Opinion
12-08-1905
RUSSELL & ERWIN MFG. CO. v. E. C. FAITOUTE HARDWARE CO.
Frank Benjamin and Mr. Duffield, for receiver. Brown & Beecher, for respondent.
Action by the Russell & Erwin Manufacturing Company against the E. C. Faitoute Hardware Company. On petition of defendant's receiver to set aside an assignment of certain book accounts by defendant to E. Forest Powell. Petition granted.
Frank Benjamin and Mr. Duffield, for receiver. Brown & Beecher, for respondent.
EMERY, V. C. This petition is filed to set aside an assignment of book accounts, amounting to $995, and to secure an indebtedness of $1,000 made by the insolvent corporation to the respondent Powell on December 6, 1904, four days before the filing of the bill on which the company was declared insolvent and a receiver appointed. The ground alleged in the petition is that the company at the time of the assignment was insolvent and had suspended its ordinary business, and that possession of its stock in trade at its place of business in Newark had been taken under a chattel mortgage. Notice to the respondent that the company had suspended business and contemplated insolvency is charged. The answer admits the suspension of the ordinary business of the company on December 6, 1904, and the taking of possession by the mortgagee as charged, but denies a voluntary suspension of business, or that it suspended on account of insolvency or in contemplation of insolvency, and sets up that the assignment of that date was to secure an indebtedness of $1,000, but denies that it was made after the suspension of business, or notice of the insolvency. A present consideration of the assignment is also set up, being the cancellation and surrender of other book accounts assigned to him by the company, taken possession of by respondent previous to that time, and the payment by him to the company of moneys collected for him by the company of accounts previously assigned to him. The cause was tried together with the cause on the petition of the receiver against Peters (62 Atl. 421), to set aside assignments of similar character to him on the same day, and the evidence relating to the validity of those assignments applies equally to the present assignment. This assignment was delivered to the respondent in New York at the same time as the assignments to Peters were delivered, after the company had suspended business and not before. Powell as well as Peters was told at the time of the delivery that the mortgagee had taken possession. Powell also then delivered up his previous assignment of November 19, 1904, and directed Beach, the officer of the company, to employ counsel to protect his interest, and at once proceeded to collect the accounts assigned on December 6th.
The assignment must be declared null and void as against the receiver under the statute, for the reasons given in the Peters Case, and a decree for account will be advised.