Groschen v. Page

The opinion of the Court was delivered by Mr. Chief Justice Murray. Mr. Justice Terry concurred.

In Cheever v. Hays, 3 Cal. Rep., 471, we held that an assignment for the benefit of creditors was void, unless made in conformity with the statute.

The only difference betwean that case and the present is, that instead of a general assignment for the benefit of all, the present defendants have attempted, by an assignment of their assets, to protect such of their creditors as would consent to an extension of time, or a substitution of security.

The mere statement of this proposition would be sufficient as against the defendants, Page, Bacon & Co.; but the guarantors of their certificates, to whom their assets were assigned, claim that they have equities which take the case out of the rule before laid down, and that they are interested in the assets in their hands. This must depend on the nature of the assignment. The firm was insolvent, and the only way in which the property could be disposed of was by a bill in chancery, to distribute it ratably among their creditors. Instead of resorting to this method, a different one is pursued to bolster up the credit of the firm.

[140]Those of the creditors who were willing to accept new certificates of deposit, payable in two, four, six and eight months, were guarantied their debt upon the faith of solvent men, who were willing to sustain the house, while those who were unwilling to accede to these terms were left to get their money as they could. Had this been a direct assignment for the benefit of those creditors, who thus consented to extend the time of payment, no one would have contended it was valid. How then, can it be sustained by the intervention of third parties, who undertake to guaranty particular creditors. Certainly what the law had tainted with fraud in its inception, can lose none of its concomitants by passing through a multiplicity of hands. A partial or special assignment is equally as void as a general assignment j and being void because it hinders and delays creditors, as well as because it is against the policy of the statute, cannot be cured by the intervention of third parties who voluntarily assume to do, for complaisant or indulgent creditors, what the judgment debtor himself could not.

It is unnecessary to pass upon the ultimate liability of the guarantors, as it is not involved.