•
This is a contest between certain attach¬
ing creditors of John C. Belt, and one King, his voluntary assignee for the benefit of creditors.
The record is in an unsatisfactory condi¬ tion. It is impossible to tell whether the plaintiffs are a corporation or a partner¬ ship; and, if the latter, who constitute the firm, or against what individuals the judg¬ ment of the court was rendered. Although the only right of the plaintiffs to contest the assignment of Belt to King arises from the levy of an attachment upon the assigned property, neither the writ of attachment nor the return of the marshal of the levy thereunder appears in the record or testi¬ mony. Nor does the record contain a copy of the complaint, in which these proceed¬ ings were probably averred. The only pleadings before us are the interplea of King, filed in the action (which appears to have been brought against Belt alone), set¬ ting up the assignment, and the answer of the plaintiffs thereto, denying the owner¬ ship of King and averring the fraudulent character of the assignment. But as the interplea of King alleges that on December 31, 1891, and just after he had completed an inventory of the property so assigned, plaintiffs caused a writ of attachment to be levied upon a portion of the property, we may treat this as a sufficient admission of plaintiffs’ title to justify us in passing upon the question of the validity of the assign¬ ment, upon which the case largely depends.
1. This assignment is attacked by the
plaintiffs chiefly upon the ground that it contains a provision that the preferred creditors shall accept their dividends “in full satisfaction and discharge of their re¬ spective claims, . . . and execute and
deliver to said John C. Belt a legal release therefor.” This provision has been the sub¬ ject of discussion in England and in most of 187 U. S.
the states, and in a large number of cases has been held to avoid the assignment, upon the ground that the debtor has no right to compel his creditors to accept his terms or lose their preference. In England a clause of a somewhat similar nature was held to be void under the statute of Elizabeth as an attempt to hinder, delay, or defeat credit¬ ors (Spencer v. Slater, L. R. 4 Q. B. Div.
13), though the applicability of that case to this particular provision admits of some doubt.
*The fact that it enables the debtor to ex- [45- tort a settlement by playing upon the fears or apprehensions of his creditors is thought by the courts of many of the states to be sufficient to justify them in setting aside the assignment; and, where such pro¬ vision has been sustained, it has usually been in deference to authority, rather than upon conviction of its propriety or wisdom.
The question was discussed at considerable length by Mr. Justice Story in Halsey v. Fairbanks, 4 Mason, 206, 227, Fed. Cas. No. 5,964, and the validity of the clause sus¬ tained, largely in deference to the case of King v. Watson, 3 Price, 6, where, as he states, the very exception was taken by counsel, and the assignment held good by the court of exchequer. King v. Watson, however, has but a remote bearing, and seems to have been pro ta-nto overruled by the case of Spencer v. Slater, above cited.
Mr. Justice Story finally remarks that if the question were entirely new, and many estates had not passed upon the faith of such assignments, the strong inclination of his mind would be against their validity.
“As it is,” said he, “I yield with reluctance to what seems the tone of authority in fa¬ vor of them.” Somewhat similar doubt is expressed by Mr. Chief Justice Taney in White v. Winn, a memorandum of which is found in 8 Gill, 499. The question was also incidentally considered by this court in Se¬ curity Trust Co. v. Dodd, 173 U. S. 624,
633, 43 L. ed. 835, 839, 19 Sup. Ct. Rep 545, but the case went off' upon another point.
This court has never directly passed up¬ on the validity of this provision, but, wher¬ ever it has been called in question, it has been treated as determinable by the local law of the state from which the question arose. Thus, in Brashear v. West, 7 Pet.
608, 8 L. ed. 801, the clause was upheld solely upon the ground that the courts of Pennsylvania had sustained its validity.
The assignment in that case was in trust to pay and discharge the debts due from the assignor, first, to certain preferred cred¬ itors, and afterwards to creditors generally, provided that no creditor should be entitled to receive a dividend, who should not, with¬ in ninety days, execute a full and complete release of all claims and demands upon the assignor. Mr. Chief Justice Marshall, after summarizing the arguments for and against the validity of this provision, did not com¬ mit the court to the expression of *an opin-[46J ion, but held that “the construction which the courts of that state [Pennsylvania] have
67
4i?-48
Supreme Court of the United States.
