142 P. 709 | Utah | 1914
This proceeding was commenced July 21, 1909, to recover from the appellant, the Utah Savings & Trust Company, certain moneys which it was alleged were the funds of Page & Brinton, a copartnership, and to which, it was averred, the respondent IT. P. Clark, as trustee, was entitled for the use and benefit of his correspondent, the Commercial National Bank of Salt Lake City, a creditor of said Page & Brinton, and for other creditors of said firm. The appointment of a receiver was also prayed for to take possession of the assets of said firm, and the Honorable C. S. Varian was appointed such receiver on August 4, 1909. The action, it seems, continued pending in the district court of Salt Lake County until November 26, 1913, at which time, upon an application there
The material facts in substance are as follows: On the •2nd day of June, 1909, and for several years prior thereto, the firm of Page & Brinton was under contract with the United States Government to construct certain public works in Idaho known as the Boise Payette irrigation project. On the day last named said firm, being indebted to various persons, entered into a certain agreement with and for the benefit of at least a large number1 of its creditors, as follows:
“We, the undersigned, creditors of H. D. Page, Page & Brinton, and Page Mercantile Company, hereby agree with the said parties, and each with the other, that we will accept settlement of our claims against said debtors upon the following terms and conditions, to-wit: That H. P. Clark shall act as trustee for the parties hereto. That all moneys due Page & Brinton from the Government shall come in care of H. P. Clark, trustee. That all creditors shall share equally in the distribution of all money, after operating expenses in connection with the contract and labor claims have been paid, which said claims shall be paid in full. That the money now due and payable (which should be received within a week! shall be at once distributed. That an additional payment shall be made to creditors not later than August 1, 1908, and the balance upon final settlement with the Government for the contract on Payette-Boise project. And the said creditors further agree that, for and in consideration of the above conditions and payments, they and the said trustee will forbear any action of any nature whatever against said debtors that would interfere with their business operations until the said parties have made final settlement with said Government in*17 connection with the said contract, whereupon the balance then remaining due said creditors shall be liquidated.”
This agreement was signed by twenty-two creditors representing claims amounting to $43,618.54, including the respondent Commercial National Bank, and was also signed by Page & Brinton, as a copartnership. Respondent H. P. Clark accepted the trust, and thus made himself a party to the agreement, in the following words:
“I hereby accept the trust provided for in the foregoing contract and agree to faithfully administer1 the same according to the terms thereof. H. P. Clakk. ’ ’
Arrangements had also been made by Page & Brinton with the agents of the United States Government that the treasury drafts made payable to said firm from the Government for work done on the project aforesaid should be addressed to the firm in care of appellant. Accordingly, on the 19th day of November, 1908, the firm of Page & Brinton received a Government draft for the sum of $11,300.70, payable to the order of said firm, which draft was, on the day it was received, deposited in the appellant bank to the credit of said firm. Of this deposit, according to the evidence, there remained a balance on February 18, 1909, of $5,047.86. The deposit of said draft and the disbursing of a portion of the proceeds thereof as shown from the balance remaining, as aforesaid, was, by Mr. Clark, the trustee, contended to be contrary to the provisions of the creditors’ agreement referred to, and hence, on the 16th day of January, 1909, he, as trustee, for the benefit of the creditors as they appeared in the agreement aforesaid, brought an action against appellant to recover the proceeds of said draft, to-wit, said sum of $11,300.70. That action was tried on the 8th day of July, 1909, and at the trial the fact developed that there was only a balance remaining from said draft amounting to the sum of $5,047.86. The court found in favor of appellant in that action and rendered the following judgment:
“It is ordered * * * that said complaiht and this action * * * are hereby dismissed, and said defendant*18 (appellant) go without day, and that the plaintiff (Clark, trustee) take nothing by this action.”
