upon execute an assignment of all his property, whether belonging to the previous firm or not, in trust for the payment of his individual creditors.1

§ 89. Surviving Partners.-As to the power of surviving partners, it has been held, in South Carolina, that a surviving partner, especially in case of insolvency, may assign the firm effects to a trustee for payment of debts. But in New York it has been held, that after the dissolution of a copartnership, one of two surviving partners cannot, without the consent of the other, assign the partnership effects to trustees for the benefit of preferred creditors. And it seems that in this State, since the adoption of the Revised Statutes, the surviving member of an insolvent firm is not authorized to give a preference in payment to some creditors of the firm over others; and that a general assignment made by him of the partnership effects to a trustee, for the purpose of securing a preference to some of the creditors, even with the assent of the legal representatives of the deceased partner, is invalid.*

But an assignment by a surviving partner, in all respects equitable and just, and made for the equal benefit of all creditors, is valid.

Power v. Kirk, 1 Pitts. R. 510; Clark v. Wilson, 19 Penn. 414; Parsons on Part. p. 400.

1 Clark v. McClelland's Assignee, 2 Grant (Pa.), 31; Clark v. Wilson, 19 Penn. St. 414; Power v. Kirk, 1 Pitts. R. 510; Marsh v. Bennett, 5 McLean, 117; Price v. De Ford, 18 Md. 489; Dimon v. Hazard, 32 N. Y. 35; Smith v. Howard, 20 How. Pr. 266. Contra, Heye v. Bolles, 33 How. Pr. 266; s.c. 2 Daly, 231.

2 White v. Union Insurance Co. 1 Nott & McCord, 556; and see, in Virginia, Galt v. Callaud, 7 Leigh, 594. But the rule is otherwise in Tennessee. See Barcroft v. Snodgrass, 1 Cold. (Tenn.) 430; see Tieman v. Molliter, 71 Mo. 512; Vosper v. Kramer, 31 N. J. Eq. 420.

'Egberts v. Wood, 3 Paige, 517.

'Hutchinson v. Smith, 7 Paige, 26; Walworth, C., Id. 35, 36. In the case of Marsh v. Bennett, in the Circuit Court of the United States for the District of Michigan, it was held that by the dissolution of a partnership, provision being made in the articles of dissolution for the payment equally of all the creditors of the firm, by the partner who purchases the interest of the retiring partner and continues the business, such partner is a trustee for the creditors of the firm; and a subsequent assignment by such partner of the partnership effects, preferring certain creditors to others, and contrary to the stipulation in the articles of dissolution, is fraudulent and void. 5 McLean, 117.

Loeschigk v. Hatfield, 5 Robt. 26; s. c. as Loeschigk v. Addison, 4 Abb. Pr. N. S. 210; affi'd, 51 N. Y. 660.

§ 90. Limited Partnership.-In almost if not quite all the States, restrictions have been placed by statute1 upon the powers of limited partnerships and their members, when insolvent or in contemplation of insolvency, to make assignments. These restrictions in general prevent such partnerships and their members, under such circumstances, from giving any preferences to creditors.2

But although a limited partnership cannot make an assignment giving preferences, when insolvent or in contemplation of insolvency, nor can any member of such partnership make such assignment under like circumstances, yet an assignment for the benefit of creditors in all respects equitable and just to all parties, made in a condition of hopeless insolvency by all of those who, by the terms of the actual arrangement between the members, are the active managing partners in the business, will be sustained.

And such assignment is valid when made by the general partner only. But this has been doubted, unless the express consent of the special partner is contained in the partnership agreement, or can be inferred from the circumstances of the case.5

1 See post, Chap. X.

' See, on this subject, Troubat on Limited Partnership, c. 13. 'Robinson v. McIntosh, 3 E. D. Smith, 221; Jackson v. Sheldon, 9 Abb. 133; Hayes v. Heyer, 3 Sandf. 293; 4 Sandf. Ch. 485; Whitewright v. Stimpson, 2 Barb. 379; Greene v. Breck, 10 Abb. 43; Darrow v. Bruff, 36 How. 479; Mills v. Argall, 6 Paige, 582; s. c. 7 Paige, 586; 4 Sandf. Ch. 485; Van Alstyne v. Cook, 25 N. Y. 489.

