McClelland agt. Remsen. verdict accordingly, for the sum of $394.55, the amount of the indebtedness of William McClelland & Co. to the plaintiff, with the interest. The exception was ordered to be heard in the first instance at the general term. The existence of the debt from the firm of William Mc Clelland & Co. to the plaintiff was not disputed upon the trial, so that the relation of debtor and creditor between the parties to the deed of assignment was duly established. The cases distinguish-and there is an obvious distinctionin principle between an assignment by a debtor of his property to trustees upon trust for the payment of particular and specific debts, reserving the surplus to the debtor, and an assignment by a debtor of his property and effects to his creditor upon the trust to sell and pay his own debt, reserving the surplus to the debtor or his assigns. The latter is in effect a mortgage, and when the debt which it is designed to secure is paid, the property reverts to the original owner. The surplus is always within the reach of the other creditors, and can, by a creditor's bill, or proceedings supplementary to the execution, be attached and appropriated to the payment and satisfaction of their debts. Such a disposition of a debtor's estate is therefore free from the weightiest objections against assignments upon trust to third persons for the payment of debts. There is no trustee interposed between the creditors and the property of their debtor. The assignee does not acquire entire legal interest in the property conveyed subject to the trust, but a specific lien upon it; and the property is still subject to the process of the courts, and may, subject to the lien of the mortgage creditor, be devoted to the satisfaction of the other creditors' debts. When property is assigned and transferred to a creditor to secure the payment of a debt, the surplus, without any special reservation in the deed, would revert to the assignor the moment the debt was paid and the purpose of the conveyance accomplished. A special reservation can do no more, and is not evidence McClelland agt. Remsen. of a fraudulent intent. The law regards mortgages, and grants and conveyances in the nature of mortgages, to secure antecedent debts, with no disfavor; and, under proper limitations as to possession and notoriety, they are constantly upheld. Assignments of property upon trust to pay debts, giving preferences, have never been favored by the courts, and will only be upheld when they fulfil the condi tions which the law finds it necessary to prescribe for the prevention of fraud. Among these are, that the debtor shall devote all his property to the satisfaction of his debts, without condition or qualification, and that he shall reserve nothing from the assigned property to himself, until all his creditors are paid. He may prescribe the order in which payments shall be made, giving preference to favored creditors; but if he reserves any part of the estate to his own use, or for the benefit of himself, in any way, until the debts of all his creditors are satisfied, the assignment will be adjudged fraudulent per se, and absolutely void. For authority as to one class of these cases, vide Goodrich agt. Downs, (6 Hill, 438;) Barney agt. Griffin, (2 Coms., 365.) And for authority as to the other class, vide Leitch agt. Hollister, (4 Coms., 211.) In the latter case the court, in speaking of assignments made to creditors themselves for the purpose of securing their own debts, say: "The conveyance, whatever may be its form, is in effect a mortgage of the property transferred. A trust as to the surplus, results from the nature of the security, and is not the object or one of the objects of the assignment. Whether expressed in the instrument or left to implication is immaterial." In view of these authorities, there is nothing vicious or illegal in the form of the instrument under which the plaintiff claims to recover the value of the property. The remaining question in the case arises upon the power of one partner to assign over and transfer to a creditor, the partnership effects in payment of or as security for the payment of his debt. Elizabeth Hasluck did not unite in or McClelland agt. Remsen. assent to the executing of the deed of assignment, but it was the act of William McClelland solely. It cannot escape notice in this connection, that while the plaintiff claims the property under an instrument made in the name of the firm by one co-partner, the defendant claims to hold it under an execution issued upon a judgment confessed by the other co-partner, still the legal problem remains to be solved by the aid of principle or authority. The right of one party to make a general assignment of the co-partnership effects to a trustee, for the payment of debts, giving preferences, has been denied by very competent and resspectable authority, and probably does not exist. It may still be