lowance to be made to the voluntary assignee for his necessary and reasonable charges and expenses; but it was said that no allowance could be made of a future settlement of the trustee's account in the court of a State under its laws relating to assignments.

But where the debtors had made an assignment under the laws of the State of Maine, and were within a month thereafter adjudged bankrupt, and the voluntary assignee surrendered to the assignee in bankruptcy all the property of the debtors which had come into his hands, reserving only enough to cover the expenses and commissions to which he was entitled under the State law, it was held, in a proceeding to compel him to pay over the balance, that he was not entitled to the deductions claimed, for the reason that the proceedings under the State law were in fraud of the bankrupt act, and that the bankrupt court would not allow the expenses incurred in an attempt to defeat the operation of the act. It is usual and proper when the assignment is set aside for the decree to contain a direction for a reconveyance by the trustees to the assignee in bankruptcy.2

3

$ 59. Bar to Discharge.-Previous to the recent amendment to the bankrupt act, the authorities were in conflict as to whether the execution of an assignment for the equal benefit of all creditors, was a bar to the debtor's discharge in

to priority of payment, but as to such items stands in the same position as other creditors, and must prove his claim. Re Lains, 16 N. B. R. 168.

As to the allowance of expenses to a creditor who brings suit, see Re Dumahaut, 17 N. B. R. 517; affirmed by Waite, C. J., 15 Blatch. 20; see also Re Dumahaut, 19 N. B. R. 393.

1

1 In re Stubbs, 4 N. B. R. 376; see Clark v. Marx, 6 Ben. 275.

2 Burkholder v. Stump, supra.

'Act of July 26, 1876, c. 234; 19 Stat. L. 102; Supp. to R. S. vol. I, 232 (see ante, p. 65). "This amendment alters the law only in involuntary cases, and in them only in the single particular that such an assignment (i. e., one in good faith, without preferences, and valid by State law), of itself, is no longer a bar to a discharge. In voluntary cases it is a bar, and in all cases it is an act of bankruptcy, and is void as against the assignee." Re Beisenthal, 15 N. B. R. 228, per Johnson, J.

case of a subsequent adjudication of bankruptcy.1 And the question may be still regarded as being open in a case where voluntary proceedings in bankruptcy are instituted. Where, however, the debtors are adjudicated bankrupt in a proceeding of involuntary bankruptcy, no voluntary assignment for the benefit of all creditors ratably and without preference, and valid according to the laws of the State where made, will be a bar to a discharge, and this applies to assignments heretofore or hereafter made.

§ 59a. Compositions in Bankruptcy and General Assignments.-Under the provisions for composition in the Bankrupt Act, creditors may resolve that a composition proposed by the debtor shall be accepted in satisfaction of their claims. It has been decided that the making of an assignment prior to the commencement of proceedings in bankruptcy does not preclude the confirmation of the composition;3 nor where a debtor has made a general assignment in good faith are the rights of the assignee to the property affected by the subsequent bankruptcy of the debtor and his discharge under a composition in bankruptcy. The creditors' right to an accounting by the assignee under a general assignment is not divested by the mere fact of a composition in bankruptcy, unless this right is relinquished by the creditors; nor will an order of the bankruptcy court, made in composition proceedings to which the assignee is not a party, directing him

5

'An assignment was regarded as a bar to a discharge in the cases of In re Goldschmidt, 3 N. B. R. 165; s. c. 3 Ben. 379; In re Brodhead, 2 N. B. R. 278; s. c. 3 Ben. 106; but the contrary doctrine was sustained in In re Pierce & Holbrook, 3 N. B. R. 258; s. c. 16 Pitts. L. J. 204; In re John M. Quackenboss, 1 N. Y. Leg. Obs. 146; Smith v. Ely, 1 Id. 343.

Where an assignment was made for the purpose of preventing some portion of the firm assets from being distributed to satisfy firm debts, it was held that the court would not grant a discharge. Re Croft, 8 Bissell, 188.

4

Pool v. McDonald, 15 N. B. R. 560.

17; 18 Stat. L. 178; adding to R. S.

