Summary
Appeal from, the Linn District Court.
This cause was before this court at tbe December term, A.D. 1855, when tbe judgment below was reversed, and will be found fully reported in 1 Iowa, 460. On the return of tbe cause to tbe District Court, witb a procedendo, tbe plaintiff asked leave to file an amended replication to tbe answer of tbe garnisbee, wbicb replication reads as follows:
“ And now comes tbe said plaintiff, and for amended replication to tbe answer of Isaac M. Preston, garnisbee, says:
“1. That tbe assignment under wbicb tbe said garnisbee acted as tbe trustee of Annis Hathaway, and wbicb assignment is dated tbe 12tb day of January, A.D. 1854, a copy of wbicb is made a part of tbe answer of said garnisbee, embraces all tbe property and effects of tbe said Hathaway, not exempt from execution; that tbe same was made in contemplation of insolvency, and was made witb intent to hinder and delay creditors of tbe said Hathaway, and said Hathaway & Parkhurst; and that the same is fraudulent in law and in fact as against the said creditors.
“ 2. And for other and further replication to the said answer, the said plaintiff says, that the said defendant is indebted to the said Hathaway, and the said Hathaway & Parkhurst; that he owes them, or one of them, money or property which is not yet due ; and that the said defendant has in his possession, or under his control, property, rights, credits, and effects of the said Hathaway, or Hathaway & Parkhurst; and the said plaintiff denies the answer, and each allegation thereof, to the first interrogatory answered.”
The court refused to allow the amended replication to be filed, to which refusal, the plaintiff excepted. The parties then proceeded to trial; and. the plaintiff, for the purpose of showing that Hathaway & Parkhurst were indebted to creditors other than those mentioned in the assignment, previously to the date thereof, offered to introduce in evidence, two promissory notes, one for $886.34, to the plaintiff, Bebb, and one for $ 1,354.12, to Bowen & McNamee, and a copy of the judgment in favor of Bebb, on the foregoing note. This being objected to, the court ruled them inadmissible. The plaintiff then offered McIntosh as a witness, to prove that the property mentioned in the assignment to Preston, was all the property of said H. & P., and of said H. at the time of making the assignment. On the motion of the garnishee, this testimony was rejected. To all this the plaintiff excepted, and now assigns for error, the rejection of the said testimony, and the refusal to permit the filing of the amended replication.
1. Upon the first error assigned,'I shall expend but few words. The statute expressly provides, that the court may allow material amendments at any stage of the proceedings, upon such terms, and subject to such rules, as it may prescribe. Code, § 1756. The court cannot deny the right to amend, but it may impose a penalty. The judgment having been reversed, the case stood as though there had been no trial — as in fact there was none. It was competent, then, for the plaintiff to amend his pleadings, and it was error in the court to deny him that right.
2. This is a contest between a creditor and the garnishee of his debtor. The statute provides that when the answer of the garnishee is made at the District Court, the plaintiff may controvert any facts contained therein and specified by him, and issue being thereupon joined, may be tried in the usual manner. Code, § 268. What does this mean ? What are the facts referred to by the statute ? The statute gives the questions which may be propounded to garnishees; and in this case the garnishee answers the first two of those questions in the negative, stating that he is not indebted to the defendants in the principal case, and that he has in his possession, or under his control, no property, rights, or credits of said defendants. Are these, or either of them, the facts contained in the answer, and specified by the garnishee, which the plaintiff may contest, and on which there may be a trial ? We think so, and for the plain and simple reason, that they may he the only facts stated in the answer. If the plaintiff stops at the interrogatories laid down in the statute, there can he no other facts in the answer, for the plaintiff to controvert. And treating the answer in this case, as if no other interrogatories had been propounded to the garnishee, and issue had been taken on his denial of indebtedness, or having property, rights, or credits of the defendant in the principal case, in his possession, or under his control, let us see what evidence would have been admissible, on the part oí the plaintiff, to sustain the issue ? Under the issue of property, &c., or no property, &c., in the hands of the garnishee, we insist that the plaintiff might have shown the following facts:
1. That Hathaway & Parkhurst, or Hathaway himself was heavily in debt, and in embarrassed circumstances;
2. That being pressed for payment, and threatened with litigation, by certain of his creditors, Hathaway made an agreement with the attorney of said creditors, by which he delivered to said attorney all of his stock of goods, wares, and merchandise, with authority to sell the same on credit, pay certain creditors named in the agreement, and to pay the surplus proceeds of the sale to said Hathaway.
8. That the goods specified in the said agreement, embraced substantially all the property of Hathaway, and of Hathaway & Parkhurst, not exempt from execution; and that there were other creditors of said firm, and of said Hathaway, not named in the agreement, and for whose payment no provision had been made.
