever been jealous and watchful to prevent the imposition of onerous and burthensome conditions to fair creditors.

When this is done, all, that a grateful and honest debtor could ask, is permitted. But it is going a step beyond to allow him, after putting all his property beyond the reach of law, to say to his creditors, they may compound with the trustee if they can. If they cannot, they will be driven into a court of equity to obtain their just rights. I think the law has been well laid down by Justice Sutherland, in Grover v. Wakeman, where such a power was held by him to make the assignment void.

We are of opinion, that under the particular circumstances of this case, the plaintiffs have no right to recover, without a demand of these books by the plaintiffs of the defendant. The judgment is affirmed with cost. Ante 417. Ex parte Foster, Law Reporter, June, 1849, 55. 15 Johns. 571; 3 Johns. 84; 8 Term R. 528. 11 Wend. 301.