regarded as an open question, not having yet passed the ordeal of the court of last resort in this state. But the authority of one co-partner to sell the co-partnership property to a particular creditor or creditors in payment of their debts, has been judicially determined, and is now the settled law. The power of a partner to dispose of the property of the firm, extends to assignments of it as security for antecedent debts, as well as for debts thereafter to be contracted on account of the firm. Lord MANSFIELD, in a celebrated case, (Fox agt. Hanbury, Cowp., 445,) decided that even after an act of bankruptcy committed by one partner, an assignment, bona fide, of partnership effects by the solvent partner to a creditor of the firm, in payment of his debt, was binding on the firm. (Collyer on Partnership, 395.) Mabbet agt. White, (2 Kern., 442,) decides that one co-partner has authority to sell and transfer all the co-partnership effects directly to a creditor of the firm in payment of a debt, without the knowledge or consent of his co-partner, although the latter is at the place of business and might be consulted. Nor is the validity of the sale affected by the insolvency of the firm at the time, and the preference which the purchasing creditor will thus acquire over the others. If I am right in thinking the instrument of assignment Connecticut Mutual Life Assurance Co. agt. Cleveland, &c. R. R. Company. made by William McClelland in the name of the firm to the plaintiff, a mortgage, or an instrument in the nature of a mortgage, then it is within the principle of the decisions referred to, and is effectual to pass the title to the goods, for all the purposes of the action, to the plaintiff. Judgment should be entered upon the verdict, for the plaintiff. SUPREME COURT. THE CONNECTICUT MUTUAL LIFE ASSURANCE COMPANY agt. THE CLEVELAND, COLUMBUS and CINCINNATI RAILROAD COMPANY. Where parties (though both are foreign corporations) make a contract out of the state, and contemplate its performance in the state, the cause of action thereon arises here, and the court has jurisdiction. New York General Term, May, 1862. INGRAHAM, LEONARD and BARNARD, Justices. THE plaintiffs, on the first of February, 1862, attached funds of the defendants deposited in the city of New York by the defendants, to pay their eastern stockholders. The suit in which the attachment issued was commenced to enforce defendants' liability as guarantors of the bonds and coupons of the Columbus, Piqua and Indiana Railroad Company, now insolvent. The defendants moved to set aside. he summons and attachment, on the ground that the parties are foreign corporations, and the cause of action did not arise in this state. The plaintiffs contended that the cause of action arose in this state, the bonds and coupons being payable at the office of the Ohio Life Insurance and Trust Company, in this city; that the defendants, by a general appearance, waive any irregularity of service, and that, irrespective of any state law, a corporation created Connecticut Mutual Life Assurance Co. agt. Cleveland, &c. R. R. Company. in another state was entitled to all the rights and remedies citizen of another state in our courts. of any The following opinion, at special term, was delivered by LEONARD, J. There is such a diversity of authority upon the question, viz., where does the cause of action arise, where the contract is made out of the state, but is payable, or to be performed within it, that I find myself not at liberty to advance my own views at special term, where a decision adverse to the plaintiffs may result in leaving them remediless. I feel particularly constrained by the case of Burckle agt. Eckhart, reported in 3d Coms. R., 132. From the result to which I have arrived on this question, it is not necessary to consider the point raised in relation to the effect of the notice served with the order to show cause. I think, however, jurisdiction could not be claimed in consequence of the notice, if allowed the construction claimed for it by the plaintiffs, unless the cause of action arose in this state. The object of section 427 of the Code was not to confer a privilege upon foreign corporations, but creates a rule of policy which is independent of any action of the corporation or parties. Defendants' motion must therefore be denied, with costs to abide the event of the suit. The defendant appealed. E. S. VAN WINKLE, for appellant, cited Whitehead agt. B. & L. H. R. R. Co., (18 How.. 218;) Campbell agt. Ch. & St. L. R. R. Co., (id., 412;) Harriot agt. N. J. R. R. Co., (8 Abb., 284;) Dickinson agt. Benham, (19 How., 410;) Wilson agt. Britton, (6 Abb., 33.) WILLIAM E. CURTIS, opposed. I. The cause of action arose in this state; the coupons upon which this action is brought being all payable in this state, and the conditions precedent to their payment to be performed here, and the bonds to which they belong, and |