Bigler v. National Bank, 26 Hun, 520; Matter of Stowell, Id. 258; see Matter of Backer, 2 Abb. N. C. 379.

* Matter of Allen, 24 Hun, 408; Matter of Herman, 53 How. Pr. 377; see Re Dumahaut, 15 Blatch. 20; affi'g 17 N. B. R. 517; 19 Id. 393.

to hand over the assigned property to the assignor, protect the assignee from the necessity of an accounting on the petition of a creditor who did not personally assent to the composition, although his name was duly entered on the list of creditors.1

1 Matter of Stowell, 26 Hun, 258.

CHAPTER IV.

WHO MAY MAKE AN ASSIGNMENT.

§ 60. Assignments for the benefit of creditors are most commonly made by persons engaged in business, as merchants, traders, manufacturers, mechanics, and the like, either individually or as copartners. Any person, however, of sound mind, and not laboring under legal disability,1 may make such a disposition of his or her property. The power of corporations to assign their property for the benefit of creditors has frequently been discussed, and important restrictions have in some instances been imposed upon the exercise of this right by corporate bodies. The authority of partners to make such disposition of the partnership effects has likewise given rise to judicial discussion and legislative enactment. The questions thus presented will be considered in the course of the present chapter. But, before entering upon this division of the subject, it will be proper to devote some attention to the meaning of a term which is constantly used, not only as descriptive of that condition of affairs in which assignments usually originate, but as a test of the validity of the instruments themselves, namely, insolvency.

§ 61. Insolvency, when important.-As we have already

'It was held, in the case of Fox v. Heath (21 How. Pr. 384), that an assignment executed by partners, one of whom was an infant, was void for the reason that the instrument being voidable by the infant, the conveyance was not absolute and irrevocable, and was consequently fraudulent as to creditors. In the late case of Yates v. Lyon (61 N. Y. 344), this doctrine was disapproved, and it was there held that the defense of infancy must be made, if at all, by the infant himself; and it seems that the most he could claim would be that he should not be held personally for debts beyond what the assets of the firm are able to pay.

In Soper v. Fry (37 Mich. 237), it is held that an infant's assignment is not void, but only voidable, and that only by the infant, or some one in his right. In Maryland a married woman may make an assignment of her property, the same as any other person. Schumann v. Peddicord, 50 Md. 560.

seen, many of the State statutes, which have been enacted for the purpose of restraining the right of making assignments and regulating their operation, are confined by their terms to assignments made by debtors who are insolvent or acting in contemplation of insolvency. When, therefore, the attempt is made to bring an assignment within the operation of these acts, either for the purpose of having it declared fraudulent and void, or for the purpose of compelling an administration of the assigned property in accordance with its provisions, it becomes essential to establish primarily the fact that the instrument was made by a debtor in insolvency or in view of insolvency; and when the deed. purports on its face to be made by a solvent debtor, proof may be given of his insolvency, and if that is established, it will then be governed by the same principles as if the insolvency appeared on its face.1

8

The question of insolvency also frequently becomes of importance in considering the validity of assignments executed by corporations, the restrictions upon their right to make such conveyances depending in some instances upon their financial condition and outlook at the time of the execution of the instrument.5

Independent of statutory regulations, it has been thought that the right to make an assignment for the benefit of creditors belonged exclusively to debtors who were insolvent, or who honestly believed themselves to be so, and that the execution of such an instrument by a solvent debtor was conclusive evidence of an intent to hinder, delay and defraud creditors. This doctrine no longer prevails to the same ex

4

Hardy v. Skinner, 9 Ind. 191; Hardy v. Simpson, 13 Ind. 132; Green v. Banks, 24 Tex. 508.

› See post, § 65.

"Where a man," it was said in the case of Planck v. Schermerhorn (3 Barb. Ch. 344), "has ample means to pay all his debts in cash, as they become due, there seems to be no reason for making a general assignment and giving preferences, except for the purpose of delaying the creditors in the assertion of their legal rights." See Van Nest v. Yoe, 1 Sandf. Ch. 4, 9; Kellogg v. Slawson, 15