An assignment is not invalid because of misappropriation of the property of the debtor by the debtor prior to the assignment, but the assignee may recover the property if it was misappropriated in fraud of this article 10. Nothing in this article 10 invalidates any conveyance or mortgage of property, real or personal, by the debtor before the assignment, made in good faith, for a valid and valuable consideration.
Source: L. 1897: p. 100, § 20. R.S. 08: § 196. C.L. § 6263. CSA: C. 12, § 23. CRS 53: § 11-1-23. C.R.S. 1963: § 11-1-23. L. 2026: Entire section amended, (HB 26-1426), ch. 334, p. 2011, § 55, effective August 12.
ANNOTATION
Annotator's note. Cases material to § 6-10-123 decided prior to its earliest source, L. 1897, p. 100, § 20, have been included in the annotations to this section.
Where property has been misappropriated the right of action, if any, inures to the assignee who might bring such suit to recover it as circumstances warranted. Bailey v. Am. Nat'l Bank, 12 Colo. App. 66, 54 P. 912 (1898).
To vitiate an assignment under this section there must be fraudulent intention followed by irregular and fraudulent disposition of the property or a failure to convey all. In other words, there must be either a reservation of property or such a disposition of it that the proceeds will inure in some way to the benefit of the assignor. Hunter v. Ferguson, 3 Colo. App. 287, 33 P. 82 (1893).
However, a general assignment by a debtor of all his property for the benefit of all his creditors is not a fraudulent disposition of property furnishing ground for an attachment when it is made honestly and bona fide. Hunter v. Ferguson, 3 Colo. App. 287, 33 P. 82 (1893).
Any debtor, whether insolvent or otherwise, so long as he remains in possession of his property with full power of disposition, may mortgage and incumber his property for the benefit of his creditors even though the result may be that some creditors thereby obtain a preference as against the general creditors of the insolvent. Bailey v. Am. Nat'l Bank, 12 Colo. App. 66, 54 P. 912 (1898).
Moreover, this section plainly recognizes the right of a debtor to prefer by payment or security, and clearly affirms the right of a debtor to do with his property as he pleases except as in terms restrained by statute. May v. Tenney, 148 U.S. 60 (1893).