Oct. Term,
put on the Pennsylvania statute of frauds must be received in the courts of the United States,” and decided the case upon the au¬ thority of Lippincott v. Barker, 2 Binn. 174, 4 Am. Dec. 433, in which this question arose, and was decided, after an elaborate argument, in favor of the deed. He also re¬ marked that the question had been decided the same way in Pearpoint v. Graham, 4 Wash. C. C. 232, Fed. Cas. No. 10,877. In that case Mr. Justice Washington thought that an assignment in trust for the benefit of such creditors as should release their debts was founded upon a good and valua¬ ble consideration, and was valid, the only inquiry being whether it was bona fide. The assignment was supported in favor of such of the creditors as executed a release of their demands within sixty days after the date of the instrument, that being the time limit provided for such acceptance. Neither in Lippmcott v. Barker nor in Pearpoint v. Graham were there any pre¬ ferred creditors, but the assignments were in trust for all the creditors who should, within sixty days in one case, and four months in the other, execute a release of their demands. In several subsequent cases the rule laid down in Brashear v. West has been adopted, and the principle fully estab¬ lished that the construction and effect of a state statute regulating assignments for the benefit of creditors is one upon which the decisions of the highest courts of the state are a controlling authority in the Federal courts. They are treated as estab¬ lishing a rule of property applicable with¬ in their several jurisdictions. Sumner v. Hicks, 2 Black, 532, 17 L. ed. 355; Jaffray v. McGchee, 107 U. S. 361, 27 L. ed. 495, 2 Sup. Ct. Rep. 367; Peters v. Bain, 133 U. S. 670, 686, 33 L. ed. 696, 702, 10 Sup. Ct. Rep. 354; Randolph v. Quidnick Go. 135 U. S. 457, sub nom. Jencks v. Quidnick Go. 34 L. ed. 200, 10 Sup. Ct. Rep. 655; Union Rat. Bank v. Bank of Kansas City, 136 U. S. 223, 235, 34 L. ed. 341, 345, 10 Sup. Ct. Rep. 1013; South Branch Lumber Go. v. Ott, 142 U. S. 622, 627, 35 L. ed. 1136, 1138, 12 Sup. Ct. Rep. 318.
The same rule has been held to be appli¬ cable to decisions of state courts constru¬ ing the statute of frauds. Allen v. Massey, 17 Wall. 351, 21 L. ed. 542; Lloyd v. Pul¬ ton, 91 U. S. 479, 485, 23 L. ed. 363, 365.
Whatever might be our own views with regard to the validity of a release by cred¬ itors as a condition of preference under an assignment, the question is one which, upon 47] the authorities *above cited, must be held to be determinable by the state law as in¬ terpreted by the supreme court of such state.
While the case under consideration arose in the Indian territory, the law applicable thereto is determined by the laws of Ar¬ kansas, which were adopted and extended over the Indian territory by the act of Con¬ gress approved May 2, 1890 (26 Stat. at L. 94, § 31), which declares that certain gen- 68
eral laws of Arkansas, “which are not lo¬ cally inapplicable, or in cohflict with this act, or with any law of Congress relating to the subjects specially mentioned in this section, are hereby extended over and put in force in the Indian territory,” among which laws are enumerated assignments for the benefit of creditors and the statute of frauds. In adopting this law with respect to assignments, the courts of the Indian territory are also bound to respect the deci¬ sions of the supreme court of Arkansas in¬ terpreting that law.
In more than one case we have had occa¬ sion to hold that, if a foreign statute be adopted in this country, the decisions of foreign courts in the construction of such statute should be considered as incorporated into it. Thus, in Pennock v. Dialogue, 2 Pet. 1, 7 L. ed. 327, it was said by Mr. Justice Story (p. 18, L. ed. p. 333) : “It is doubtless true, as has been suggested at the bar, that where English statutes, such, for instance, as the statute of frauds and the statute of limitations, have been adopted into our own legislation, the known and set¬ tled construction of those statutes by courts of law has been considered as si¬ lently incorporated into the acts, or has been received with all the weight of author¬ ity.” In speaking of our patent act, which was largely taken from the English statute of monopolies, he says (p. 20, L. ed. p.
334) : “The words of our statute are not identical with those of the statute of James, but it can scarcely admit of doubt that they must have been within the con¬ templation of those by whom it was framed, as well as the construction which had been put upon them by Lord Coke.” In Cath- cart v. Robinson, 5 Pet. 264, 8 L. ed. 120,
Mr. Chief Justice Marshall said (p. 280,
L. ed. p. 126) : “By adopting them [Brit¬ ish statutes], they become our own as en¬ tirely as if they had been enacted by the legislature of the state. The received con¬ struction in England at the time they are admitted to operate in "this country, indeed