Lapas attēli

Opinion of the Court.

at maturity, but conveyed the property absolutely to the trustee, to be sold for the payment of the debts named and preferred in it, it was not a mortgage security, but an assignment for the benefit of creditors; and Judge Krekel laid down this general rule : “A debtor in Missouri, under its legislation and adjudications thereon, may, though he be insolvent at the time, prefer one or more of his creditors by securing them; but he cannot do it by an instrument conveying the whole of his property to pay one or more creditors. Instruments of the latter class will be construed as falling within the assignment laws, and as for the benefit of all creditors, whether named in the assignment or not.” 14 Fed. Rep. 166.

The rule thus laid down has since been followed by the same and other judges in the Federal courts within the State of Missouri, and has been extended (in disregard of the adjudication of the Supreme Court of the State in Crow v. Beardsley) so as to hold a deed of trust, in the nature of a mortgage, of all the personal property of the debtor, to be a voluntary assignment, within the meaning and effect of the Missouri statute. Dahlman V. Jacobs, 16 Fed. Rep. 614 ; Kellog v. Richardson, 19 Fed. Rep. 70; Clapp v. Dittman, 21 Fed. Rep. 15; Perry v. Corby, 21 Fed. Rep. 737; Kerbs v. Ewing, 22 Fed. Rep. 693; Freund v. Yaegerman, 26 Fed. Rep. 812, and 27 Fed. Rep. 248; State v. Morse, 27 Fed. Rep. 261.

That rule, as thus construed and applied, has not, however, always been approved in the Circuit Court. In Clapp v. Dittman, above cited, Mr. Justice Brewer, then Circuit Judge, confessed that, if it were a new question, his own conclusion would be different, and in harmony with the decisions in National Bank v. Sprague, 3 C. E. Green, 13, 28; Farwell v. Howard, 26 Iowa, 381; Doremus v. O'Hara,'1 Ohio St. 45; Atkinson v. Tomlinson, 1 Ohio St. 237, and other cases; and declared that he should follow the rule, as having been established by the course of the decisions in the courts of the United States within the State of Missouri, until there should be some authoritative construction of the statute by the Supreme Court of the United States, or by the Supreme Court

Opinion of the Court.

of the State. 21 Fed. Rep. 17. See also Perry v. Corby, 21 Fed. Rep. 737; Freund v. Yaegerman, 27 Fed. Rep. 248; Elgin Co. v. Meyer, 30 Fed. Rep. 659; Weil v. Polack, 30 Fed. Rep. 813.

The decision in Crow v. Beardsley has always been treated in all the courts of the State as settling the law of Missouri upon the subject. It has been followed by the St. Louis Court of Appeals in Holt v. Simmons, 16 Mo. App. 97, and by the Kansas City Court of Appeals in Sampson v. Shaw, 19 Mo. App. 274, and in Smith & Keating Co. v. Thurman, 29 Mo. App. 186; and it has been approved and acted on by the Supreme Court of Missouri in a very recent case, in which the court, after repeating and enforcing the reasoning upon which Crow v. Beardsley proceeded, said: “The assignment law of Missouri is not, in letter or spirit, a bankrupt or insolvent debtor's act. A debtor, whether solvent or insolvent, may, in good faith, sell, deliver in payment, mortgage or pledge. the whole or any part of his property for the benefit of one or more of his creditors, to the exclusion of others, even though such transfer may have the effect of delaying them in the collection of their debts. Its terms in no way qualify the rule by which the character of this instrument is to be determined. Reading the instrument then as a whole, in the light of the circumstances under which it was executed, was it intended as a security, or as an absolute unconditional conveyance, in præsenti, to the grantee of all the grantor's interest in the property, both legal and equitable, to the exclusion of any equitable right of redemption ?” And it was accordingly adjudged that the assignment law was inapplicable to a deed of trust, conveying all the debtor's property, real and personal, (except his homestead and household furniture, and a horse and buggy,) to a' trustee in trust to secure the payment of part of his debts for which he was liable either as principal or as surety, which appeared to the court, upon a view of all its provisions as applied to the facts of the case, to be “not an absolute indefeasible assignment of all the grantor's title, both legal and equitable, in the property 'in trust for his creditors;' but a deed of trust to secure the pay


Opinion of the Court.

ment of debts and other liabilities, in which the grantor has an interest in the property conveyed,” for the protection of which “equity gives him a right of redemption, though no clause of defeasance was inserted in the deed.” Haryadine v. IIenderson, 97 Missouri, 375, 386, 387, 389.

