ner have been, from an early period, declared void by statute. 1 Rev. Stat., 135, § 1. The application of this statute has been often invoked to defeat endeavors of insolvents to place property out of the reach of their creditors, with a view to their own ultimate benefit. The case of Goodrich v. Downs (6 Hill, 438,) was upon this subject. The assignment drawn in question in that case directed the assignees to pay certain specified creditors, making no provision for others, and to pay the surplus, if any, to the assignor. It was held that such an assignment was void upon its face; as operating to put a part of the debtor's property out of the reach of creditors for his own benefit; and that as the statute declares that in such a case the conveyance shall be void, the void trust as to the surplus avoided the whole deed. And it could not be aided by extrinsic proof that there would be no surplus. The parties having expressly provided for a surplus, were not at liberty to say they did not contemplate one. To the same effect is Strong v. Skinner, 4 Barb., 456. See, however, a disapproval of the grounds of decision in Goodrich v. Downs, in Curtis v. Leavitt, 15 N. Y., 9, 114.

In Goodrich v. Downs the property assigned was personal; in Barney v. Griffin, decided in the court of appeals in 1849 (2 Comst., 365), similar principles were established with reference to assignments of real property. It was there determined that an assignment of a debtor's entire property, in trust to pay certain specified creditors, and, without making any provision for others, to repay the residue to the assignor, is void, for fraud upon creditors not provided for; inasmuch as the property is placed beyond the reach of their executions, in the hands of men not accountable to them, and upon a trust in part for the benefit of the debtor. And the defect cannot be aided by proof there will be no surplus. Substantially the same view is taken in Leitch v. Hollister (4 Comst., 211), Lansing v. Woodruff (1 Sandf. ch. 43), and Clark v. Dowlings (1 Hill & D. Supp., 105); and the rule has even been applied in a case where it was thought that the resulting trust was not intended, but arose from an inadvertent omission in drawing the assignment Hooper v. Tuckerman (3 Sandf., 311); and in cases where the assignment was of partnership property, and the resulting trust arose only indirectly through the individual interest of partners in the residue of the firm assets. (Johnson v. Gardner, 4 N. Y. Leg. Obs., 424; Collomb v. Caldwell, 16 N. Y., 484; Wilson v. Robertson, 21 N. Y., 387; 19 How. Pr., 350; Smith v. Howard, 20 How. Pr., 121); with which compare Collumb v. Read (24 N. Y., 405); compare, however, upon this subject, Wilkes v. Tenis ( 5 Johns., 335), and remarks upon Barney v. Griffin (cited supra), in Curtis v. Leavitt (15 N. Y., 118, 176).

Some cases, indeed, are recognized as not within the rule avoiding an assignment for expressing a trust to pay a surplus to the assignor. One class is, cases in which property is assigned direct to a particular creditor, as a means of securing payment of his demand. Such an assignment being in the nature of a mortgage for the particular demand, a trust to pay the surplus to the assignor, is held to result from the nature of the instrument; and whether it is stated in the instrument or left to implication, is immaterial. (Leitch v. Hollister, 4 Comst., 24; Hendricks v. Robinson, 3 Johns. Ch., 284, affirmed 17 Johns., 438; Dunham v. Whitehead, 21 N. Y., 131; McLelland v. Remsen, 36 Barb., 622; 14 Abbott's Pr., 381; 23 How. Pr., 175.)

Another class embraces cases in which the surplus directed to be returned is only such as may remain after paying all creditors in full. Where a surplus results under such circumstances, the law implies a trust to repay it to the assignor. Hence a direction to repay a surplus in an assignment will not avoid it, if the instru ment in effect empowers the assignor first to pay all creditors in full, in case assets are sufficient. (Wintringham v. Lafroy, 7 Cow., 735; Van Rossum v. Walker, 11 Barb., 237; Ely v. Cook, 18 Id., 612; Taylor v. Stevens, 7 How. Pr., 415.)

A third class comprises cases in which particular items of property are excepted from the assignment. As these remain open to the reach of creditors in the same manner as they were before the assignment was made, the reservation does not operate to delay them. (Carpenter v. Underwood, 19 N. Y., 520.)

