188 .. '. \
BEPORTER,
vol. 49.·
HILL et; at..11. WOODBERRY
et al. 18112.) ,
(Citrcwlt VO'WI't Q/ AppeaZ8, E'lghthCirc",it.January -,
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The prov\sion in a deed of for the benefit of creditors authorizing the assignee to "ilia; fOr tl account8: 'Ultell, eta., is in harmony with the law of Arkansas. . and dQes nOct ,vitlat!! the deed. ' ,:" . . . , Where the court's fibdingsare special'the circuit court ofappeaiscannot inquire whether the evidence supports tlie special of facts,but only whether the , fl1oCtsfo\lJ1.d are, !lnlJicient to i,Udgml;l!1t.". , . ,' . . , . .. . . ·
A8SIGNMllN:T
.1JENilFli' OJ'
2; REVIEW ON Al'l',AL.
B. 1l'RA1;1t>t'LENT CONVEYANCES-EFFECT ON ASSIGNMENT,'.
, 'Afra:udulent Oispositlbnof PJ'&p&rty invalid:&t:lls a SUbsequent for the ;bltue1lt i 9f, creditors OlllY· .!leed o,f,!¥,sii.nment is. part Of. a scheme to de. .....(raud" and the provisions, 9f the Qeed are calcUlated to promote object. : ;' " ' ,.' j '
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Woodberry, & in ,J'qhn M. Denman, as of ,.fIamtUfs froOl ajudgment for the in,. terpleader. Affirmed., '. ' . ' , & GTeesrfn, for, in error. O. Q.ita7nbyan,d T!ws. O.Mf$.ae, forderendant in error, J. M. Den· .' " " '. " .' ' , QA,r.nWELL, .Circuit Jri4ge, and SBIRAS. District JudgeS: . ., I ' .
to the, Circuit of AflrAnAlit5. . . ' . . ',' '.'. ;, ... Hill,' &'9? ,was,suw} I " ,',' _"
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Ch'cuitJqdge·. 12th day or Marqh, 1891, berry & HaOliltpn,partJJ,ers Prescott, Ark., eXecute,d a deed toperim/1-n, as assignee, for the benefit of of. their stock of w,erchandise, notes, their creditors, without anq accounts, lJ,llother property, of every nature, and debut aftel' the execution scriptiOl\, to them belongi:pg." On the and delivery.of,the deed.of assignment, the. plaintiffs, in error commenced Woodan action ill; which tpey, suecl out a writ of berry&, for the sum of and qa:used the marana! the propl\'fty which d,efenq.a.ntshad conveyedw to Denman as assignee for the benefit ·.. ,The in:tervened in the action in the court below, and filed an interplea, claiming the property attached under the deed of assignment. The issues between the plaintiffs and the assignee arising on the interplea were, by agreement of the parties, tried before the court, which made a special finding of facts, upon which judgment was rendered in favor of the interpleader; and thereupon the plaintiffs sued out this writ of error. The deed of assignment authorizes the assignee "to demand. sue for, collect, and receipt for" the accounts, notes, and evidences of debt assigned to him by the deed. The trial court held the authority conferred on the assignee to" sue for" the collection of the choses in action did
HILI,
WOODBERRY;
139
not render the deed void; and this rulfng is assigned for error. It is settled by repeated decisions of the supreme court Of Arkansas, construing the statute of the state relating to assignments for the benefit of cred.. itOI'S, (sections 305-309, Mansf. Dig.;) that any provision in the deed which authorizes or directs the assignee to administer the trust in a dir. manuel' from that prescribed by the statute renders the deed void. Raleigh v. Griffith, 37 Ark. 150; Teak v. Roth, 39 Al'k. 66; Jaffray \'. McGehee, 107 U. S. 361, 2 Sup. Ct. Rep. 367; Rice v. Frays(f/', 24 Fed. Rep. 460; (Jolli(f/' v. Dat'i8,47 Ark. 373,1 S. W. Rep. 684. But there is nothing in the statute which in terms or by implication prohibits the assignee from bringing suit to collect a debt due the estate. Under the statute as amended by the act of February 23, 1883, thEl assignee administers the trust under the supervision of the court of chancery. It is provided by section 306 that the" assignee shall first term of the court after one year from the date of the assignment, and at the corresponding term of said court every yeatthereafter, until the proceeds of the property assigned be disposed of for the benefit of creditors, prasent to the court a ·1air written statement 0'1' Rccount current, in which he shall charge himself with the whole amount of the property assigned, including all debts due or to become due. * **» Section 307 provides that "such account shall be carefully examined by the court, and upon· such examination the court shall allow the assignee for all the debts with which he stands charged, which the court shall be satisfied could not be collected. * * "These provisions clearly contemplate the collection by the assignee of the· collectible debts due the eState. He