The question of the construction and effect of a statute of a State, regulating assignments for the benefit of creditors, is a question upon which the decisions of the highest court of the State, establishing a rule of property, are of controlling authority in the courts of the United States. Brashear v. West, 7 Pet. 608, 615; Allen v. Massey, 17 Wall. 351; Lloyd v. Fulton, 91 U. S. 479, 485; Sumner v. Hicks, 2 Black, 532, 534; Jaffray v. McGehee, 107 U. S. 361, 365; Peters v. Bain, 133 U. S. 670, 686; Randolph's Executor v. Quidnick Co., 135 U. S. 457. The decision in White v. Cotzhausen, 129 U. S. 329, construing a similar statute of Illinois in accordance with the decisions of the Supreme Court of that State as understood by this court, has therefore no bearing upon the case at bar. The fact that similar statutes are allowed different effects in different States is immaterial. As observed by Mr. Justice Field, speaking for this court, “The interpretation within the jurisdiction of one State becomes a part of the law of that State, as much so as if incorporated into the body of it by the legislature. If, therefore, different interpretations are given in different States to a similar local law, that law in effect becomes by the interpretations, so far as it is a rule for our action, a different law in one State from what it is in the other." Christy v. Pridgeon, 4 Wall. 196, 203. See also Detroit v. Osborne, 135 U. S. 492.

In the present case, there can be no doubt that the deed of trust, conveying the personal property of the partnership to secure the payment of its debts therein named, and reserving in the clearest terms a right of redemption to the grantors, by providing that if they shall pay those debts the deed shall be void, as well as by authorizing the trustee to sell the property only in case of their failing to pay those debts or any part thereof for five days after they become payable, was, according to the settled course of decision in the courts of the State

Opinion of the Court.

of Missouri, a mortgage only, and not an assignment under the statute relied on; and therefore, according to the decisions in Missouri, cited at the beginning of this opinion, (no fraud being proved or suggested,) an instrument which one partner had the inherent authority to bind the partnership by, although his copartners did not join in it.

The deed of trust, executed by and with the consent of two of the three partners, being a valid mortgage, and not an assignment, within the meaning of the statute, the fact that the third partner had authorized his copartners to execute an assignment, which was never executed, cannot affect the validity or the operation of the deed of trust.

Nor did the simultaneous appointment of a receiver of the partnership property at the suit of one of the partners alter the nature of the deed of trust, or transform it into a voluntary assignment, within the meaning of the statute of Missouri, as construed by the Supreme Court of the State. A receiver derives his authority from the act of the court appointing him, and not from the act of the parties at whose suggestion or by whose consent he is appointed; and the utmost effect of his appointment is to put the property from that time into his custody as an officer of the court, for the benefit of the party ultimately proved to be entitled, but not to change the title, or even the right of possession, in the property. Skip v. Harwood, 3 Atk. 564; Anon. 2 Atk. 15; Wiswall v. Sampson, 14 How. 52, 65; Ellis v. Boston, Hartford & Erie Railroad, 107 Mass. 1, 28; Maynard v. Bond, 67 Missouri, 315; Herman v. Fisher, 11 Mo. App. 275, 281. And in the present case, the three banks have claimed and received payment of the full amount of their debts from Stewart as trustee under the mortgage, and not as receiver under the appointment of the court.

The necessary conclusion is, that each of the questions certified must be answered in the negative, and that the decree of the Circuit Court dismissing the bill must be


Statement of the Case.

THE CHIEF JUSTICE, having been of counsel, and MR. JUSTICE Brewer, not having been a member of the court when the case was argued, took no part in its consideration or decision.






No. 28. Argued April 15, 16, 1889.- Decided May 19, 1890.

An appeal from a decree of the Circuit Court of the United States, dis

missing a bill filed by creditors to set aside a mortgage by their debtor, is within the jurisdiction of this court as to those creditors only whose

debts severally exceed $5000. The filing of a voluntary assignment for the benefit of creditors, and of the

assignee's bond, in a probate court, under the statutes of Ohio, does not prevent a creditor, who is a citizen of another State, and has not become a party to the proceedings in the state court, from suing in equity in the Circuit Court of the United States to set aside a mortgage made by the

debtor contemporaneously with the assignment. In Ohio, a mortgage by an insolvent trading corporation to prefer some of

its creditors, having been held by the Supreme Court of the State to be invalid, under its constitution and laws, against general creditors such a mortgage must be held invalid in the courts of the United States.

This was a bill in equity, filed November 4, 1885, by a corporation of Michigan against the Simpson and Gault Manufacturing Company, a corporation of Ohio, Sayler, a citizen of Ohio and assignee of that company, under the laws of Ohio, McGroarty, Simpson, Gault and Fitch, also citizens of Ohio, and Charles, a citizen of New York.

The bill alleged that the defendant company, on May 25, 1885, by a deed of assignment filed in the probate court of Hamilton County in the State of Ohio, granted and assigned all its property, real and personal, to Sayler, in trust to sell and dispose of it, and to apply the proceeds, after paying the

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