A reservation of a specific sum to the assignor for the support of his family, was thought, in an early case, to constitute no objection to the instrument, as to the residue. (Murray v. Riggs, 15 Johns., 535.) Later, it has been held to render the whole assignment void, as operating to put property of the assignor out of the reach of his creditors, and for his own enjoyment. (Mackie v. Cairns, 5 Cow., 547.) The same principle has been held applicable where an assignment provided for payment of a sum which the assignor had applied for as a loan, and had reason to believe was upon the way to him, but which he had not yet received. As such sum would not belong to the assigned assets, but must be repaid from them, the effect was an indirect reservation of the sum, from the estate, for the individual benefit of the assignor. (Sheldon v. Dodge, 4 Den., 217; see, also, to nearly the same effect, Barnum v. Hempstead, 7 Paige, 568.)

6. Provisions have often been inserted in assignments tending to enable the debtor to exercise a future preference between his creditors. These are held to avoid the instrument. Examples are, where the assignment pre.

ferred the creditors who should be named in a schedule to be thereafter made out and affixed (Averill v. Loucks, 6 Barb., 470); where it directed that, in a certain contingency, debts enumerated in a later class should be preferred to those mentioned in an earlier one (Sheldon v. Dodge, 4 Den., 217); and where it directed that if certain creditors should refuse to release the assignor then such creditors should be preferred to them as the assignors should appoint. (Hyslop v. Clarke, 14 Johns., 458.)

7. The endeavor to empower an assignee to impose conditions upon creditors, before paying their demands, has frequently been held ground for avoiding the assignment; as where certain creditors are directed to be preferred upon the condition that they execute releases of their demands (Hyslop v. Clarke, 14 Johns., 458; Austin v. Bell, 20 Id., 442; Grover v. Wakeman, 11 Wend., 187; Armstrong v. Byrne, 1 Edw., 79; Lentilhon v. Moffat, 1 Edw. Ch., 451; Searing v. Brincherhoff, 5 Johns. Ch., 329; Hone v. Henriquez, 13 Wend., 240; Gasherie v. Apple, 14 Abbott's Pr., 64); or where the assignment authorizes a surplus to be divided among those who will execute a release. (Grover v. Wakeman, 11 Wend., 187; Mills v. Levy, 2 Edw., 183; but see De Caters v. De Chaumont, 2 Paige, 490; Hastings v. Belknap, 1 Den., 190. See also, upon the same general principle, Berry v. Riley, 2 Barb., 307; Bellows v. Partridge, 19 Barb., 176; Oliver Lee & Co's. Bank v. Talcott, 19 N. Y., 146; Bank of Silver Creek v. Talcott, 22 Barb., 550; Jewett v. Woodward, 1 Edw., 195; Van Nest v. Yoe, 1 Sandf. Ch., 4; Spaulding v. Strong, 36 Barb., 310.)

8. Directions to an assignee to deal with the estate in a given way, in order to increase the amount to be realized from it, are another class of frauds upon creditors; that is, they are held to be fraudulent and to avoid the assignment wherever they operate to delay a sale. At one period their tendency was not fully perceived. Therefore, where in an assignment made by proprietors of a foundry, the trustee was directed to conduct and carry on the establishment for the benefit of the creditors, to sell the manufactured articles, to work up and sell those unmanufactured, and, in general, to sell all the property as soon as it could conveniently be done without a sacrifice, it was held that these directions were not necessarily fraudulent. But this view has been disapproved by the later cases; which go upon the general ground that the creditors have a right to a prompt sale and distribution of proceeds, whether a sacrifice is the result or not. Without their consent the debtor cannot carry on his business through the medium of an assignee, for the purpose of increasing the ultimate fund. He may direct, in general terms, a sale of the property, and to what debts and in what order the proceeds shall be

applied; but beyond this he can prescribe no condition whatever as to the management or disposal of the estate. (Dunham v. Waterman, 17 N. Y., 9. To the same effect are Van Nest v. Yoe, 1 Sandf. Ch., 4; 2 N. Y. Leg. Obs., 70; Schlussel v. Willett, 34 Barb., 615; How. Pr., 15.)