Robinson v. McIntosh, supra.

* Mills v. Argall, 6 Paige, 582; see Crary's Specl. Proceedings, vol. I, p. 714. On the insolvency of a limited partnership, the partnership property becomes a trust for the benefit of creditors; and if the partners neglect to place it in the hands of a trustee for immediate distribution among all the creditors ratably, any creditor may file a bill, on behalf of himself and all other creditors, for distribution of the partnership funds, without first obtaining a judgment at law. Innes v. Lansing, 7 Paige, 583; see Jackson v. Sheldon, 9 Abb. Pr. 127; Whitewright v. Stimpson, 2 Barb. 379; Darrow v. Bruff, 36 How. 479; McArthur v. Chase, 13 Gratt. 683.

An assignment by a general partnership in which a member of a limited partnership may be also a member, is not to be treated in view of these prohibitions as an assignment by the individual member of the limited partnership of his individual property. Fanshawe v. Lane, 16 Abb. 71.

CHAPTER V.

TO WHOM AN ASSIGNMENT MAY BE MADE; QUALIFICATIONS OF ASSIGNEES.

§ 91. Who may be Assignee.-A voluntary assignment for the benefit of creditors may be made either to a person who is a creditor of the assignor, or to one who is not a creditor, and it may be made to a single individual or to several. The persons to whom it is made are, from the usual form of the transfer, called trustees as well as assignees; the latter being the more general term by which they will be designated in the present work.

When the assignment is made to partners, it is not material whether they are designated by the firm name or their individual names, if the language used is such as to indicate with certainty the persons who are nominated as assignees. Where it is intended to make the transfer to an assignee, he must be named in the instrument. But where the convey.

Yates, J., in Wilt v. Franklin, 1 Binn. 502, 520; Lee, J., in Johnston v. Zane's Trustees, 11 Gratt. 552, 564; United States Bank v. Huth, 4 B. Mon. (Ky.) 423; Wooster v. Stanfield, 11 Iowa, 128; Frink v. Buss, 45 N. H. 325; see Layson v. Rowan, 7 Rob. (La.) 1. In Vermont, it has been provided by statute, that, in order to render an assignment operative against the creditors of the assignor, he shall be confined in the selection of an assignee to some one who is not at the time a creditor or interested in the provisions of the assignment. Act of November 19, 1852; Laws of 1852, p. 15, § 8. But in Virginia, in the case of Gordon v. Cannon (18 Gratt. 388), where the trustee was a creditor, and the trust was to secure his own demand amongst others, it was contended that the trust deed was a mortgage, and the trustee could not sell by the mere authority of the deed, and without resorting to a court of equity; the objection was not regarded as valid.

"Where made to several, only those who accept are required to act (Moir v. Brown, 14 Barb. 39); but those who accept must all act. Brennan v. Wilson, 4 Abb. N. C. 297; s. c. 71 N. Y. 502.

3

4

3 Forbes v. Scannell, 13 Cal. 242.

In the case of Reamer v. Lamberton (59 Penn. St. 462), where an assignment for the benefit of creditors, leaving a blank for the assignee's name, was executed and acknowledged, and an execution was afterwards issued against the assignor and put into the sheriff's hands, and subsequently the assignee's name was inserted and the assignment recorded, it was held that the title to the prop

ance is declared by the court to be an assignment for creditors, and no trustee is named, the court will either regard the transferee as trustee, or will name a trustee.2

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The power to select and appoint his own assignee is one which the common law of voluntary assignments allows to every debtor contemplating such a disposition of his property; and he is not bound to consult his creditors, or any of them, and obtain their previous consent to the appointment, but may make his selection even against their will.5 But this power is not to be exercised arbitrarily and without a proper reference to the interests of the creditors."

8

In Wisconsin the assignees must be residents, and in Minnesota, both residents and freeholders of the State, otherwise the assignment will be void. In South Carolina, the creditors are empowered to name an agent or agents to act jointly with the assignee named in the assignment.