is not entitled to credit for the unCollected debts with which he stands· charged until he satisfies the court that they" could not 00 col· Ip.cted."Stippose an assignee sh('lUld ask the court to credit him with uncollected debts, stating in his application·· for FUch credit that the debtors Were solvent, and had no defense to the debts, but would not pay without suit.. Would the court, upon such a showing, credWhim with. the amount of such debts upon the ground that they "could not· be collected 1» Are the debts due from solvent debtors to be treatedss uncollectible, and returned as worthless, whenever the debtors neglect· or refuse to pRy them voluntarily? The power and authority of the assignee to collect debts is not limited to dunning the debtors. It isbis dutytoeollect the debts due the estate; and that duty is not discharged by simply demanding payment of the'debtor who will not pay volun-; tarily, but who can be compelled to pay by suit; 'rhe clause in the the assignee to sue for the collection of the chosesin action is a useless one; 'but it does not vitiate the deed, for the reason that i·t is in harmony with the law, and conh:lrs on the assignee no power whit;h he would not have possessed if it had been omitted. It i'a not this case to decide, and weido not decide, whether, UpOIlIl of all the provisions of the statute, the term "property, It a8(;used· in section 309, includes the chases in action. In any eventfit> would be the duty of the assignee tocoHect all the debts he could within the 120 days; and for that purpose he wot;lld have the right, and it
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FEDERAL REPORTER,
vol. 49.
wOllld he 4i8 duty, to bring suit against a debtor when necessary to col. lootiOr.seQure the debt. If choses in action have to be sol4 under section 309, the f/lct that suits are pending for their collection is no impediment to their sale. The I«oart below, among its other findings of fact, found that Wood· berry, '<;)Lthe firm of Woodberry & Hamilton, withdrew from the firm "duriog year 1890, and up to March 2, 1891," the sum of that that sum was largAly in excess of the amount raquirl'l<i' for the necessary expenses of said Woodberry, and was more than thf:HHllount contributed by him to the capital stock of said firm." The ph\intiffs in error contend that the withdrawal by Woodberry of the SUll). ,lU,er#oned from tbefirm assets was a fraudulent act, ,!;lnd that the olaking ,ofthedeed of the remtlining firm asact in a scheme to defrimd.the firm The conto.this cqntE!ntion.is that the court below expressly finds '\tbaJ;1f1ltU :the .improperllcts the defendant Woodberry iI). the use of I\luds were· prior to {h,e execution of theliSsignment," and was and .is fme from any fraUd, and conveys all to tbesuing out rm)Rr.,ohttachment herein. and that the title to .thesaid property ;1Plt4a'assignee, apd·is tp the attachment." . The ex';that the'assignment was and isfreeJrom any ffllOd,;" ,.i/3"qonclusive of ·that questiQn. It is earnestly contended that did not w:arrlto.t this finding of the court, but this court whether ,the ,eviden96 warranted the special fi.nding of the : . W here the cour,t's findings are special, itl!>req1;liredto . facts,and not and suc4 epeoial tinding Qf i$1!,e:s,Jl,the faots tha.t this court can consider. The inquiry in this cases is n<>,.t whether the evidence supports finding. Qf' ·faqt!!J' but only whether the facts found are sufficient to support the;juQgDlleI)t. Norris v'. Jackson, 9 Wall. 125; Tyng v. Grivmell, 92 U. 8,;:467:'I"'!' . ; nAin .'\nl'!ohrent Qrl)lmay;, undoubtedly make a valjd assignment of the par,tner,ship.property Jor ,.payment of the partnership: debts. The validiW.of s\l,oh an assignment is not affected by the fact that, before it was made, ,mie .member of the firm wrongfully or fraudulently appropriated tobis own J1lle a part of the firm assets. Such wrongftl1 or fraudulent act. of tbe partners may have compelled the firm to make an assigI)men£,ci>r the equal protection of all their creditors. It is very well settlednthll1:atfraudulent disposition of property by a debtor does not of itself imPhill,& subsequent general assigpmentfor the bellefitof; his cred-. Hors.. . 122 U. S. 450,.4:56, 7 Sup. Ct. Rep. 1.275. A fla1.lgl;llept dillposition of property invalidates a sUQseqllent assignment ..(Qr. of creqitors; only where the deed of aS13igl1tnent is part of ssphema"to defraud and the provisions of the deed are cal. qullited,tq 'Pf<mlote that object. Upon the fl10ts found the judgment of the :belolV 'was rigbt, and U1 uat be affirmed.. ..
