When debtor may execute TITLE III. ASSIGNMENTS FOR THE BENEFIT OF CREDITORS. NOTE. It is thought best to submit this Title, from the New York Code, to the Legislature. There ought to be some well ordered system by which a debtor can make an honorable distribution of his assets among his creditors, without the intervention of the Bankrupt Law. Of course such a State law could not prevent creditors carrying the assets into bankruptcy if they should doubt the intent of the assignment or the fitness of the assignee to execute it. Secs. 641, 642 and 643 of the Penal Code of New York ought to be inserted in our own Code. The notes to these sections in the New York Penal Code fully review the whole question. SECTION 3449. When debtor may execute assignment. 3450. Insolvency, what. 3451. Certain transfers not affected. 3453. What preferences may be given. 3454. Preference must be absolute. 3455. Certain rights not affected by preferences in assignment. 3456. Joint and separate debts. 3457. Assignment, when void. 3458. The instrument of assignment. 3459. Compliance with provisions of last section necessary to validity of assignment. 3460. Assignee takes, subject to rights of third parties. 3461. Inventory required. 3462. Verification of inventory. 3463. Recording assignment and filing inventory. 3464. Same. 3465. Effect of omitting to record. 3466. Assignment of real property. 3467. Bond of assignees. 3468. Conditions of disposal and conversion. 3469. Accountings. 3470. Property exempt. 3471. Compensation. 3472. Assignees protected for acts done in good faith. 3473. Assent of creditor necessary to modification of assignment. SEC. 3449. An insolvent debtor may, in good faith, exassignment. ecute an assignment of property to one or more assignees, in trust for the satisfaction of his creditors, in conformity to the provisions of this chapter; subject, however, to the provisions of this Code relative to trusts and to fraudu lent transfers, and to the restrictions imposed by law upon assignments by special partnerships, by corporations by other specific classes of persons. or The Commissioners have already reported, in Sec. 643 of the Penal Code, a provision making it a misdemeanor for an insolvent to make an assignment with preferences, except in the cases in which a preference is expressly allowed to be given by law. And they have stated quite fully, in a note to that section, the reasons which led them to recommend restricting so closely the right to make preferential assignments. The provisions of the Penal Code upon the subject are, of course, confined to imposing a punishment for attempting to make an illegal assignment. In the present chapter other provisions are presented in respect to the making of preferential assignments and the settlement of assigned estates. The course of decision in this State upon the right to give preferences, and the various restrictions which have been imposed upon it, will be found reviewed in the Penal Code, Sec. 643, note. N. Y. C. C., Sec. 1924. what. SEC. 3450. A debtor is insolvent, within the meaning Insolvency of this Title, when he is unable to pay his debts from his own means, as they become due See Herrick vs. Borst, 4 Hill, 650; Curtis vs. Leavitt, 15 Compare also Sec. 1708 of this Code. The definition here N. Y. C. C., Sec. 1925. NOTE.-See Sec. 3077 of this Code. SEC. 3451. The provisions of this Title do not prevent a person residing in another State or country from making there, in good faith, and without intent to evade the laws of this State, a transfer of property situated within it. nor do they affect the power of a person, although insolvent and within this State, to transfer property to a particular creditor for the purpose of paying or securing the whole or a part of a debt, owing to such creditor, whether in his own right or otherwise. Ackerman vs. Cross, 40 Barb., 465; Hall vs. Arnold, 15 id., 599. N. Y. C. C., Sec. 1926. Certain affected. transfers no may be SEC. 3452. An assignment for the benefit of creditors What debts may provide for any subsisting liability of the assignor secured. which he might lawfully pay, whether absolute or contingent. N. Y. C. C., Sec. 1927. What preferences may be given. Preference must be absolute. Certain rights not preferences in assignment. Joint and separate debts. SEC. 3453. Except as otherwise specially provided by statute, an assignment by an insolvent debtor, for the benefit of creditors, may give a preference to one or more creditors or classes of creditors, in the following cases, and in no others: 1. Judgments may be preferred to debts not in judg ment. 2. Debts which are liens or charges upon the assigned property, or upon some part of it, may be preferred to debts which are not such liens or charges. 