FEDERAL
which iEl a prosecution inseparable from a cause which that plaintiff haEl himself instituted. The process which is issued as a notice to the plaintiff in such a case is not "original j" it is incidental, ancillary, a step in a pending cause. It is not a process which originates a cause, but merely prolongs one already commenced. The plea to the return is overruled, and the service upon the attorney is adjudged to be good. The respondent may have time to anawer as if the service of the subpcena had been made to-day.
ElILL, Assignee,
1:.
AGNEW, SCALES & Co. and others.
{Dietrict Court, N. D. Mississippi. December Term, ISSI.} 1. AssIGNMEN'rm FOR CREDITORS-WHEN FRAUDULENT.
A conveyance in trust for the benefit of creditors, which provides for crops to be thereafter planted, and for a sale of supplies to the laborers, with no provision that the trustees shall have any power to control the laborers, or over the completion or gathering of the crops, is fraudulent in law and void as to creditors.
2.
SAME-PROVISION FOR ATTORNEY'S FEES.
It is no objection to a conveyance in trust for the benefit of creditors that a provision is made for the payment of a reasonable attorney's fee for the examination of the facts, advice, and drawing up the assignment and securing its proper proof or acknowledgment and placing it on record; but the debtor has no power to contract with attorneys for any further services, which is a matter entirely within tl:e control of the trustees, and for which the assignees will be allowed a reasonable sum. 3. B..um-VICE MUST BE APPARENT.
To declare a conveyance fraudulent per S6, the vice must be apparent on the face of the instrument, without reference to extrinsic proof. 4. SAME-ILLEGAL PREFERENCE.
Where such an assignment, after providing for different classes of creditors to be preferred, and then' for a distribution of the surplns among those not preferred, and the surplus to the grantor, contained the following provision, "provided, however, that the said party of the second part, or his successors, shall pay no claims unless the correctness of the same shall be established to his satisfaction," the directions extending to all claims, and not restricted to the creditors not named, is fraudulent and void as to the creditors named. 5. SAME-UNFAIR ADVANTAGES.
Where the assignment gives the first class of creditors the right to determine whether or not the assignee shall give a bond, and if so, to fix the amount, it gives an unfair advantage over other creditors, and is a circumstance to show fraud, but not sufficient to show it fraudulent p61' 88
HILL, D. J. This bill was filed in the ohancery court of Chickasaw county against the creditors of T. R. Sadler, who had made a
HILL V. AGNEW.
general assignment of all his estate to complainants, prayingtliat they might be enjoined from prosecuting their suits so as to obtain' satisfaction out of the estate conveyed of the sums due them respect-' ively. By the order of the circtiitjudge for that district an injunction was granted in accordance with the prayer of the bill. Agnew, Scales & Co., creditors of said Sadler, had sued out their attachment - in the circuit court of Chickasaw county, and caused the same to be levied upon the property so conveyed, and in the hlinds of complainant as such trustee. Under the provisions of the act of congress of cause as to them tothis 1875, Agnew, Scales & Co. court, and have also removed their attaehment suit to this cotid, and ,now move to the injunction -ltgainst them for the alleged reason that the conV'Eiyance under which complainant claims the property attached, contains provisions in it which render itfraudulent in law as to them; and whether this is so or noi is the only question now for decision. The first provision whIch'it is alleged has this effe'ct is as follows: "And the said party of ,the second part, (the trustee,)in order to promote said party Of the first part, is hereby the interestof the creditors of ized to carry out the agreement oltha said first party with tile laborers on his plantation; to furnish them actual necessary family and farming Bupplies,ln order to enable said laborers to cultivate and gather the crops' already planted, and to be planted, on the plantations of the said first party, hereby conveyed, planted, and so invested to be planted, during the year 1881."
,"
:1
This provision contemplated a. sale of the supplies then on hand necessary for the purposes mentioned, and, if not a sufficiency then on hand, the purchase of stich as might be needed for that purpose, and a sale to the laborers. In other words, so far as it related to these laborers, the business, for the time and purpose mentioned, was to be carried on as it had been done by the grantor. It is difficult to perceive any substantial difference between the exercise of such a power and the action of the trustee in the case of Richard80n v. Marjuez,recently decided by the supreme court of this state, and not yet reported, and which was condemned by the supreme court, and for which the trustee was removed and a' receiver appointed. The court, in that case, decided the power was not given to the trustee in the deed, and, had it it would have rendered the assignment fraudulent and void. The action on the part of the trustee so condemned, was the furnishing parties who had conthe necessary supplies for the crop year, tracted with the and who had given trust deeds to secure the paymcmt thereof.
