233 N.W. 115 | Iowa | 1930
On May 1, 1929, Swift Company and the Iowa Packing Company, corporations, each filed in the estate of John I. Nelson, deceased, in Story County, Iowa, applications for orders of the court directing the administrator to account to the applicants for the proceeds received by the administrator from the collection of accounts previously assigned by John I. Nelson, as security, to the said claimants. On the 20th day of June, 1929, the administrator filed an amended and substituted resistance to *169 the applications of Swift Company and the Iowa Packing Company.
The facts are not much in dispute, and we have here largely a question of law. It appears from the record that John I. Nelson was engaged in the retailing of groceries and meats in Ames, Iowa. During the latter part of 1928 and the fore part of 1929, he became indebted to Swift Company in a sum in excess of $3,800, and he also became indebted to the Iowa Packing Company in a sum in excess of $2,500. These accounts were for merchandise sold to Nelson. On February 12, 1929, the said packing companies sent an agent to Ames to collect the accounts or get security for the same. On that day, Nelson executed and delivered to these companies separate assignments, the material parts of which are as follows:
"That the undersigned, in consideration of one dollar ($1.00) in hand paid, the receipt whereof is hereby acknowledged, and other (good and valuable) consideration, has assigned, transferred and set over, and by these presents does assign, transfer and set over unto Swift Company, Omaha, all book debts, accounts, choses in action, now due or accruing due, to the undersigned from [here follow names of parties], and also all book debts, accounts and choses in action which may at any time hereafter become due and owing, to the undersigned from the above-listed customers."
The instrument then constituted Swift Company the authorized agent and lawful attorney, irrevocably, to collect these claims. The instrument further continues:
"This assignment is executed as a continuing security for the payment of any indebtedness, liability or liabilities of the undersigned to said Swift Company, due or to become due or that may have been heretofore or may be hereafter contracted by said undersigned."
A similar instrument was executed to the Iowa Packing Company. On the same day, Nelson executed and delivered to the agent of these packing companies what is termed a "trust receipt," by the terms of which it was attempted to turn back these accounts to Nelson for collection and account. The assignments were not recorded. None of the customers were notified *170 of the assignment, nor was any notice given to other creditors. Nelson was explicitly authorized in writing to retain possession of the accounts, and to continue collecting the same in the usual course of business, such authorization being set forth in the so-called "trust receipts."
It clearly appears from the record that it was understood and intended that the assignments were to be kept secret and confidential, and that it was intended by the parties that neither the retail customers nor the wholesale or other creditors of Nelson should learn of the assignments.
Nelson died March 29, 1929. Many of the accounts in question were collected in whole or in part by Nelson, and the proceeds retained and used by him. Many of the items were active accounts, on which payments were made from time to time by customers, and additional items were added for goods delivered. Many of the accounts, as they stood on the books as on the date of Nelson's death, were collected in whole or in part by the administrator. The appellants claim that the administrator is accountable for all moneys collected on these accounts, both as they stood on the date of the assignment and as they subsequently accrued, whether they were collected by the administrator himself or by Nelson in his lifetime.
It clearly appears that the estate is wholly insolvent, and can pay only a small percentage on the claims filed. The money collected by Nelson on these accounts was dissipated by him, there being no showing that any of these proceeds came into the hands of the administrator. If it be conceded that Nelson, in the collection of accounts, acted as an agent for the packing companies and received and held the proceeds in trust for them, no part of such funds has been traced into the hands of the administrator.
I. The most important question in this case is whether the assignment to the packing companies by Nelson on February 12, 1929, passed anything to the packing companies as to the indebtedness of Nelson's customers accruing after February 12, 1929. The courts of this country are, to some extent, out of harmony on this question. Some confusion arises in considering the cases, by reason of the existence of statutes bearing upon the subject in various states.
