Kennedy v. McKee - 142 U.S. 606 (1892)
U.S. Supreme Court
Kennedy v. McKee, 142 U.S. 606 (1892)
Kennedy v. McKee
Submitted December 16, 1891
Decided January 4, 1892
142 U.S. 606
The statutes of Texas in relation to assignments for the benefit of creditors, 1 Sayles' Civil Stats. 61, 62, 68, Arts. 65a, 65c, and 65s, do not contemplate an assignment of partnership property only by partners for the benefit of creditors, and while such an assignment may be valid as to
creditors who accept its provisions, creditors who do not may levy upon the property conveyed by it, subject, it may be, to the rights of the accepting creditors.
There being no brief filed for defendant in error, and no argument made in his behalf, the court confines its consideration of the case to the decision of the questions raised by the counsel for plaintiff in error, without considering the case in any other aspect.
The Court stated the case as follows:
This action was brought upon the official bond of the late James A. McKee, marshal of the United States for the Northern District of Texas, to recover damages for the seizure of certain goods, wares, and merchandise under attachments sued out from the court below, January 25, 1884, by Crow, Hargardine & Co. and Goodbar, White & Co., respectively, against the property of Moseley Brothers, a firm composed of W. P. Moseley, S. P. Moseley, R. T. Moseley, and F. P. Moseley, and doing business in the Counties of Grayson and Limestone, Texas.
The plaintiff alleged that the property in question was not subject to those attachments, but belonged at the time to, and was in the rightful exclusive possession of, W. E. Doyle under and by virtue of a deed of assignment executed January 23, 1884.
That deed of assignment was as follows:
"The State of Texas"
"Know all men by these presents that we, Moseley Brothers, a mercantile firm composed of W. P. Moseley, S. P. Moseley, R. T. Moseley, and F. P. Moseley, and doing business in the Cities of Mexia and Denison, said state, in consideration of the sum of one dollar to us in hand paid by W. E. Doyle, of said county and state, have this day transferred, assigned, and set over, and by these presents to transfer, assign, and set over, to the said W. E. Doyle, assignee, all of our property of every character and description, real and personal and mixed, a more complete and perfect description of which property will hereafter, and as soon as it can be done, be filed with said assignee,
in trust, nevertheless, and for the following purposes and uses, to-wit: Whereas, the said Moseley Brothers are justly indebted to various parties -- a more complete description of the names and amounts due to each will be hereafter filed with said assignee -- and which indebtedness we are unable to pay, and being desirous of securing to our said creditors an equitable and just distribution of our said property: Now therefore in consideration of the premises, we hereby authorize and empower the said W. E. Doyle to take full and exclusive control of the property herein conveyed and transferred, and to convert the same into money, and apply the proceeds to the payment and satisfaction of our said indebtedness in the proportion of the respective claims of such of our creditors as shall accept these presents, after paying all proper and necessary costs incident to the execution of this trust, and the said Doyle is hereby authorized and empowered to sign all the deeds, conveyances, acquittances, and receipts, and to institute and defend any and all suits necessary and proper for the full execution of the trust herein created, provided that there is reserved out of the operations of this instrument such property as is exempt from forced sale under the constitution and laws of this state."
"Witness our hands this January 23, 1884."
"S. P. MOSELEY"
"R. T. MOSELEY"
On the day this deed bears date, S. P. Moseley and R. T. Moseley appeared before a notary public of Limestone County and severally acknowledged that they had executed and delivered it for themselves and for the firm of Moseley Brothers for the purposes and considerations stated in it, and it appears from the certificate of the county clerk of that county that the deed, with the notary's certificate, was filed in his office for record at 9 o'clock on the morning of January 24, 1884, and was duly recorded the same day at 10 o'clock.
The petition alleged, among other things, that on the 23d day of January, 1884, the firm of Moseley Brothers was insolvent,
and being insolvent, S. P. Moseley and R. T. Moseley on that day,
"for themselves and for said firm, in their own names and in the name of said firm, with the knowledge and consent of their co-partners, the said W. P. Moseley and the said F. P. Moseley, the former being sick and absent, and the latter absent from the county,"
made, executed, and delivered said deed to W. E. Doyle , who duly qualified as assignee; that
"the making of said deed of assignment had been discussed and agreed to by all the members of said firm before it was made, and was ratified immediately afterwards, and before any adverse right had been acquired by each of said partners who did not sign the same individually;"
"no property was owned by said firm, or any of the members thereof, not conveyed thereby, except such as was exempted from forced sale by the Constitution and laws of Texas;"
that after the levy of the above attachments, Doyle resigned the place of assignee, and was succeeded by the plaintiff, who was appointed assignee by the judge of the county court upon the written application of the accepting creditors of Moseley Brothers, and that the plaintiff accepted the position of assignee, giving bond and qualifying as required by law and becoming the lawful assignee of Moseley Brothers.
The case was heard below upon demurrers, general and special, filed by the defendants. The special demurrer showed that the petition was excepted to as insufficient in law upon the following grounds: (1) one or more partners could not make an assignment for the benefit of creditors that would bind the co-partnership and pass the property of the firm; (2) an assignment by two of the partners only could not be ratified by the partners not signing or executing the same, so as to interfere with rights of creditors accruing before such ratification, and any pretended ratification which would operate as an assignment of real estate could not take place by parol or by parol ratification; (3) the deed, signed and executed by two of the partners only, could not and did not purport to convey and pass the individual and separate property of the partners not signing it, and consequently the deed was void upon its face; (4) the deed does not on its face show that it was made
by Moseley Brothers as insolvent debtors or by them in contemplation of insolvency.
The demurrers were sustained and, the plaintiff declining to amend, the action was dismissed, with costs to the defendants.
The statutes of Texas in force when the above assignment was made provided:
"Art. 65a. Every assignment made by an insolvent debtor, or in contemplation of insolvency, for the benefit of his creditors, shall provide, except as herein otherwise provided, for a distribution of all of his real and personal estate, other than that which is by law exempt from execution, among all his creditors, in proportion to their respective claims, and however made or expressed, shall have the effect aforesaid, and shall be construed to pass all such estate, whether specified therein or not, and every assignment shall be proved or acknowledged and certified and recorded in the same manner as provided by law in conveyances of real estate."
"Art. 65c. Any debtor desiring to do so may make an assignment for the benefit of such of his creditors only as will consent to accept their proportional share of his estate, and discharge him from their respective claims, and in such cases the benefits of the assignment shall be limited and restricted to the creditors consenting thereto. The debtor shall thereupon stand and be discharged from all further liability to such consenting creditors on account of their respective claims, and when paid, they shall execute and deliver to the assignee for the debtor a release therefrom, provided that such debtor shall not be discharged from liabilities to a creditor who does not receive as much as one-third of the amount due and allowed in his favor as a valid claim against the estate of such debtor."
"Art. 65s. Any attempted preference of one creditor or creditors of such assignor shall be deemed fraudulent, and without effect."
Act March 24, 1879, as amended April 7, 1883, 1 Sayles' Civil St. Tex. pp. 61, 62, 68.