CHAPTER XXXIII TO WHAT EXTENT THE ASSIGNOR'S BUSINESS MAY BE CONTINUED BY THE ASSIGNEE. § 396. As a general rule, the effect of a general assignment of a debtor's property is to put an end to the transaction of his business, as ordinarily conducted, and to the ordinary operations of purchase, manufacture and sale. But this, as we have seen, is sometimes qualified by stipulations in the instrument of assignment, providing for the continuation of the business for a limited time, with a view to the more beneficial execution of the trust. The cases in which stipulations of this kind have been sustained, were considered under a previous head.1 Independently, however, of any authority contained in the assignment, the assignee may, in certain cases, continue the business as it has been conducted by the debtor. Thus, where an assignor is conducting a manufacturing business when he makes an assignment, and he has a large amount of material on hand for the purpose of being manufactured, the assignee can conduct the business in his own name, for the purpose of working up the material thus ready for manufacture, where it is manifestly for the benefit of the estate. In the case of Woodward v. Marshall, in the Supreme Court of Massachusetts, it was observed by the court (Morton, J.), that an authority for this purpose would be implied by law, as necessarily incident to the principal powers granted to the assignee. "Where the estates of insolvent men," it was said, "are liable to be transferred, and that too, generally, without much discretion in the selection 'See ante, pp. 227 et seq. 'Patten's Estate, 2 Pars. (Penn.) Select Eq. Cas. 108; Miller v. Mulford, 31 N. J. Eq. 661. 3 22 Pick. 468. 2 of a propitious opportunity, it will necessarily happen that property of all kinds, and in every stage of preparation for market, will come into the hands of assignees; and unless they exercise the power of preparing it for market, it will often perish or be sacrificed. Of the propriety and expediency of the measures to be adopted, they must judge in the first instance. Whether they abuse their trust or not, may be inquired into, in a proper form of action." 1 § 397. So, the assignee may continue the business, with the express assent or approval of the creditors. In the Vermont case of Mussey v. Noyes, in which the assignment was sustained, the assignees, after taking possession of the property named in the assignment, continued to run a paper mill, for the purpose of working up the paper mill stock then on hand, and also purchased some stock which they worked, which was not necessary for working off that on hand. But this was done with the assent and by the advice of the creditors, who had been called together for the pnrpose.8 But the assignee cannot continue the business longer than is necessary for the special purpose of working up the material on hand. If he conducts it longer, he does it at his own risk, and may be held accountable for any loss which thereby accrues to the estate. In a New York case, Robinson, J., remarks: "The idea that a general assignee for the benefit of creditors can, in the exercise of any proper discretion imposed upon him by virtue of an assignment, proceed to conduct and carry on the. previous business of the assignor so long as he pleases to do so, or to do any act in respect thereto, except such as tends to the most speedy conversion of the assigned estate into cash, is wholly untenable, and the acts of the assignee tending to any other result are (equally as if committed by the 2 26 Vt. 462. 3 Id. 464. 122 Pick. 475. Patten's Estate, 2 Pars. (Penn.) Select Eq. Cas. 108; see Doyle v. Smith, 1 Cold. (Tenn.) 15. 5 * Levy's Accounting, 1 Abb. N. C. 186. debtor) in fraud of the creditor, in hindering and delaying him in the realization of what is justly due him either from his debtor or from the assigned estate." Nor is it every case, nor all matters of business, that will justify an assignee in conducting it under the assignment. It can only be allowed from the necessity of the case, and where it is manifestly for the benefit and advantage of the creditors and those interested in the estate.1 Thus, where the assignee individually owned one-fourth of a steamboat, and the other three-fourths belonged to the estate, and the assignee made repairs on the boat and defended suits brought against her, and ran her on joint account, and she was finally lost by fire, it was held to be inconsistent with his duty for the assignee to run the steamboat on joint account for himself and the estate. "No doubt," said Mr. Justice Leonard, in delivering the opinion of the court," he had the right to run the steamboat, as he owned one-fourth, but he neglected his duty