3. Debts for money or other property lent without interest, may be preferred to debts for money lent upon interest, or for property sold. 4. Debts due from the assignor by virtue of a trust, may be preferred to debts which are not thus due; and, 5. Debts for personal services performed within six months next before the assignment, may, to an extent not exceeding one hundred dollars to any one person, be preferred to other debts not within any of the preceding classes. N. Y. C. C., Sec. 1928. SEC. 3454. A preference, in an assignment for the benefit of creditors, can only be given absolutely, and with out reserving any power of revocation. N. Y. C. C., Sec. 1929. SEC. 3455. No provision in an assignment, giving a preference to a creditor, can affect or impair any right of another creditor to priority of payment, whether created by law, or arising from an obligation or transaction of the parties. N. Y. C. C., Sec. 1930. SEC. 3456. Joint, or joint and several debtors, can prefer their joint creditors only out of joint property; and can prefer the individual creditors of each, only out of the separate property of each. This provision is partly new. Compare Kirby vs. Schoonmaker, 3 Barb. Ch., 46; Nicholson vs. Leavitt, 4 Sandf, 252; Jackson vs. Cornell, 1 Sandf. Ch., 348; Van Rossum vs. Walker, 11 Barb., 237; Wilson vs. Robertson, 21 N. Y., 587; 19 How. Pr., 350; Smith vs. Howard, 20 How Pr., 121; Cox vs. Platt, 32 Barb., 126; 19 How. Pr., 121; Turner vs. Jaycox, 40 Barb., 164; Scott vs. Guthrie, 25 How. Pr., 481, 512. N. Y. C. C., Sec. 1931. when void SEC. 3457. An assignment for the benefit of creditors Assignment, is void against any creditor of the assignor not assenting thereto, in the following cases: 1. If it gives an unlawful preference of one debt or class of debts over another. 2. If it gives a preference dependent upon any condition or contingency, or with any power of revocation reserved. 3. If it tends to coerce any creditor to release or compromise his demand. 4. If it provides for the payment of any claim known. to the assignor to be false or fraudulent; or for the payment of more upon any claim than is justly due from the assignor. 5. If it reserves any interest in the assigned property, or in any part thereof, to the assignor or for his benefit, before all his existing debts are paid. 6. If it confers upon the assignee any power which, if exercised, might prevent or delay the immediate conversion of the assigned property to the purposes of the trust. 7. If it exempts him from liability for neglect of duty or misconduct; or, 8. If it violates Sec. 3456 of this Code. N. Y. C. C., Sec. 1932. ment of assignment. SEC. 3458. An assignment for the benefit of creditors The instrumust be in writing, subscribed by the assignor, or by his agent thereto authorized in writing. It must be acknowledged, or proved and certified, in the mode prescribed by the chapter on Recording Transfers of Real Property, and recorded as required by Secs. 3463 and 3464; but recording in one county constitutes a compliance with the following section. N. Y. C. C., Sec. 1933. NOTE. The words "and if it embraces a fee or freehold estate in real property it must be sealed" are stricken out, as seals are abolished. The section is also modified so that assignment will not take effect until recorded. SEC. 3459. Unless the provisions of the last section are complied with, an asssignment for the benefit of creditors is void against every creditor of the assignor not assenting thereto. N. Y. C. C., Sec. 1934. Assignee takes, sub of third SEC. 3460. An assignee for the benefit of creditors is ject to rights not to be regarded as a purchaser for value, and has no greater rights than his assignor had, in respect to things in action transferred by the assignment. parties. Inventory, required. Verification of inventory. Curtis vs. Leavitt, 15 N. Y., 195; Van Heusen vs. Radcliff, 17 id., 580; Griffin vs. Marquardt, id., 28; Leger vs. Bonaffe, 2 Barb., 475; Warren vs. Fenn, 28 id., 333; Marine and Fire Ins. Bank vs. Jauncey, 1 id., 486; Matter of Howe, 1 Paige, 125; Mead vs. Phillips, 1 Sandf. Ch., 83; Bliss vs. Cottle, 32 Barb., 322; Reed vs. Sands, 37 id., 185; Maas vs. Goodman, 2 Hilt., 275; Schieffelin vs. Hawkins, 14 Abb. Pr., 112. N. Y. C. C., Sec. 1935. SEC. 3461. Within twenty days after an assignment is made for the benefit of creditors, the assignor must make and file, in the manner prescribed by Sec. 3463, a full and true inventory, showing 1. All the creditors of the assignor. 2. The place of residence of each creditor, if known to the assignor, or if not known, that fact must be stated. 3. The sum owing to each creditor and the nature of each debt or liability, whether arising on written security, account or otherwise. 4. The true consideration of the liability in each case, and the place where it arose. 5. Every existing judgment, mortgage or other security for the payment of any debt or liability of the assignor. 6. All property of the assignor at the date of the assignment, which is exempt by law from execution; and, 7. All of the assignor's property at the date of the assignment, both real and personal, of every kind, not so exempt, and the encumbrances existing thereon, and all vouchers and securities relating thereto, and the value of such property according to the best knowledge of the assignor. N. Y. C. C., Sec. 1936. SEC. 3462. An affidavit must be made by every person executing an assignment for the benefit of creditors, to be annexed to and filed with the inventory mentioned in the last section, to the effect that the same is in all respects just and true, according to the best of such assign. or's knowledge and belief. N. Y. C. C., Sec. 1937. |