Section 9453 of the 1927 Code, found in Chapter 422, entitled *171 "Assignment of Accounts and Nonnegotiable Instruments," provides as follows:
"Assignment of open account. An open account of sums of moneydue on contract may be assigned, and the assignee will have a right of action thereon in his own name, subject to such defenses and counterclaims as are allowed against the instruments mentioned in the preceding section, before notice of such assignment is given to the debtor in writing by the assignee." (Writer's italics.)
In Metcalf v. Kincaid (1893),
"The first question certified, in substance, is whether one can assign his future earnings so as to vest the same in his assignee, free from the claims of attaching creditors; and if so, can a valid assignment be made of wages in the absence of a contract under which the wages are to be earned? * * * It has been held that a school teacher who was indebted to another had the legal right to make an assignment of his wages to accrueunder his contract with the district, * * * Johnson v. Pace,
See, also, Seymour v. Aultman Co.,
In Taylor v. Barton Child Co. (1917),
"The crucial question is whether the assignment of book accounts which are to come into existence in the future in connection with an established business will be enforced in equity against a trustee in bankruptcy. It is a well recognized principal of the common law that a man cannot sell or mortgage property which he does not possess, and to which he has no title. The vendor must have a vested right in personal property, in order to be able to make a sale of it. `A man cannot grant or *173
charge that which he hath not.' Jones v. Richardson, 10 Metc. 481, 488; Moody v. Wright, 13 Metc. 17; Leverett v. Barnwell,
The court further said:
"There is an exception at the common law to the effect that one may sell that in which he has a potential title, although not present actual possession. The present owner might sell the wool to be grown upon his flock, the crop to be harvested from his field, or the young to be born of his herd, or assign the wages to be earned under existing employment. Kerr v. Crane,
In O'Niel v. Wm. B.H. Kerr Co. (1905),
"North Lake, Wis., March 29, 1901.
"For the purpose of obtaining credit from the Wm. B.H. KerrCompany, I hereby authorize you to pay said Wm. H.B. Kerr all my part of the milk delivered to your factory.
"To Mike Murphy. Heinrich Helmke."
It appeared that the writing was executed for the purpose of obtaining credit for goods and merchandise to be purchased from the Kerr Company, and that the defendant Helmke purchased goods from the company after the date of the order. It *174 appeared that no contract existed between Helmke and Murphy whereby Helmke agreed to deliver milk to Murphy for any future period, nor did it appear that Murphy was obligated to receive from Helmke milk for any future period after March 29, 1901. The court said, among other things, commenting on a previous holding by that court:
"The ruling in this and subsequent cases is upon the ground that a party must have an existing vested interest in the property sought to be conveyed, to give the transfer effect in the law, and that a mere possibility or expectancy of acquiring property, `not coupled with an interest, is insufficient.' It is well settled that a potential interest in property is sufficient to support such a transfer. This principle is illustrated in the case of Low v. Pew,
Appellants rely mainly upon the following cases: Jones v.Jones,
In Peterson v. Ball,
In the case at bar it will be noted that there is no claim or evidence that any of the customers of Nelson were under any contract whatsoever, on the date of the assignment, to purchase more goods from Nelson, nor is there any claim or evidence that Nelson, on February 12, 1929, was under any contract or obligation to deliver any goods of any kind to any of his then customers. It, therefore appears that Nelson had only mere possibilities of accounts. There was no interest based upon any contract or agreement, nor was there any interest created by law, such as arises in the case of an heir. Nelson, as to all items of account accruing after February 12, 1929, had nothing to assign, and the assignment was void.
II. If it be assumed, though not decided, that equity will, under any circumstances, recognize and enforce an assignment of future possible book accounts, such as those which arose after the assignment in this case, nevertheless it is manifest that, under the particular facts in this case, such an assignment will not be thus recognized or enforced.
We find no reversible error on the part of the lower court, and the cause must be, and is, — Affirmed.
*176MORLING, C.J., and EVANS, FAVILLE, and KINDIG, JJ., concur.