in not selling the interest of the estate in her for the best price that could be obtained, before any repairs or expenditures for running expenses were made." The court allowed the assignee three-fourths of the expense of defending the suits against the vessel, but nothing for the expense of repairs and running the vessel. Thus, where a stock of goods in a retail business is assigned, the assignee cannot continue the business and retail the goods as before, with the view of ob taining higher prices, but must sell off at once. And even where he is allowed to retail the goods for a limited time, as a more beneficial course to creditors than an immediate sale at auction, the sales must be uniformly for cash,* and there must be no new purchases with the proceeds, nor any 1 Patten's Estate, 2 Pars. (Penn.) Select Eq. Cas. 108. 'Duffy v. Duncan, 35 N. Y. 187; s. c. 32 Barb. 587; see Dunham v. Waterman, 17 N. Y. 9; rev'g 3 Duer, 166. Hart v. Crane, 7 Paige 37, 38; and see Whallon v. Scott, 10 Watts, 237; American Exchange Bank v. Inloes, 7 Md. 380. See Meacham v. Stearnes, 9 Paige, 398. * See Connah v. Sedgwick, 1 Barb. S. C. 210. act done or permitted, which can prevent the business from being at any time brought to an immediate close. In a late case in New York,' the assets consisted of property used in a livery business, and debts due the assignor; there were chattel mortgages covering the property for more than its value. The assignor carried on the business for about two months at a loss, and then sold the entire property, subject to the mortgages, for one dollar. It was held, on the accounting of the assignee, that items for receipts and disbursements while he was carrying on the business, were properly rejected; that he was simply au. thorized to convert the assets into money and distribute it among creditors, and the estate could not be charged with a loss incurred in an unauthorized use of the property; that the assignee was bound to exercise the diligence required of a paid agent or of a provident owner, and he was liable for ordinary negligence, or the want of that degree of diligence which persons of ordinary prudence are accustomed to use about their own business and affairs. In Connecticut, the trustee may be authorized by the Court of Probate, before which the estate is in settlement, to work up and complete any stock and materials in an unfinished state, which belong to such estate, if it shall find that it will be for the interest of creditors.2 8 In Ohio it is provided by statute that the court, on application of seven-eighths in number and amount of the creditors, may order the business of the assignor to be carried on by the assignee. 1 Matter of Dean, 86 N. Y. 398. Gen. Stat. (Rev. of 1875), p. 384, § 28. CHAPTER XXXIV. COLLECTION OF DEBTS AND RECOVERY OF PROPERTY.-ACTIONS BY THE ASSIGNEE. § 398. Where possession of the assigned property cannot be obtained nor the debts collected without suit, the assignee has authority to commence and prosecute such suits, and to institute such other legal proceedings as he may be advised are necessary for the purpose. This he may do in his own name,1 and without joining the creditors.2 He should proceed with promptness, otherwise he may become personally liable to make good any loss occasioned by delay. Where property conveyed in a deed of trust was taken under execution and sold, and the purchasers remained in peaceable possession for five years, before suit brought by the trustee or cestui que trust to recover it, it was held in Virginia that the statute of limitations was a bar to the recovery.* In New Jersey, the assignee is expressly empowered by statute to sue for and recover, in his proper name, everything belonging to the estate, real or personal, of the debtor, with full power and authority to refer to arbitration, settle and compound, and agree with any person concerning the same, and to redeem all mortgages and conditional contracts, and generally to do whatever the debtor might.5 1 3 Ogden v. Prentice, 33 Barb. 161. 2 Irwin v. Keen, 3 Whart. (Penn.) 347. It is the duty of the trustee to use all necessary means, by action or otherwise, to realize the debts; if a debt is lost by his neglect of duty, where the debtor had property sufficient to pay, he is personally responsible for the loss, although he may have acted without any improper motive. Royall's Adm'r v. McKenzie, 25 Ala. 363; McQueen v. Babcock, 41 Barb. 337; see Winn v. Crosby, 52 How. Pr. 174. The duties of assignees are, so far as they are analogous, determined by the same rules as govern executors in similar circumstances. Jermain v. Pattison, 46 Barb. 9. 4 Sheppards v. Turpin, 3 Gratt. 373. 5 ' Rev. of N. J. (1878), p. 39, § 13. |