WAMSUTTA MILLS '11. FOX.
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WAMSUTTA MILLS
'11.
Fox.
(Circuit {)ourt, D. ConneCticut. February 4,,1892.} INJUNCTION-QUALITY OJ' GOODS SOLD-MISREPRESENTATIONS.
An employe of defendant retail dry-goods merchant, in charge of the men's furnishing goods department, advertised sales, at reduced prices, of shirts made from Wamsutta cotton,a high-grade cotton of established reputatIOn made by plainti:lf, and the clerk in charge of snch sales, in positive terms, represented the shirts sold at the advertised prices as made of Wamsutta cotton, when, in fact, 'they were made of a much inferior cotton.. Held, that a temporary injunction should be granted restraining defendant from advertising and selling such shirts as made from Wamsutta cotton, notwithlltanding defendant denied knowledge of the untrue representation, and the sales were discontinued on serV'ice of the motion papers and notice of the misrepresentation. '
. InEquity. . Bill in equity by the Wamsutta Mills' against Moses to restiaindefendant from advertising and selling'articles as made frOlD muslin Inanufactured by defendant, which were, in 'fact, made from· inferior muslin. Motion fot temporallY injunction. 'Gt'llnted. Edward D. RobbinB, for plaintiff. Cha'r'tef8 E. Gross, for defendant. SHIPMAN, District Judge. This is a bill in equity to restrain the defendant frout 'advertisinga;nd selling shirts, made' from inferior cotton shirtings/as made fromWamsutta ton shirting manufactured by the plaintiff, and known as, and generally -ealled, !l Wamsutta cotton," ha!! acquired a widely extended, ;and highteputation, and extensive salesthroughout tbecountrYi and tbat the sale of an inferior article uuder that name,' and the untrue assertion .by advertisements, and otherwise, that· the· inferior' cotton shirting is Wamsutta cotton, injure the plaintiff's reputation tbe good·wUl, abd the j)fofits of its business; The present hearing is upon a motion for temporary injunction. . . The allegations of the bill in regard to the high aTld general reputation of the cGtton sbirting manufactured by the· plaintiff, and generally ,called '.'Wamsutta," are not denied. It appears from the affidavits,that ,the defendant· isa large retail dry-goods merchant in Hartford,whose ,business is divided into departments, and that one of his employes is the head of the men's furnishing goods department. In accordance with a not unusual custom among I merchants of this class, the prices of the odd lots ou hand were reduced after the 1st of J anuaty,and were .advertised, by an extensive advel'tisement, tohe sold at these low prices .during the week beginning January 4, 1892. 'Amongmen's furnishing goods, there were advertised, "M;en'sLaundered Shirts, Wamsutta cotton, value $1.00. Men's Night-Shirts, Wamsuttaootton,47c., value 75c.'" This part of the advertisement waS prepared by the head -of said dep$rtment, without the knowledge of Fox, who did h'Ot: read it. Affidavits are produced from three persons, who bought at tbe ant's store,iin response to this advertisement, four night-shirtS and one laundered'sbirt, all which \v.ereexpressly . by the saleSman j