5 Wash. 333 | Wash. | 1892
The opinion of the court was delivered by
On the 2d day of November, 1891, the re-
spondents executed a deed of assignment, purporting to be for the benefit of all their creditors, appointed J. H. Mallory assignee, and on the same day placed him in possession. On the 11th day of November, L891, the appellant, schedule creditor, commenced an action against respondents, J. A. Adams, A. E. Hart and G. L. Hart, alleging the assignment; alleging the indebtedness, which is not disputed; alleging the fraud of the assignment and the fraudulent transfer by the assignors of certain real estate deeded and conveyed just prior to the assignment, and the fraudulent execution of a certain chattel mortgage prior to the assignment, and praying: (1) For judgment in the sum of §980.55, with interest; (2) that the said deeds mentioned be set aside, revoked, and held for naught; (3) that the said chattel mortgage be set aside, revoked and canceled; and (4) that the said assignment be set aside, revoked and canceled. At the same time the appellant sued out a writ of attachment, and caused the same to be levied upon the property alleged to have been fraudulently conveyed, and upon the goods and merchandise in the possession of the assignee, Mallory, and took from his possession all the property which he held as such assignee. On the 21st
If this is to be regarded as an action to set aside a fraudulent conveyance, the complaint is plainly insufficient, for it is neither based upon a return of nulla bona, nor an allegation that there was no other property out of which plaintiff’s claim could be satisfied. Courts will not enter into an investigation of the merits or demerits of a conveyance at the instance of any petitioner, until it appears that he has some interest in the determination of that question, and he cannot have any practical interest if the debtor has other property which will respond to his execution. His right is limited to the satisfaction of his claim; it does.not extend to enforcing its satisfaction out of some particular property of the debtor. See Wagner v. Law, 3 Wash. 500 (28 Pac. Rep. 1109).
But, considering the complaint to be sufficient to sustain a judgment, the main question at issue here is, can property be taken from the possession of an assignee of an insolvent debtor by virtue of a writ of attachment? Or, in other words, is such property in custodia legis? It is broadly asserted by Wait, in his work on Fraudulent Conveyances, § 316, that it is not for the alleged reason “that the assignee is not an officer of the court, but is a trustee
“The correctness of this practice has never been questioned, and, as a consquence, it has not been decided, although it was held in Lord v. Meachem, 32 Minn. 66 (19 N. W. Rep. 346), the assignment being, in fact, valid, that the assignee could not be garnished, for several reasons, the insuperable one being that the assigned property was in custodia legis. ’ ’
And such, we think, has been the great weight of decision under statutes similar to ours. Of course it depends entirely upon the authority given by the statute to the court.
It is conceded by all the cases that property in the hands of a receiver appointed by the court is property in the hands of the court, but it is claimed that the assignee derives all his power from the assignment, which, says Mr. Wait, is both a guide and measure of his duty. But the
“Any pei’son interested may appear within three months after filing such x-eport and file with said clex’k any exceptions to the claim or demand of any creditor, and the clerk shall forthwith cause notice thereof to be given to the creditor, which shall be served as in case of sxxmmons, returnable at the next tex’m, and the said court shall at such term proceed to hear the proof and allegations of the pax'ties in the premises, and shall render such judgment therein as shall be just, and may allow a tx’ial by jury thex’eon. ’ ’
Sec. 8 gives the court jurisdictioxi in the distribution. It is as follows:
“If no exception be made to the claim of any creditor, or if the same has been adjudicated, the coux't shall order the assignee to make, from time to time, fair and equal dividends among the creditors of the assets in his hands, in proportion to their claims, and as soon as may be to render a final account of said trust to said court, who may allow such commissions to said assignee in the final settlement as may be considered just and right.”
“The assignee shall at all times be subject to the order of the court or judge, and the said court or judge may, by citation and attachment, compel the assignee from time to time to file reports of his proceedings, and of the situation and condition of the trust, and to proceed in the faithful execution of the duties required by this act.”
Sec. 10 provides:
“No assignment shall be declared fraudulent or void for want of any list or inventory as provided in this act. The court or judge may, upon application of the assignee or any creditor, compel the appearance in person of the debtor before such court or judge forthwith, or at the next term, to answer under oath such matters as may then and there be inquired of him; and such debtor may then and there be fully examined under oath as to the amount and situation of his estate, and the names of the creditors, and amounts due to each, with their places of residence, and the court may compel the delivery to the assignee of any property or estate embraced in the assignment. ’ ’
Thus it will be seen that the court has full and complete power over the property of the estate to such an extent that it can compel the delivery of any of „the property of the estate to the assignee. The law certainly does not intend that one of its pi’ovisions shall render another provision nugatory, and yet how futile would be the action of the court compelling the delivery to the assignee of the property for the purpose of distributing its proceeds if the same could be taken from the assignee by a writ of attachment, or any other process. Such a practice would certainly lead to interminable confusion, creating fraud and endless trouble.
The Iowa statute seems to be substantially the same as ours, and the supreme court of Iowa, in Hamilton Brown Shoe Company v. Mercer (51 N. W. Rep. 415), a leading case, decided February 2, 1892, the plaintiff in that case
‘ ‘ The primary authority of the assignee is derived from the assignment, for it is voluntary; but, when made, it puts in operation the provision of the law, which, through the agency of the court, guides, guards and controls the entire administration of the estate. ’ ’
But in addition to what has been said, section 1 of the insolvency act provides in direct terms that ‘ ‘ such assignment shall have the effect to discharge any and all attachments on which judgment shall not have been taken at the date of such assignment.” Certainly the very strongest implication is, that an attachment could not be levied after the date of the assignment. It would be both ridiculous and unjust to destroy a lien which was rightfully in existence before the property was assigned, and supplant it with one asked for after the assignment. Appellant asserts that under the provisions of § 10, which provides that the court may compel the delivery to the assignee of any property or estate embraced in the assignment, that there is no method provided in the act of reaching any property which should have been, but was not, conveyed by the assignment. If this were true it could not affect the standing of the property that was in the hands of the assignee; that property is safe in the hands of the court, placed there by the act of the assignor, and it will be distributed by the court regardless of the bona fides of the assignment. That is a question which only affects the discharge of the assignee. Such is evidently the scope and meaning of § 15. But we do not understand that the provision in the latter part of § 10 is restricted to the property set forth in the inventory, for notwithstanding the provisions 'for the inventory the law especially provides that no assignment shall be declared
So far as the allegations of fraud are concerned in this case, the ascertainment of which would tend to defeat the discharge, we have not considered them, for there is no proof whatever submitted.
The judgment is, therefore, affirmed.