4. That the garnishee, at the time he was garnished, held in his hands, and under his control, the sum of $1,176.15 of the proceeds of the property received and held under the said agreement.
These facts being legitimate to the issue, if sustained by competent testimony, would give rise to a question of law, viz: the character of the agreement, and its sufficiency to pass the title to the property to Preston, the garnishee. To the consideration of this question of law, we shall come hereafter.
In this case, however, the plaintiff, not content with propounding the questions fixed by the statute, exercised his right, and puts other questions to the garnishee ; and in answer to these interrogatories, two of the facts above suggested, are drawn out of the garnishee, viz: the agreement and the circumstances upon which it was made, and that the garnishee at the time of the service of the writ of attachment upon him, held $1,176.15 of the funds arising from the property conveyed by the agreement. Thus two of the facts necessary to be established by the plaintiff, were admitted by the garnishee, and-no proof was required as to them. Two other facts, then, were left for the plaintiff to establish by testimony, viz: the indebtedness and embarrassment of Hathaway, and that the property delivered to Preston under the agreement, embraced substantially all the property of Parkhurst, leaving other creditors unprovided for. To establish these facts, the plaintiff offered two notes and a judgment against the firm of Hathaway & Parkhurst, and McIntosh, to prove that there was no property belonging either to Hathaway individually, or to the firm of Hathaway & Parkhurst, other than that mentioned in the agreement. This evidence the court refused to allow to go to the jury. This was error, and, so palpably so, under the view I take of the case, as to require neither argument nor illustration. If the testimony was competent, as will not be questioned, and relevant to the issue, in any degree, the court improperly withheld it from the jury. And had this testimony been admitted, it would have made out and established the four facts above suggested, and which, in my judgment, it was necessary for the plaintiff to prove, in order to entitle him to a judgment against the garnishee.
It may be well here to inquire, why it was necessary for the plaintiff to establish the two facts last mentioned?, I answer, that these two facts bear upon the character of the instrument by which the property was delivered to Preston, and are necessary in order to determine its legal sufficiency to pass the title of the property to him. If the instrument only conveyed the property to Preston, to secure certain creditors, leaving other property out of which other creditors might be secured or paid, then the instrument was valid, and transferred the property. If, on the other hand, the instrument embraced all the property of Hathaway, and of the firm of Hathaway & Parkhurst, and instead of being a conveyance to secure certain creditors, amounted to an absolute assignment of the property for the benefit of certain creditors, to the exclusion of others, then the conveyance or agreement was invalid, and could pass no title to the property. The agreement might be valid on its face, yet rendered invalid by extrinsic circumstances. Unimpeached, the courts would presume in its favor; when impeached, that presumption would cease to exist. With the view of impeaching it, the evidence rejected by the court was offered. ¡That evidence, if admitted, would "have shown that the instrument, though purporting to be an agreement, was in fact and in law, an assignment of all the property of Hathaway, for the benefit of some of his creditors, to the exclusion of ethers. Without that evidence, no such question could be raised, for the court could neither presume that there were other creditors, or that there was no other property. Eorthese reasqns, it was necessary to show, not only that there were other creditors, but that there was no other property out of which their claims could be realized. And qn the broad questions, whether the garnishee had or had not, property, rights, and credits, belonging to Hathaway, in his possession or under his control, there can be no doubt, it seems to me, that the testimony offered, was. admissible.
With this testimony before the jury, and the four facts above stated, thus established, the legal question arose — what is the legal character of the agreement between Hathaway and Preston, and was it sufficient to vest the title to the property in the latter ? If the agreement was valid, it passed the property to Preston, and he could truly say, that he. had no property, rights, or credits of Hathaway, in his possession or under his control. If the instrument was void, it passed no title — the title remained unchanged in Hathaway — Preston held as trustee for Hathaway only, and not as trustee for Hathaway’s preferred creditors — and the property, or the avails of it, in Preston’s hands, was subject to attachment. The garnishee places his. defence on this instrument, and claims to hold under and by virtue of that only. It is the foundation stone of his claim to exemption from liability. If it stands, his answer is true — he has no property, rights, or credits of Hathaway. If it falls, his answer is legally untrue, and he has property, rights, and credits of Hathaway in his possession or under his control; for it is too. well settled to admit of controversy, that a void deed conveys nq title. What then, is the legal character of this instrument ?. We say that it is an assignment to Preston, in trust, for the benefit of certain creditors. ■ The instrument shows on its face that it is such. It recites that Hathaway is indebted to certain persons, naming them, and the amount of their respective claims, and that they are about to coinmence legal proceedings to collect the same, and .that the said Hathaway, for the purpose of paying said debts, and for the consideration and purposes aforesaid, delivers to said Isaac M. Preston, attorney for claimants, &c., and after providing tbe manner of the sale, and for tbe payment of expenses, and tbe payment of tbe debts mentioned therein, requires tbe said Preston, to account for and to tbe said Hathaway, for tbe residue of tbe purchase money received for said goods upon tbe sale made as aforesaid. "What is this, but tbe language of an assignment, and what stronger could be employed evidencing an intent to make an assignment ? Tbe consideration expressed, and tbe requirement to account for tbe surplus, are tbe very ear-marks of such an instrument. And tbe acts of Preston under the instrument, as detailed in bis answer in this case, shows that it was so regarded and treated by both parties. No particular form of words is necessary in making an assignment, and any instrument by which property is vested in a particular person, for certain expressed purposes, is in legal contemplation, an assignment.