FEDERAL REPORTER.
It is insisted in this case that it would have been a great hardship upon the laborers who had planted their crops, and who had depended upon obtaining their supplies under their contracts; and further, that it was to the interest of the creditors that the contracts should be carried out; and there is force in the argument. But the ,same argument would sustain the action of the trustee which the supreme court has condemned as fraudulent, had the power been given. So far as the assignment in this case shows, there was no overpowering necessitY!Qr the grantor to have made it until after the crops had been made an.d gathered, and, if there had been, it is difficult to perceive any difference, or that it would have placed the laborers in a worse condition than they would have been had the property been seized under exec\ltion or attachment. It is one of the misfortunes which befalls parties when they contract with those who either will not or cannot comply with their agreements. When a debtor makes an assignment of his property he parts with all control over it; the assignee takes it, and is authorized to convert it into money and apply it to the satisfaction of the trusts imposed. lndoing so, he may, for a limited time, so as to make available ma;terials on han,d, continue the business by the employment of laborers, and the purchase of limited and materials; but all to 1:>e under the immediate control of the trustee. The trustee may also employ laborers to complete a crop planted, or to gather it and prepare it for market. But this conveyance provides for crops to be thereafter planted, and for a sale of supplies to the laborers. There is no provision that the trustee shall have any power to control the laborers, or the completion or gathering of the crops; it is a power inconsistent with an assignment of this character, and which renders this conveyance as to these defendants fraudulent in law and void. The next provision in the assignment which it is alleged renders it void, is as follows: "And with and out of the proceeds of the plantations, sales, and collections, the said party of the second part shall pay all the just and reilsonable expenses, costs, charges, and commissions of making, executing, and carrying into effect this assignment, and the trusts hereby created, together with the sum of $1,000 to Buchallan & Houston, for their services as lawyers in and about the premises, and together with their anthority as to the execution of the trusts hereby created."
The provision for the payment of the attorney's fees is the one to which objection is made. It is no objection to the conveyance that provision was made for the payment of a reasonable attorney's fee,
233
for the examination of the facts, advice, and drawing up ,the assignment, and securing it properly proven or acknowledged and placed on record. But at this point the control of the grantor ceases; he has no power to contract with attorneys for any further services; that is a matter entirely within the control of the trustee. The only authority referred to holding a contra,ry doctrine is a case decided by the supreme court of Texas, in which it is said that the grantor may designate the attorney to be employed by the assignee. I dt) not know the facts in that case, but if it holds that the grantor in such '8, conveyance may contract with the' attorney for services to formed after the assignment is made, or tha't the assignee 'is bound by the' designation of the grantor, in a general assignment of an insolvent estate, I am of opinion that such a rule is violative' o'hi sonnd rule on the subject, and cam;lOt follow it. ,.'; ;' But to declare a conveyance fraudulent per se, the vice must be 'on the face of tne instrument itself, 'to extrinsic proof. This conveyance does not 'come up to ,this rule, but from its face leaves it in doubt whether the understanding behveen the parties was that the services of the attorneys shourdclose' putting the deed on record, or to continne afterwards. If the fonnet, the provision is not condemned except for' unreasonablenl3ss' in" the amount, which would be a matter of proof; if the latter, it would avoid the conveyance, but would require proof to establish it; hence the assignment cannot be declared void upon its face for this reason. An assignee will be allowed a reasonable sum paid to attorneys for their services in defending the assignment, or for other services; and a provision in the assignment directing that the costs and expenses of the trust, including reasonable attorney's fees, will not of itself vitiate the conveyance. This would be allowed if the conveyance is sustained, without such direction,-as a matter of course, if not sustained, disallowed,-but this leaves the entire contract to the assignee, and is different from a contract for such services made by the assignee. The next provision relied upon as avoiding the assignment is that, after providing for different classes of creditors to be preferred, and then for a disposition of the surplus among those not preffilrred, and the surplus after that, if any, to the grantor, is the following provision: "Provided, however, that the said party of the second part, or his successors, shall pay no claims unless the correctness of the same shall be established to his satisfaction." Had this provision been confined to the creditors not named, and in which the amounts due a:re not specified, it might not be held as
