Housel v. Cremer

Lake, Ch. J.

We will consider the points relied on for a reversal of the judgment, in the order of their presentation by counsel in their brief. The first of these is that Housel, who offered himself as a witness in his own behalf, was not permitted to testify, the court holding him to be disqualified by section 329 of the code of civil procedure, which provides that: “ No person having a direct legal interest in the result of any civil cause or proceeding, shall be a competent witness therein, when the adverse party is an executor, administrator, or legal representative of a deceased person,” etc. This ruling was correct. It is true that Cremer was neither an executor nor administrator, but he was the assignee of Agnes M. McKelligon, and within the contemplation of the statute, her “legal representative.” He had, by the deed of assignment, been entrusted with the property in controversy for the purpose of selling it and paying off her debts. This done, if there should happen to be a surplus it would belong to her estate. In view, therefore, of the language of this section, “ executors, administrators and legal representatives,” the construction given to it in Wamsley v. Crook, 3 Neb., 344 , is clearly correct. The principle applied to the defendants in that case is applicable here, and makes Housel incompetent to testify. Magenau v. Bell, ante p. 247.

Several of the rulings complained of were based upon the assumption that Cremer, the assignee, could make the ' same defense to the^ mortgage that the creditors of Mrs. McKelligon might do, viz., that as to them it was fraudulent. This was an erroneous view of the law, and may have been induced to some extent by the remark in the last clause of the opinion in Lininger v. Raymond, 12 Neb., 167 , that “ the assignee is a trustee for the creditors.” That the very reverse of this is the correct rule in the case of a voluntary assignment, is shown by an almost unbro *301 ken line of decisions in the courts of this country as well as of England. And even in Pennsylvania, where decisions have been made which support the rulings of the court below, Chief Justice Gibson, in one case, said : “ The assignee is the debtor’s instrument for distribution, and stands in relation to the property as stood the debtor himself.” * * * “As he stands in no privity to the creditors he cannot arrogate to himself any of their attributes and rights.” Vandyke v. Christ, 7 Watts & Serg., 374 .

And in Pillsbury v. Kingon, 31 N. J. Eq., 619, it is said: “The important question is: Whom does the assignee under a voluntary assignment represent? Simply the assignor? Or, does he also stand in the right of his creditors, and represent both? If he represent only the assignor, it is clear that he cannot be heard to impeach his assignor’s acts, for no man can invest another man with a power he does not himself possess (the creature can never be greater than his creator), and no man can be permitted to found a claim on his own iniquity; nemo ex proprio dolo consequitwr ac~ tionem. A fraudulent conveyance is good against the parties and their representatives.” And in Brownell v. Curtis, 10 Paige’s Ch., 210, the rule was stated to be, that no one by his mere voluntary assignment can transfer to his voluntary assignee a right of action which he does not himself possess. And where an insolvent makes a fraudulent transfer of property to defraud his creditors, so as to deprive himself of the right to reclaim it, he cannot by a merely voluntary assignment give the assignee that right. A great number of cases might be cited to the same effect, but in addition to the foregoing, we will refer only to Jones v. Yates, 9 Barn. & Cress., 532. Estabrook et al. v. Messersmith, 18 Wis., 546 . Leach v. Kelsey, 7 Barb., 466 . Wakeman v. Barrows, 41 Mich., 363 . Van Heusen et al. v. Radcliff, 17 N. Y., 580 . Heinrichs v. Wood, 7 Mo. App., 236 . Flower v. Cornish, 25 Minn., 473 .

*302 The rule contended for by counsel for the defendant in error is doubtless the proper one in cases where the assignee derives his title to the property, not through the merely voluntary act of the debtor, but by operation of law, as is the case with assignees in bankruptcy. In such cases he is not the creature of the debtor, but of the law for the protection of his creditors, and he may therefore very properly exercise their powers and attributes. Pillsbury v. Kingon, supra. Briefly stated then, the correct rule seems to be that the rights of a voluntary assignee, which Cremer was, respecting the assigned property, are simply those of the assignor at the time of making the assignment, and inasmuch as the assignor could not have interposed his own fraud in making a prior sale of his property to defeat it, his assignee cannot do so. Such being the law applicable to this case, Housel was not obliged to vindicate his mortgage against any presumption of bad faith in the making of it. The presumption of fraud which the statute raises, and which the judge referred to in his charge to the jury, is permitted only in favor of “creditors of the ' Velidor, and subsequent purchasers in good faith,” to neither of which classes Cremer belonged.

Such being our views of the law applicable to this case, the judgment must be reversed and a new trial awarded.

Reversed and remanded.