Every sale, mortgage or assignment made by debtors, and every judgment suffered by any defendant, or any act or device done or resorted to by a debtor in contemplation of insolvency and with the design to prefer one or more creditors to the exclusion in whole or in part of others, shall operate as an assignment and transfer of all the property and effects of such debtor and shall inure to the benefit of all his creditors, except as hereinafter provided in this chapter, in proportion to the amount of their respective demands, including those which are future and contingent, but nothing in this chapter shall vitiate or affect any mortgage made in good faith to secure any debt or liability created simultaneously with such mortgage, if the same be lodged for record forthwith in the office of the county clerk where the property described therein shall be situated.
History: Laws 1889, ch. 67, § 1; C.L. 1897, § 2818; Code 1915, § 274; C.S. 1929, § 7-101; 1941 Comp., § 23-101; 1953 Comp., § 27-1-1.
ANNOTATIONSBracketed material. — The bracketed material was inserted by the compiler and is not part of the law.
Compiler's notes. — The compilers of the 1915 Code substituted the words "county clerk" for the words "county recorder."
The words "in this chapter," the first time they appear, were inserted by the 1915 Code compilers; the words "this chapter," the second time they appear, were substituted for "this act." Presumably, "this chapter" refers to 56-9-1 to 56-9-55 NMSA 1978, whereas "this act" refers only to Laws 1889, ch. 67, §§ 1 to 9, presently compiled as 56-9-1 to 56-9-9 NMSA 1978.
Cross references. — For county clerks, see N.M. Const., art. VI, § 22 and Chapter 4, Article 40 NMSA 1978.
For assignments by insolvent banks, see 58-1-73 NMSA 1978.
Designed to prevent fraudulent transfer. — Intent and purpose of this section is to prevent an insolvent and failing debtor from making fraudulent transfer of his property and from giving a preference to one creditor, and to give an equal distribution of all such property between all creditors by creating a trust in their behalf. Early Times Distillery Co. v. Zeiger, 1897-NMSC-008, 9 N.M. 31, 49 P. 723.
Specifies procedure for assignment to creditors. — Acts regulating both voluntary and involuntary assignments, passed in 1889, were designed to form a complete code of procedure for parties wishing to abandon their estates to their creditors, and requiring sales of assigned property to be in accordance with statute. In re Zeiger, 1909-NMSC-017, 15 N.M. 150, 106 P. 345.
No release of debtor from debts. — This statute is not in the nature of an act of bankruptcy, and does not release any debtor or his after-acquired property from his debts, but only seeks to prevent preferences to creditors. It was not suspended by the National Bankruptcy Act as to any proceeding to set aside fraudulent conveyances made prior thereto. Grunsfeld Bros. v. Brownell, 1904-NMSC-014, 12 N.M. 192, 76 P. 310.
Applies to assignments only. — This section does not apply to fraudulent conveyances other than assignments. Douglas Fir Lumber Co. v. Star Lumber Co., 1921-NMSC-077, 27 N.M. 403, 201 P. 867.
Intent to hinder creditor necessary. — Even though a transferee is in fact insolvent, in case a transfer is made voluntarily without any intent or purpose of hindering, delaying or defrauding any creditor in so doing, the mere fact that such transfer amounts to the preference of one creditor over another does not make the transfer illegal, except where bankruptcy or insolvency laws are involved. Marchbanks v. McCullough, 1942-NMSC-066, 47 N.M. 13, 132 P.2d 426.
No equitable mortgage of community property without spouse's promise. — A promise by a husband to give a mortgage on community real estate, in which wife does not join, furnishes no basis upon which an equitable mortgage can be declared. El Paso Cattle Loan Co. v. Stephens & Gardner, 1924-NMSC-067, 30 N.M. 154, 228 P. 1076.
Law reviews. — For article, "Attachment in New Mexico - Part I," see 1 Nat. Resources J. 303 (1961).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 6 Am. Jur. 2d Assignments for Benefit of Creditors §§ 2, 37, 45 to 48, 69; 42 Am. Jur. 2d Insolvency § 108.
Creditor's receipt of proceeds of conveyance or transfer by debtor as estopping him to claim that conveyance or transfer was fraudulent, 9 A.L.R. 358.
Validity and effect of provisions in assignments for creditors authorizing continuance of assignor's business, 23 A.L.R. 199.
Preference in event of debtor's insolvency in respect of funds designated or set apart by him for payment of specified obligation, 32 A.L.R. 950.
State's prerogative right of preference at common law, 51 A.L.R. 1366, 65 A.L.R. 1331, 90 A.L.R. 184, 167 A.L.R. 640.
Admissions of insolvent as evidence against assignee in case of fraud or collusion between assignor and assignee, 53 A.L.R. 655.
Corporate dividends improperly paid, right of corporation's assignee for creditors to recover, 55 A.L.R. 108, 76 A.L.R. 885, 109 A.L.R. 1381.
Declarations of assignor, made subsequent to assignment, on issue whether sale constituted fraud on creditors, 64 A.L.R. 825.
Chattel mortgage giving mortgagor right to sell, validity of, as against assignee for creditors, 73 A.L.R. 258.
Prerogative right of county or other political subdivision to preference, 90 A.L.R. 208.
Verdict in tort action, 156 A.L.R. 1431.
Validity of anti-assignment clause in contract, 37 A.L.R.2d 1251.
Validity of provision in deed or transfer to assignee for benefit of creditors for payment of attorneys' fees, 79 A.L.R.2d 513.
6A C.J.S. Assignments for Benefit of Creditors §§ 26, 54, 55, 57.