In Kansas 10 and Ohio," the creditors are empowered to select an assignee, who is substituted by the court in the place of the assignee named in the assignment; and to this end, methods are provided for convening the creditors and ascertaining who are entitled to participate in the choice.

erty remained in the assignor till the assignee's name had been inserted and the assignment delivered to him, and the assignor's goods were not protected from the execution. See Park v. Glover, 23 Tex. 469.

So under statutes of Ohio (1 Rev. Stat. of Ohio [S. & C.], p. 713; R. S. [ed. 1880], § 6344) and Kentucky (Rev. Stat. of Kentucky, vol. I, p. 553). Gen. Stat. (ed. 1881), p. 491.

3

Tilghman, C. J., in Wilt v. Franklin, 1 Binn. 502, 516; Sandford, A. V. C., in Cram v. Mitchell, 1 Sandf. Ch. 251, 253; and in Jackson v. Cornell, Id. 354. In Burd v. Smith (4 Dall. 76), this right was denied. But in all the subsequent Pennsylvania cases, it has been conceded.

B

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4 Harris, J., in Webb v. Daggett, 2 Barb. 9, 11.

" Id. Ibid.

Sandford, A. V. C., in Cram v. Mitchell, 1 Sandf. Ch. 254; Roosevelt, J., in Childs v. Mouseley, N. Y. Supreme Ct. Sp. Term, Nov. 1854.

Stat. of Wis. (ed. 1871), c. 63, vol. I, p. 843; R. S. of Wis. (ed. 1878), c. 80,

p. 497.

Stats. of Minn. (ed. 1878), p. 544.

Rev. Stat. of S. C. (ed. 1873), c. 97,
p. 477.

1o Laws of 1876, c. 101; Comp. L. 1881, p. 103.

11 Stat. of Ohio (Sayler), vol. IV, p. 3250, § 2; R. S. of Ohio (ed. 1880), § 6338.

An officer of the court, before whom the trustee is required to qualify, cannot himself be assignee and qualify before his deputy.1

In New York, it is provided that, whenever any incorporated company shall have refused the payment of any of its notes or other evidences of debt in specie or lawful money of the United States, it shall not be lawful for such company or any of its officers, to assign or transfer any of the property or choses in action of such company to any officer or stockholder of such company, directly or indirectly, for the payment of any debt. But apart from the statute, a corporation may select one of its officers as assignee.3

§ 92. Qualifications of Assignee. It is an essential qualification of an assignee, not only that he should be capable from age, health and education, of performing the duties of the office, but also that he should be of sufficient character and pecuniary ability to afford assurance to creditors that the fund will be safe in his hands, and that the trust will be properly administered; and the selection of incompetent assignees will have the effect of rendering the assignment void. Thus, where the debtor selected for assignees three relatives, one of whom was incapacitated by

3

1 Bancroft v. Snodgrass, 1 Cold. (Tenn.) 430.

Rev. Stat. (7th ed.) vol. II, p. 1534.

Pope v. Brandon, 2 Stew. 401. In Covert v. Rogers (38 Mich. 363), it was held that the fact that the assignee is or has been a stockholder of the insolvent corporation or is insolvent himself, does not disqualify him; but the jury may consider its bearing upon the good faith of the transaction.

See observations of Tilghman, C. J., in Wilt v. Franklin, 1 Binn. 502, 516; Christiancy, J., in Angell v. Rosenbury, 12 Mich. 241; Flandrau, J., in Guerin v. Hunt, 6 Minn. 375; Jennings v. Prentice, 39 Mich. 421.

5

This will depend upon the question whether the selection was made with a fraudulent intent. In the case of Guerin v. Hunt, Mr. Justice Flandrau laid down the rule as follows: "If it appears that the selection of an incompetent assignee was made in order to allow the assignor to control the administration of the estate, then the assignment will be declared void, because such an intent on the part of the assignor would be a fraud upon his creditors. If it should appear that the assignee was incompetent in fact from any cause, but that his selection was not made from any improper motive on the part of the assignor, then the assignee would be subject to removal at the instance of a creditor of the estate, and a proper person would be substituted by the court to carry out the trust.