Dana v. Stanfords

Citations

• 10 Cal. 269

Syllabus

<p>The object of the thirty-ninth section of the “Act for the relief of Insolvent Debtors and protection of Creditors,” which provides that no assignment of any insolvent debtor, otherwise than as provided in that act, shall be legal or binding upon creditors, was to do away with all voluntary assignments by a debtor in failing circumstances, for the benefit of his creditors.</p> <p>It was never intended to prevent an insolvent debtor from transferring his property directly to his creditor, either absolutely in payment of his debts, or as security by way of mortgage.</p> <p>An assignment, in the sense of the statute, must embrace a trust for others than the assignee. Without the creation of such trust, the conveyance directly to the creditor, with authority to him to sell the property transferred, and to apply the proceeds in discharge of the indebtedness to himself and the liabilities he has incurred, is only a mortgage, whatever its form, and is not within the letter or spirit of the statute.</p> <p>In such cases, the assignee acquires only a specific lien upon the property. The trust which results in favor of the assignor, arises from the nature of the transaction, as one of security. Such trust results in all cases of mortgages, but is not the object of their execution.</p> <p>From the power which a man possesses over his own property, it follows that he can dispose of it in any manner he may see fit, which does not contravene the general policy of the law. That policy restricts the power of disposition, so as to prevent the withdrawal of the property from the claims of his creditors. It is no part of such policy to inhibit its application to the payment of one debt rather than another.</p> <p>A conveyance giving a preference, is not fraudulent, though the debtor be insolvent, and the creditor be aware at the time that it will have the effect of defeating the collection of other debts. To avoid the conveyance, there must be a real design on the part of the debto