tiEPEBINK V.
Lemcke v. Booth, 47 Mo. 885; Banningv. Bleakley', 27 La. 'Ann. 257.
the character or business But there is a wide distinction of a cotton factor and an agent to collect money, and if the question of the character of indebtednes of a cotton factor to his principal for goods sold be doubtful, the character of an agent receiving money for his principal ought to be clear. In the one case financial standing and business capacity are the tests of employment; in the other, esty and integrity are the tests. Default in the one implies bad judgment, misfortune, bad luck, but not dishonesty. Default in the other implies recreancy to trust, if not absolute dishonesty. In the one case a bankrupt law· releases an unfortunate debtor and restores a busi· neBS man to the commercial world; in the other, the bankrupt law would be made a cover and nrotection for the rogues who devour widows' houses. In Ohapman v. Forsyth the court says that "such a construction against commission merchants would have left but few. debts upon which the law could operate;" and this was a reason for the judgment in that This language does not apply to the law of 1867, but if it did I should hesitate a long. time before· I let the defendant in this case escape in order to widen the operations of !\ bankrupt law. Let a judgment be entered overruling the demu.uW' in this C&lJt1,
with.
iOijta.
ZlllPERIIm
and others
t1.
CABD and another.March 24, 1882.)
(Otroute OO'Urt, B. D. Jfia80Uri.
BANKllUPTCY-PRINCIPAL AIm AGENT-REV. ST.
Where a commission merchant, as agent of the owner, sells goods and fails, without fraud but because of insolvency, to account for the proceeds of the sale, and subsequently becomes a bankrupt and receives his discharge in bank· ruptcy, the proceedings in bankruptcy will discharge his debt to his principal.
t 6117.
Suit in an Account against Factors. The answer sets up a discharge in bankruptcy, and alleges, among other things, that the plaintiffs proved up their claims i:J;l bankruptcy, received dividends, and did not object to defendants receiving their discharge. It also denies fraud. Demurrer to answer. The other material facts are sufficiently stated in the opinion'of the coud. -Reported by B. F. Rex, Esq., of the t:it. Louis !Jar.
296
FEDERAL REPORTER.
The defendants set up as their defence a discharge in bankruptcy. The plaintiffs demur to this answer, and the question is whether the'discharge is good as against the indebtedness which is the foundation of the suit. The answer admits that said indebtedness was contracted in the course of defendants' dealings with the plaintiffs. They (defendants) were acting as plaintiffs' factors in the capacity of commission merchants. Hdoes not appear from the answer that the debt grew out of a single transaction, but it does appear that it is a balance due for the proceeds of sales of iron which was sent to the defendants as commission merchants, to be sold and accounted for by them to the plaintiffs. The question is whether the debt thus oontracted was, within the meaning of section 5017 of the Revised Statutes, a debt contracted by the defendants "while acting in a fiduciary capacity." That section is as follows: "No debt created by fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or while acting in a fiduciary capaoity, shall be discharged by proceedings in bankruptcy, but the debt may be proven, and the dividends thereon shall be a payment on account of the debt." Upon the question whether a debt contracted by a commission merchant, by his failure to account for the proceeds of goods sold by him as such, is within this section, there is a great conflict in the authorities. The affirmative is maintained by the following, among other cases, viz.: In re Seymour, 1 Blatchf. 352; In re Kimbal, 2 Ben. 554; S. C. on appea:l, 6 Blatchf. 292; Treadwell v. Holloway, 46 Cal. 547; 111eador v. Sharpe, 54 Ga. 125; Jones v. Russell, 44 Ga. 460; Whitaker v. Chapman, 3 Lans. 155; Lemcke v. Bonth, 47 Mo. 385; Banning v. Bleakley, 27 La. Ann. 257; Brolcn v. Garrarcl, 28 La. Ann. 870. The negative of the proposition has been mentioned in the following, other cases, viz.: Cronan v. Colting, 104: Mass. 248; Grover cC Baker S. M. Co. v. Clinton, 8 N. B. R. 312; S. U. 5 Biss. 512; Kime v. Graff, 17 N. B. R. 319; Owsley v. Cobin, 15 N. B. R. 489. It would serve no useful purpose for me to enter into an elaborate discussion of this question, as little could be said on either side of it which is not to be found in the cases already, referred to. The amount involved is large enough to enable the parties to take the case to the supreme court of the United States, and there have the
W. B. Homtr ana R. M. Nichols, for plaintiffs. Noble cf: Orrick, for defendants. MCCRARY, C. J., (orally.) This is a suit upon an account.
SCHOOLFIELD v. JOHNSON.
297
question, which is important and doubtful, finally settled. It is suf· ficient for the present to say that in my judgment the better reason and also the greater weight of authority supports the position of the defendants, and we therefore hold that the discharge pleaded is a bar to the action, and overrule the demurrer to the answer. Counsel for defendants can take an exception·.
SCHOOLFIELD, HANAUER & CO.
'V.
JOHNSON & SULLIVAN and another.
(Circuit Oourt, E. D. Arkan8a8. October Term, 1881.) 1. ASSIGNMENT IN TRUST FOR BENEFIT OF CREDITORS. WHEN VOID.
A deed of assignment for the benefit of creditors, which in terms directs or authorizes the assignee to execute the trust and dispose of the property in a mode not authorized by the statute, or contrary to its requirements, is void.
W. M. Rose and B. O. Brown, for plaintiffs. Dodge <t Johnson, for interpleader. CALDWELL, D. J. The validity of the deeds of assignment on their face is the only question in this case. The particular clauses of the deeds of a!:lsignment which it is claimed avoid the instruments are the following: The trustee is direoted to "proceed at once to execute this trust by converting all property herein conveyed into money with as much rapidity as possible consistent with the interest of our creditors;" · · · "and is hereby empowered to sell all goods or property of every kind herein conveyed at public or private sale, for cash or othe1'wise, as may best to the interest of our creditors, with or without publio or private notioe of any kind." These provisions are in both deeds. One of the deeds conveys the leasehold interest of the assignors in three plantations, and directs "that said trustee shall take immediate possession of them, and take all steps necessary and as may seem best to him for the purpose of cultivating them " may purchase mules, implements, supplies, and all things necessary to the interests of our creditors." The two deeds were executed on the same day and for the same purpose, each deed conveying different portions of the assignor's property, and are to be taken together as one instrument. Burl'. Assignm. § 128. If valid, the assignee might purchase mules, etc., to carryon the plantations mentioned in one deed, with means derived from sale of