12 Abb. Pr., 397; 22

9. Akin to the last mentioned provisions are clauses which empower the assignee to sell upon credit, with a view thereby to realize a larger price for the assets. As this necessarily protracts the ultimate distribution until the term of credit expires, such a sale is held a fraud upon the right of the creditors to have the assets converted into money, and the money divided without delay. (Rogers v. De Forest, 7 Paige, 272; Barney v. Griffin, 2 Comst., 365; 8 N. Y. Leg. Obs., 68; and 9 Id., 106; Nicholson v. Leavitt, 2 Seld., 510; and 6 Id., 591; Burdick v. Post, 2 Id., 522; Houghton v. Westervelt, Seld. notes, No. 1, 32; Porter v. Williams, 5 Seld., 142; and 12 How. Pr., 107; Lyons v. Platner, 11 N. Y. Leg. Obs., 87.) As in the case of clauses conferring other powers on the assignee, so in respect to the terms in which the power to sell is expressed, if they do not necessarily import discretionary power to sell upon credit, inconsistent with the legal duty of his trust, but may be construed as consistent with an immediate conversion into money, the assignment is not rendered invalid. (Kellogg v. Slauson, 1 Kern., 302; Whitney v. Krows, 11 Barb., 198; Southworth v. Sheldon, 7 How. Pr., 414; Bellows v. Partridge, 19 Barb., 176; 12 N. Y. Leg. Obs., 219; Clark v. Fuller, 21 Barb., 128; Nichols v. McEwen, Id., 65; Wilson v. Ferguson, 10 How. Pr., 175; Clapp v. Utley, 16 Id., 384; Meacham v. Stearns, 9 Paige, 398; Wilson v. Robertson, 21 N. Y., 589; 19 How. Pr., 350; Ogden v. Peters, Id., 23; Griffin v. Marquadt, Id., 121; Schufeldt v. Abernethy, Duer, 533; 12 N. Y. Leg. Obs., 173; Murphy v. Bell, 8 How. Pr., 468.) And a clause forbidding the assignee to sell upon credit, though superfluous, does not affect the assignment. (Carpenter v. Underwood, 19 N. Y., 520; Van Rossum v. Walker, 11 Barb., 237; Stern v. Fisher, 32 Barb., 198.)

10. In addition to the protection thrown around the rights of creditors by the principles embodied in the adjudications abovementioned, it was found necessary, in 1860, for the legislature to interpose in their behalf; and to enact that assignments shall be in writing and acknowledged and recorded; that the assignor shall deliver to the county judge a sworn schedule containing an account of the creditors, stating their residences, the sums due them respectively, the consideration of each debt, and any collateral security held for it, and containing also an inventory of all the debtor's estate, stating incumbrances upon it, vouchers and securities appertaining to

it and its value; that the assignee must file a bond with sureties for the faithful performance of his duty, and that an accounting may be compelled, in due season, by legal proceedings for that purpose. (Laws of 1860, ch. 348.) This act has been deemed directory merely (Evans v. Chapin, 12 Abbott's Pr., 161; 20 How. Pr., 289; Fairchild v. Gwynne, 14 Abbott's Pr., 121), at least in so far as it requires an inventory and bond (Juliand v. Rathbone, 39 Barb., 97); but it appears to be the better opinion that a compliance by the assignor with the prerequisites imposed by the statute to be performed upon his part is essential to the validity of the instrument. (Fairchild v. Gwynne, 16 Abbott's Pr., 23, rev'g s. c., supra; Cook v. Kelley, 14 Id., 466.)

This brief review of the leading authorities in our state upon the restrictions imposed upon the right of preferential assignments, indicates what is much more clear upon a careful perusal of the decisions and statutes, viz.: that the strong tendency of the rule recognizing a discretionary power in debtors to give preferences, is towards fraud, and that the whole course of our jurisprudence and legislation has been steadily to restrict this power within narrower limits, and give creditors new means of protection.

The system of restrictions which has thus grown up may be briefly stated thus: A debtor, if not a moneyed corporation, nor a member of a limited partnership, nor an infant, nor a person contemplating proceedings for an insolvent's discharge, may make an assignment indicating preferences among his creditors, if the demands preferred are actual, valid, and honest;-provided that he confers no right or privilege upon his assignee inconsistent with the simple duty to sell and divide, nor any compensation exceeding that awarded by law; that he withholds nothing directly or indirectly, intentionally or inadvertently, immediately, or remotely, for himself; that he denotes the preferences to be made absolutely and finally, neither reserving to himself, nor giving his assignee a power to modify them, nor making them dependent upon contingencies; that he abstains from any attempt to exact or empower his assignee to exact favor from his creditors, as a condition of the payment of their dividends; that he authorizes an immediate conversion of the property into cash, neither permitting the sale to be deferred to allow the assets to be nursed into greater value, nor credit to be given in hope of obtaining a higher price; and lastly (which provision opens a wide field of litigation not touched by the decisions above reviewed), that there are not in all the attendant circumstances under which the act is done, indications of an actual intent to hinder, delay or defraud his creditors; the privilege being moreover allowed to be exercised only by means of an instrument in writing,