Statement of the Case.

*OVERBAGH et al. v. PATRIE.

APPEAL from the general term of the Supreme Court, in the third district, where a verdict in favor of the plaintiff had been set aside, and a new trial granted. (Reported below, 8 Barb. 28.)

This was an ejectment for a farm in Coeymans, in the county of Albany, which the plaintiffs claimed in fee. The question presented was the same as that decided in De Peyster v. Michael. There was a verdict, at the circuit, in favor of the plaintiffs, which was set aside by the court at general term, on a motion for a new trial; whereupon, the plaintiffs appealed to this court.

Stevens, for the plaintiff.

Taber, for the defendant.

PER CURIAM.-Judgment affirmed, for the reasons given in De Peyster v. Michael.

467

Statement of the Case.

DE PEYSTER v. SNYDER.

THIS suit involved the same question as De Peyster v. Michael, and the judgment was affirmed for the reasons there given.

Sutherland, for the plaintiff.

Hogeboom, for the defendant.

468

Judgment affirmed.

Statement of the Case.

NICHOLSON et al. v. LEAVITT et al.

Assignment for the benefit of creditors.

An assignment for the benefit of creditors, which authorizes the trustees to sell on credit, is fraudulent and void, as to the creditors.

Nicholson v. Leavitt, 4 Sandf. 252, reversed; Burdick v. Post, 12 Barb. 168, affirmed.

APPEAL from the general term of the Superior Court of the city of New York, where the plaintiff's bill had been dismissed, with costs. (Reported below, 4 Sandf. 252.)

This was a bill in equity, filed in the late court of chancery, by the plaintiffs, as judgment-creditors of the firm of J. W. & R. Leavitt, against the debtors and their assignees, to set aside certain assignments made by the firm, in trust for the benefit of creditors, on the ground that they were designed to hinder, delay and defraud the creditors of the assignors; and to obtain satisfaction of their judgments out of the property in the hands of the assignees.

John W. Leavitt and Rufus Leavitt, who had been largely engaged in business, as dry-goods jobbing merchants, in the city of New York, under the firm name of J. W. & R. Leavitt, stopped payment on the 28th March 1845, being then indebted in upwards of $300,000. Between that date and the 31st July 1845, they executed twelve partial assignments of their property for the benefit of creditors; and on the lastmentioned day, a general assignment of all their property for the like purposes. All the assignments con

Opinion of the Court, per GARDiner, J.

tained preferences in favor of particular creditors. The several assignees were made defendants in this suit.

*Each of these assignments, which embraced * 511 ] property in possession, as contradistinguished from choses in action, contained the following provision: "Upon trust, that the said parties of the second part, and the survivor of them, do and shall, in such manner, and at such time or times, either at public or private sale, or for cash, or upon credit, or partly for cash and partly upon credit, and by and under such terms and conditions as they shall think reasonable and proper, absolutely sell, convey and dispose of all and singular the said estate and property, hereby conveyed and assigned, or so much thereof as can be sold or disposed of. And also, do and shall, in the meantime, collect and receive the rents, issues and profits of the said real estate and premises, and by and out of the moneys which shall arise from such sale or sales, and which shall be collected, received and gotten in as aforesaid, do pay and discharge," &c.

It was this provision which was alleged to render the assignments fraudulent as to creditors. The cause was transferred to the superior court, under the act of 1849, where the assignments were adjudged to be valid, and the plaintiff's bill dismissed, with costs; whereupon, this appeal was taken.

O'Conor, for the appellants.

Beardsley, for the respondents.

* 515]

*GARDINER, J.-The only question which I propose to consider is, whether a provision, authorizing a credit, in the discretion of the trustees, upon the sale of the property, avoids the trust as to the complainant, a judgment-creditor.

Opinion of the Court, per Gardiner, J.

One of the express trusts authorized by statute is, "to sell lands for the benefit of creditors;" trusts of personal property are tolerated by our law, for the same object. The power to create a trust of real or personal property, or, as in this case, of both, must be construed in the light of other provisions of the common law and the statutes of this state. One of these statutes prescribes, that every assignment of any interest in lands, goods or things in action, made with intent to hinder, delay or defraud creditors of their lawful suits, damages, debts or demands, shall, as against the persons so hindered, delayed, &c., be void. (2 R. S. 137, §1.) Another, that all assignment of goods, &c., in trust for the use of the person making the same, shall be void as against creditors, existing or subsequent, of such persons. (2 R. S. 135, § 1.)

These statutes are but expositions of the common law (2 Cowp. 432), which, in addition, imposes upon the debtor the obligation to pay his debts as they become due. These various provisions of law must stand together, and each should be so interpreted, as to preserve the rights of the debtor, without essentially affecting his obligations to his creditors. The legislature have conferred *upon the debtor the right to create a trust [* 516 of his property for certain purposes; he may also prefer one creditor to another. Of course, the "delay" to creditors, necessarily resulting from a fair exercise of these rights, is not prohibited by any statute;' but this delay must be incidental, and necessary to the existence of the trust, or the exercise of the power. Where it becomes the principal motive for the creation of the one, or the exercise of the other, the conveyance made and thing done in pursuance of such intent, if any injury does or thereby may result to creditors, is prohibited by statute, and may be avoided, at their instance.

Nothing beyond this was determined in Meux v. Howell

Hauselt v. Vilmar, 76 N. Y. 630: s. c. 11 J. & Sp. 574.