Green v. Van Buskirk (72 U.S. 307)/Dissent Nelson

Mr. Justice NELSON, with whom concurred Mr. Justice SWAYNE, dissenting.

I am unable to concur in the opinion that has just been delivered. The litigation is one of the most common occurrence growing out of the business affairs of life. It presents the case of a race of diligence among creditors after the property of a failing debtor to get the first security for the payment of their debts. There is no question here as to the bona fides of the creditors. The simple point between them is as to which party in the race acquired the better title to the property. All the parties, debtor and creditors, were citizens and residents of the State of New York. The property was in Chicago, Illinois, consisting of iron safes.

In the race of diligence, the defendants here and plaintiffs below, Van Buskirk and others, obtained from Bates, the debtor, on the 3d of November, an assignment of the property as security for their debt. It was executed at Troy, New York. But, before the agent reached Chicago to take actual possession, Tillinghast & Warren, the other creditors, on the 5th of the month, two days after the assignment, instituted proceedings in a court in Illinois against Bates, the debtor, and attached the safes, subsequently obtained a judgment by default, and sold them on execution.

The present suit was instituted by Van Buskirk and others against Tillinghast & Warren, the attaching creditors, claiming title to the property under and by virtue of their prior assignment. As the two classes of creditors were equally honest, the only question, as we have said, would seem to be which had obtained the better right to their debtor's property; and this appears to have been the view taken by the judge and counsel in the court below.

The trial before a jury was waived, and the case was heard before the judge, who gives a statement of the facts. He found the proceedings, in the attachment as set forth. The execution of the assignment, that it was executed in good faith, and not fraudulent. He then states his conclusions of law--

1. That the assignment was a legal and valid instrument, and operated to transfer the property in the safes to the assignees.

2. That by the laws of New York the title thus acquired overreached the title by attachment, being prior in point of time, though the attaching creditors had no notice of the sale or assignment; and--

3. That the laws of New York governed the case.

The defendants excepted to the rulings, and contended--

1. That the assignment was fraudulent and void on its face, and conveyed no title to the plaintiffs against the attachment.

2. That the rights of the parties must be governed by the law of the State of Illinois, and not by the law of the State of New York; and

3. That the plaintiffs have shown no ownership or right of possession to the safes superior to that of the defendants.

A judgment was entered for the plaintiffs, which was taken, on this bill of exceptions, to the higher courts in the State, and was affirmed. It is now here under the twenty-fifth section of the Judiciary Act; and it is claimed that this court has jurisdiction, on the ground that the court below denied full faith, credit, and effect to the Illinois judgment in the attachment proceedings. It is only on this ground that this attachment can be maintained. We have seen that no such point was made on the trial or ruled by the court. These proceedings were in evidence without objection either as to regularity or effect. It was conceded that the attachment bound the goods from the time it was levied. Certainly no greater effect could be given to it; that is, whatever interest Bates, the debtor, had in them at that time. This effect was not disputed. But it was claimed, on the other side, that they had a prior right to the property under the assignment made two days before the levy.

Now, it must be admitted that, as between Bates and the assignees, they became vested with the title; and as the attachment was subsequent, and would only reach the interest of Bates, it would seem to follow that the assignees had the better title; and, if this were all of the case, there could not be two opinions upon it; the title under the attachment must fail. But it is not all, for it is said that this prior assignment was ineffectual to transfer the title to the property, and prevent the operation of the attachment, for the reason that it was fraudulent against creditors, and, being so fraudulent, the seizure under the attachment gave the better title.

The question, therefore, that arose in the case, and the only question, was as to the validity or invalidity of this assignment. If valid, then the title of the safes passed out of Bates to the assignees on the 3d November. If invalid, then it remained in him quoad creditors till the 5th, when the attachment was levied. Now, this question was one simply of law, and it turned upon this: whether the assignment was to be governed by the law of New York, where the instrument was made, and in which State all the parties resided, and of which they were citizens, or by the law of Illinois, the situs of the property. In New York the immediate delivery of the possession, as is said, is not essential to the validity of the assignment; in the State of Illinois it is. The continuance in the possession by assignor or vendor after the transfer of the title is regarded in that State as evidence of fraud, and renders the instrument inoperative as against execution or attaching creditors.

The court below decided that the instrument was to be governed by the law of the State of New York, where it was made, and which was the domicil of the parties. How, whether the court erred or not in this decision is not the question, for this court has no jurisdiction to determine that. The question here is, whether, in so deciding, the court denied full faith, credit, and effect to the judgment in Illinois. In other words, did the court, in holding that the prior assignment was not fraudulent and void, but valid and effectual to transfer the title, thereby discredit the Illinois judgment? The answer to the question, I think, is obvious. These assignees were not parties to the judgment. It could not bind them. They were free, therefore, to set up and insist upon this prior title to the property; and, if there was nothing else in the case, it is clear the junior attachment could not hold it. It became necessary, therefore, for the attaching creditors to displace the assignment, and this they attempted, by insisting that it was fraudulent and void, as not having been accompanied by possession; and this they were obliged to establish before the attachment could take effect.

The assignment being prior in time, in the absence of fraud, actual or constructive, the title passed to the assignees, and was out of Bates, when the attachment was levied. This is familiar law. The question in the case, therefore, and the one litigated in the court below, was this question of fraud, upon which the validity of the assignment depended, and the finding of which was necessary to give a preference to the claim under the attachment. This question was not only consistent with the full force and effect of the attachment proceedings, but wholly independent of them.

I agree, if the attachment had been levied before the assignment, and the court had given effect to this instrument over the levy, it might be said that full faith and credit had not been given to it; but, being posterior, these proceedings could not have the effect per se to displace the assignment as against a stranger. Another element must first be shown, namely, fraud or other defect in the instrument, to render it inoperative.

Mr conclusion is, that the regularity of the attachment proceedings was not called in question in the court below; but, on the contrary, full force and credit were given to them, and the case should be dismissed for want of jurisdiction.