Heath v. Wilson

Preference of Creditors—Transfer to Trustee—Good Faith.—A debtor, though actually insolvent, if acting in good faith, without contemplation of insolvency, may lawfully transfer a part of his property for the purpose of paying or securing certain creditors in preference to others, if there is no bankrupt or insolvent law making a different disposition of such property. It is immaterial whether the transfer was made to a trustee for the benefit of the preferred creditors or was made to them directly.

Id.—Trust Deed—Legal Title—Assignment for Benefit of Creditors—Attachment—Sale under Execution.—A deed of part of the property of the grantor, accompanied by a contemporaneous declaration of trust, showing, among other purposes, that the rents, income, profits, and proceeds of the property deeded were to be applied to pay and discharge certain scheduled debts, omitting one creditor, and that the surplus profits were to be paid to the grantor for life, with remainder to the grantor’s children, transferred the legal title to the trustee, and did not constitute an assignment for the benefit of creditors within the meaning of the Civil Code. The title of the trustee was not subject to attachment and sale under execution in favor of the creditor omitted, where it appears that the deed was made in good faith, and not in contemplation of insolvency, nor with any fraudulent intent, and that the omitted creditor at the time of the deed believed the grantor to be solvent.