U.S. Supreme Court
Estes v. Gunter, 122 U.S. 450 (1887)
Estes v. Gunter
Submitted May 3, 1887
Decided May 27, 1887
122 U.S. 450
In Mississippi, an insolvent debtor may make a general assignment of his property for the benefit of his creditors, with preferences.
A deed by an insolvent debtor in Mississippi to secure sureties on his note made in advance of, and in contemplation of, a general assignment for the benefit of creditors is valid under the laws of that state, although containing a provision that the grantor shall remain in possession until the maturity of the note.
A payment by an insolvent debtor of a debt due to his wife, in advance and in contemplation of a general assignment for the benefit of creditors, does not invalidate the subsequent assignment.
The taking of supplies and of money for family use from the store of an insolvent trader by his wife does not invalidate a general assignment for the benefit of creditors subsequently made.
In March, 1882, one S. H. Gunter, a merchant who had been for many years engaged in business at Sardis, in Mississippi, was largely indebted to the complainants and others, and, being unable to pay them in full, made a general assignment of his property of every description, except such as was exempt from execution, to one S. G. Spain, as trustee, for their benefit, which was recorded the same day. The assignment preferred certain of the creditors, who are named in a schedule annexed. Among them were the complainants, Estes, Doan & Co., merchants at Memphis, in Tennessee. The chanroblesvirtualawlibrary
sum due them was $13,587.68, but they were preferred only to the amount of $10,000. Their claim grew out of advances of cash and supplies furnished to Gunter. There is no question as to its amount or justice. On the same day, and immediately preceding the execution of the assignment, Gunter executed a deed of a house and lot in Sardis to one J. G. Hall, as trustee, to secure the firm of Boothe, Rice & Carleton, who were sureties upon his note, held by the Bank of Sardis, for $1,000, due on the first of December, 1882. This deed was to be void if the note was paid at maturity; otherwise the trustee was, on the written request of the sureties, to take possession of and sell the property at public auction, after due notice, and apply the proceeds to its payment. Any surplus was to be returned to the grantor. It the property should at any time "become endangered" as a security, the trustee was at liberty to take possession of and hold it until the debt was discharged by payment or by sale of the property, but until demanded by the trustee, the grantor was to hold the same subject to the deed of trust. This deed was also recorded on the same day, and a few minutes before the assignment.
At the same time, Gunter transferred and delivered to several of his clerks and employees certain notes and accounts in payment of his indebtedness to them. It was also in proof that Gunter was hopelessly insolvent; that for twelve days before he made the assignment he knew of his condition, and contemplated making the assignment; that during this time he gave to his wife the sum of $900 in payment of an alleged indebtedness to her, and she was permitted to take money from the drawer of the store, and that more goods than usual were carried from the store to his house.
Soon after the assignment and deed of trust were recorded, the defendants Bickham & Moore, who were also creditors of Gunter, sued out an attachment against him in the Circuit Court of United States for the Northern District of Mississippi, which was levied on the property assigned by Gunter to Spain, as trustee. This attachment was followed by attachments of other creditors, and the property was seized by the marshal. Spain, the assignee, thereupon renounced his trust chanroblesvirtualawlibrary
and refused further to act. Thereupon the complainants, Estes & Doan, who were much the largest creditors of Gunter, filed their bill against Bickham & Moore and other attaching creditors, setting forth the assignment of Gunter to Spain, his debt to them, the several attachments levied, and the refusal of Spain, the assignee, to act, and praying the court to appoint a trustee in his place, to direct the enforcement of the trust, and to enjoin the attaching creditors from further proceeding with their suits. Bickham & Moore and other defendants answered, charging that the assignment was fraudulent and void but admitting that Spain refused to act as trustee or assignee. Proofs were taken, and upon the hearing, the court held that the assignment was fraudulent and void, and accordingly entered a decree dismissing the bill with costs. From this decree the complainants have appealed to this Court. chanroblesvirtualawlibrary