Thereafter, to wit, on the 21st day of July, 1909, the present proceeding was commenced by respondent Commercial National Bank and IT. P. Clark, as trustee, plaintiffs, against Page & Brinton and appellant, as defendants. On the day the' proceeding was commenced, the court issued an order directed to the defendants to show cause why a receiver for the firm of Page & Brinton should not be appointed, and pending the hearing thereof also issued a restraining order prohibiting the defendants in said action- from cashing any drafts and from paying any money belonging to the firm of Page & Brinton, etc. The order to- show cause aforesaid came on for hearing on the 3d, and on the 4th day of August, 1909, the district court appointed the Honorable C. S. Yarian receiver to take possession and charge of all the assets of and to collect all moneys due to said firm. The court, however, excepted in said order the $5,047.86 which was the balance of said $11,300.70, as hereinbefore stated, from said receivership, in the following words:
‘'And the said receiver is directed to hold in his possession and safely keep, to await the further order of the court in this action, any and all moneys or property, real or personal, of said copartnership, saving and excepting, however, any moneys of said copartnership now held by or in the possession of the defendant, Utah Savings & Trust Company, or held by or in the possession of one T. W. Sloan, which said money not exceeding the sum of $5,047.86 is excepted from the operation and effect of this receivership.”
It also appears from the record that prior to July, 1909, said $5,047.86 was, by the direction of Mr. H. D. Page, the managing partner of said firm, placed in the hands of the T. W. Sloan, mentioned in said order, for the purpose of and with the direction to said Sloan to go to Idaho and there make arrangements with the creditors of the firm of Page & Brinton, or with such as 'would agree to the arrangements, and to purchase from said creditors the claims held by them against said firm growing out of the work contracted for by said firm with the United States Government
Passing now to the issues which it is contended by respondents were different in the present proceeding from what they Avere in the former one. We have carefully gone over the
“These claims are labor claims that are a lien against the bondsmen. These claims belong to Mr. Sloan when he buys them. Page & Brinton furnish the money to Sloan. Page & Brinton would save 50 cents on the dollar. * * * We are attempting to pay the preferred claims. The claims for material are preferred claims.”
With respect to when the arrangement with the creditors was made, he testified:
“The items which I have given here (that is, the three checks aggregating $250, then a draft for $4,610.60, and then the last draft for $454.13) were paid for the purchase of these claims under the instructions of Page & Brinton. These instructions were given prior to the appointment of the receiver, with reference to all these payments. The claims were purchased by the Bank of Idaho under our instructions prior to the injunction of the court. * * * When this cheek for $4,610 was presented to be paid by the bank, we were obligated to pay it, having undertaken to do so. Page and Monroe left for Boise to purchase these claims June 30th or July 1, 1909. This action was commenced on the 21st day of July, 1909.”
“An insolvent debtor, at common law, may assign a part or the whole of his property for the benefit of his creditors, and may prefer one creditor or class of creditors over others equally meritorious, provided the transaction be bona fide; and this rule is in force in this state, there being no statutory provisions to the contrary.”
The firm of Page & Brinton, therefore, had a right to pay some of its creditors in preference to others] and what it had a legal right to do directly it could direct appellant to do
“After the appointment of a receiver and the taking possession of the property by him, there is a suspension of the right to obtain priority out of the property by voluntary conveyance or by assignment, attachment, or other process. And, after the appointment of a receiver, a creditor within the jurisdiction of the appointing court may be restrained from obtaining a lien upon the property of the debtor, though in another jurisdiction.”
As appears from the quotation, however, the suspension of the right to prefer occurs only after the receiver has taken possession of the property and assets of the debtor. In this case the money in question was expressly excepted from the receivership, and that order remained in force for almost four years, and hence the law cited by respondents’ counsel can have no application here. The judgment, therefore, from any point of view, cannot stand. The question may, however, be asked, and it is pertinent here, whether a person who is enjoined from doing a certain thing by a court of competent jurisdiction may nevertheless do it with impunity. There can be but one answer to the question, which must be in the negative. We do not hold that it may be done. All that we hold in this case is that, as a matter of practical equity and right, the receiver should not recover a fund which already has been paid to the beneficiaries of the fund. No doubt, if, as assumed by us, the appellant has violated the injunction, it must be held guilty of contempt, and, if it had
For the reasons stated, the judgment is reversed, and the cause remanded to the District Court of Salt Lake County, with directions to set aside its findings of fact and conclusions of law and to make findings and conclusions in accordance with the views herein expressed, and to enter judgment in favor of appellant. Costs on this appeal to1 be taxed against respondents only and not against the receiver.