Tbe instrument being an assignment for tbe benefit of creditors, tbe next question that presents itself is, was it a general assignment of property by an insolvent, or in contemplation of insolvency ? and does it come within the purview of our statute ? Section 977 of tbe Code, provides, that no general assignment of property by an insolvent, or in contemplation of insolvency, for the benefit of creditors of the assignor, shall be valid, unless it be made for the benefit of all bis creditors, in proportion to tbe amount of their respective claims. Code, 154. Tbe word general used in tbe statute, applies to tbe property of tbe assignor, and includes substantially, all a man’s property. Mussey v. Baldwin, 3 Liv. Law Mag. 24. Now, upon its face, tbe instrument does not purport to be general, or to convey all the property, nor does it purport to exclude any of the creditors of the assignor. Neither is it expressed in tbe instrument, that tbe assignor is insolvent, or that be contemplates insolvency. Should it show these things, or are they extrinsic facts, which maybe established by other testimony ? If it must appear upon tbe face of tbe instrument, that tbe assignment embraces all tbe property of the assignor; that it is made under tbe pressure of threatened insolvency; and tbat all tbe creditors are provided for, in order to render it a general assignment witbin tbe meaning of tbe statute, then tbe power to evade tbe law is placed within the bands of tbe assignor himself, and tbe statute works a positive injury to creditors. If it cannot be shown by evidence dehors tbe instrument, tbat tbe assignment, while purporting to he partial, was in fact general, embracing all the property of tbe assignor; tbat other creditors are unprovided for, and tbat it was made by an insolvent person, then no assignment, however partial and unjust, can be successfully assailed. Such certainly, could not have been tbe intention of tbe law making power.
But this question has recently been decided by the Supreme Court of Vermont. In that state, tbe statute provides, that “all general assignments hereafter made by debtors for tbe benefit of creditors, shall be null and void as against tbe creditors of such debtors.” In Hussey v. Baldwin, above cited, tbe question was, whether an assignment was partial or general, under tbe above statute ? And tbe court held, tbat it was “competent for such creditors as choose not to come in under tbe assignment, always to raise the question, whether an assignment claiming to he partial, is not, in fact, general, and to give evidence to show such fact, which under proper instructions, is to he submitted to the jury," Now, here, tbe assignment purports neither to be partial nor general, either as respects the property or the creditors of tbe assign- or. Whether it is one or tbe other, is a question of fact, to be established by testimony, and its validity depends entirely upon that fact. If proved to he partial, as respects the property, it is valid; if shown to be general in tbat respect, it is void under tbe statute, for tbe reason tbat it „ does not purport to be made for tbe benefit of all tbe creditors of tbe assignor. Under tbe above decision, which I regard as conclusive, we had tbe right to establish tbat fact, or rather tbe right to attempt to establish it, and offered so to do. This right was refused by the- court, and herein was tbe second error of the court.
The answer of the garnishee denies, that he has money, rights, or credits, &c., except as stated in the answer, and then makes a full statement of the facts relating to the property in his hands. Now, upon this answer, I contend that it is a question of law for the court to determine, whether said property is so held as to be liable to plaintiff’s attachment, unless the answer is controverted. In this case, the answer is admitted to be true. But plaintiff contends that the answer itself shows the property to be liable. If the plaintiff claims that he is entitled to recover upon the showing in the answer, then it is a question of law for the court, and not a question of fact for the jury.
Upon the settlement with Hathaway, on the 27th of January, 1854, everything relating to the goods were then settled, and if any trust ever did exist, it was then executed, and became absolute. The evidence rejected by the court below, was irrelevant and immaterial, and did not tend to controvert any part of defendant’s answer, upon the issue joined; and if said evidence had been admitted, it could not have changed the result.
Syllabus and headnotes are prepared by the reporter or publisher, not the court, and are not part of the opinion.