vitiating the assignment, as in that case it would be the duty of the trustee to be satisfied of the correctness of the debt, and consequently such direction would be harmless; but the direction is not so limited, but extends to all claims-those in which the creditor, with the sum due, is gi,en; and where the creditor is . It constitutes the the debt or not. assignee the sole judge as to whether he will The presumption must be indulged that the grantor knew his creditors, and the amount justlydue, when he states the same in his assignment; and yet under this provision the assignee could refuse to pay the claim upon his own opinion as to whether it should be paid or not. These assignments are intended to supersede all other tribunals, so far as the subject and creation of the trusts are <}oncerned, and an assignee haa no right to appoint an arbiter without the consent of the creditor whose rights are to be affected. Again, by the exercise of the power attempted to be conferred the assignee may postpone the payment of the .sumsdue the creditors. I am satisfied that the rigl,lts of these this provision in the assignment renders it, as defendants, fraudulent. in law and void. . .. ' ,Another provision insisted upon as rendering the' assignment void is that it gives to the first preferred class of creditors the right to determine whether or :t;lot the assignee shall give bond; and if so fixes '. the amount. I am qf opinio:r;t that this provision gives an unfair advantage over other creditors equally entitled to protection, and is a strong circumstance tending to show fraud, but is not sufficient to authorize the court to declare it fraudulent per se. I am satisfied, as above stated, that for the first and third reasons, relied upon by the counsel for Agnew, Scales & Co., that this conveyance must be held fraudulent as to their rights, and that the motion to dissolve the injunction granted by the circuit judge must be sustained as to them; but this does not affect the validity of the conveyance as to the assenting creditors, nor will it affect the a.etion of the assignee in the execution of the trusts imposed, further than the application of so much of the assets conveyed as Jnay be necessary to satisfy the judgment of Agnew, Scales & Co. should they obtain a an order will be entered dissolving recovery in their the injunction to. the extent stated.
IN RE WILBON.
In f'e 1. ATTORNEY AT
WILSON
&
GREIG,
Bankmp,ts.
(DiBirict Oourt, S. D. :New York. June 1,1882.) LAw-LIEN OF. An attorney's lien upon an uncollected judgment is limited to his taxable costs and reasonable compensation in the cause itself, or in the same subjectmatter, and may be enforced by active proceedings;
SAME-DEPENDS ON POS8EsBIO:N.
An attorney's general lien for the balance of his entire account extending to all papers, documents, and vouchers in his possession, depends wholly upon possession, and is a right merely to retain such papers till his bill is paid, and cannot be otherwise actively enforced. S. SAME-ExTENT OF.
Such a general lien does not extend to a judgment uncollected by the attorney, so as to bind the proceeds, when collected by the judgment creditor or his assignee, or other attorneys who may collect the same, without the use of papers in the hands of the original attorney. 4. ATTORNEY'S FEES-AGREEMENT OF ASSIGNEE-GENERAL LIEN.
Where an assignee in bankruptcy, desiring to change the attorneys in legal proceedings which the bankrupt had instituted, .received from the latter's attorneys all the bankrupt papers and vouchers, including substitution upon outstanding executions on judgments previously recovered, agreeing to satisfy the attorney's lien out of the first moneys collected in the pendil1gsuits, and the executions were afterwards returned unsatisfied, and the other attorneys .of the assignee subsequently collected the first two judgments through supplementary proceedings in the nature of a creditor's bill, upon which the former attorney claimed a lien for his costs and counsel fees in a third judgment, which remained wholly uncollected, held, that the agreement was not binding upon the bankrupt's estate to any greater extent. than the legal lien of the attorney at thc' time the agrecment was made; that he had no lien upon the proceeds of the first two judgments for his costs and counsel fees in the third judgment" or for his general bill, the first judgwents .having been collected without the use of any papers in the attorney's h8.nds at the time of the agrcJl· ment; and that upon the suits not in judgment, and the papers nccessary in the prosecution thereof, thc attorney had a general lien; that the agreement was valid and binding to that extent, and certain proceeds.of. such suits having been collected by means of papers surrendered under it, tJ;le attorney was enti. tIed to have such proceeds applied to his general bill. Case of the Bowling G'NJcn &wing8 Bank v. Todd, 52 N. Y. 489, qualified. 5; SUm-LIEN ON
An attorney's lien upon an uncollected judgment is not increased by subsequent services in independent matters.
Hearing on report of the register upon petition of J. H. Goodwin for payment of an attorney's lien. The assignee of the bankrupts was appointed in June, 1879. Prior thereto the petitioner had, been employed by.the bankrupts 88 their attorney in the prosecution of several 8uitswhich: were pending at the, time: of the appointment>of the. assignee. The petitioner, as