Tompkins v. Wheeler
41 U.S. 106 (1842)

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U.S. Supreme Court

Tompkins v. Wheeler, 41 U.S. 16 Pet. 106 106 (1842)

Tompkins v. Wheeler

41 U.S. (16 Pet.) 106

Syllabus

A bill to set aside a deed of assignment, made by an insolvent debtor for the purpose of securing the payment of his debts to certain enumerated creditors, to the exclusion of the complainant, also a creditor of the assignor, and of others.

A debtor may lawfully apply his property to the payment of the debts of such creditors as he may choose to prefer, and he may elect the time when it is to be done so as to make it effectual, and such preference must necessarily operate to the prejudice of creditors not provided for, and cannot furnish any evidence of fraudulent intention.

The case of Marbury v. Brooks, 7 Wheat. 556, and 24 U. S. 11 Wheat. 78 cited.

When a deed of assignment is absolute upon its face, without any condition whatever attached to it, and is for the benefit of the grantees, the presumption of law is that the grantees accepted the deed.

The delivery of a deed of assignment for the benefit of creditors to the clerk to be recorded may be considered as a delivery to a stranger for the use of the creditors, there being no condition annexed to the assignment making it an escrow.

After the assignment, the creditors for whose benefit the same was made neglected to appoint an agent or trustee to execute it, and the property assigned remained in the hands of the assignor. The property consisted principally of chosen in action, which the assignor went on to collect, and divided the proceeds among the creditors under the assignment. No one of the creditors was dissatisfied, and at any time the creditors could have taken the property out of the hands of the assignor. Held that leaving the property in the hands of the assignor under these circumstances, did not affect the assignment or give a right to a creditor not preferred by it to set it aside.

In the circuit Court of Kentucky a bill was filed on the equity side of the court for the purpose of setting aside a deed of assignment or mortgage made by Leonard Wheeler for the purpose of securing certain of his creditors in preference to the complainant, who was also a creditor.

At the November term, 1837, of the circuit court, the complainants had obtained certain judgments against the defendant Wheeler, and on the application of the defendant it was agreed that no executions should be issued upon those judgments until February, 1838. The debt on which the judgments had been

Page 41 U. S. 107

obtained amounted to $12,000, which had been purchased by the plaintiffs for $1,000, the defendant having failed in 1814 and this being one of the debts due by him at the time of his failure. He afterwards entered into business in Kentucky, contracted a large amount of debts, and obtained some property.

Five days before the time when the complainant had a right to issue execution on the judgments, Leonard Wheeler executed a general assignment or mortgage of all his property. The assignment provided for the payment, in the first place, of all his debts contracted since his failure in 1814, giving to them a priority or preference, "as all his means and effects had been accumulated by the credit given to him in Kentucky, the same being divided into two classes." It provided that among his old debts out of the surplus of his estate which was expected to remain after the first and second class of preferred debts had been satisfied certain debts due by him in 1814, the judgments in favor of the plaintiffs not being among them, should be paid, and not believing the effects assigned would extend beyond the payment of these debts, no others were designated. The assignment then proceeded to assign and transfer all the property and effects to the creditors of the first and second class in trust to pay the debts according to the preference and classification in the same, giving to the said creditors, or a majority of them, power to nominate and appoint an agent, attorney, or trustee to carry the purposes of the instrument into full effect.

On 15 February 1838, writs of fieri facias were issued on the judgments, which were returned by the marshal "nulla bona." The appellant filed a bill in the circuit court praying that the deed of assignment executed by Wheeler should be decreed fraudulent and void as it regarded the complainant. The bill also alleged acts done by the defendant, Wheeler, for the concealment of property, and also the nominal creation or increase of debts which were included in the preferences made by the assignment, and other acts of fraudulent collusion, and also, it alleged, that the property assigned had been left in the hands of the assignor, and the creditors had never appointed an agent or trustee, who had taken charge or direction of the property assigned. In the

Page 41 U. S. 108

opinion of the Court, delivered by MR. JUSTICE THOMPSON, other facts are stated which were taken notice of by the Court. The circuit court made a decree dismissing the bill, and the complainants prosecuted this appeal.

Page 41 U. S. 113

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