In re Shea

57 Minn. 415 | Minn. | 1894

Canty, J.

Said insolvent, James Shea, resides at Glyndon, Minn. On March 2, 1891, a receiver was appointed by the District Court of Clay county of all his unexempt property for the benefit of his creditors under the insolvency law of 1881. The receiver, D. H. Moon, qualified, and proceeded to administer his trust.

On November 13,1891, the matter came on for hearing on the final account of the receiver. Several of the creditors appeared, and objected to the item of $2,350 in his final account, being the proceeds of the sale made by the receiver on the 13th of June, 1891, of all the remaining property of the insolvent estate. This objection was made on the ground that this sale was fraudulent and collusive, and that the receiver, insolvent, and purchaser entered into a conspiracy before the sale» to procure the transfer of the property to the wife of the insolvent for his use and benefit, and that the sale was made pursuant to this agreement. It was then ordered that this question be heard and tried on evidence taken in open court, which was done, and the court filed its findings of fact, in which it is found:

That the property which came into the receiver’s hands was of the value of $13,209, and, after disposing of a part of it under the direction of the court, the balance of said property in his hands at the time of said sale was of the value of $5,750; that prior to said sale the receiver procured the insolvent to claim out of said property his exemptions for the purpose of misleading and deceiving the creditors as to the amount and value of the property available for the payment of debts; that the insolvent was then in possession of all of the property as the agent of the receiver, but the exempt property was never segregated, and the unexempt property was so sold without setting apart or determining what was exempt.

That prior to the sale it was agreed between the receiver and the insolvent that the receiver would obtain leave to and would make said sale, and sell all of said balance of the property so undisposed of for some small amount, less than its value, to some third person, who should shortly thereafter transfer all of the same to the wife of the insolvent on repayment of the sum paid for it, and payment of the sum of $919 due a firm of which the receiver was a member.

That, pursuant to this agreement, the receiver did, on May 23, 1891, obtain an order of the court ordering him to sell the property June 13th, “subject to the approval of this court,” and to publish said order for two weeks prior to the sale in a local newspaper, and serve it by mailing a copy of it to each of the creditors, on or before May 27th; that the order was so served, the sale made, and confirmed by an ex parte order procured by the receiver from the judge of the District Court at Crookston, in the adjoining county and judicial district; that the property was afterwards, on October 16,1891, pursuant to said agreement, transferred by the purchaser, Marcus Johnson, to said wife of the insolvent; that during all of this time the insolvent continued to be in the possession of the property, — before the sale as the agent of the receiver, and afterwards as the agent of the purchaser, Johnson.

As conclusions of law the court found that the receiver should not be charged with $2,350 as the proceeds of that sale, but with the sum of $5,750, the value of the property so sold, and the receiver was ordered to pay that sum, with interest from June 15,1891, into court. From an order denying a motion for a new trial of the issues so tried the receiver appeals.

The most of the assignments of error are to the effect that the findings of the court are not sustained by the evidence. We are of the opinion that there is sufficient evidence to sustain these findings. There is the positive testimony of the insolvent Shea, with much circumstantial evidence to corroborate it.

The ex parte order confirming this sale was not conclusive. This proceeding is not a collateral attack on that order, but a direct attack in the same proceeding, and, while the court should have formally ordered the order of confirmation set aside for fraud, still his “conclusions of law” in effect do so, and mean the same thing.

The aggregate claims of the objecting creditors amount to about $2,300, while the total liabilities of the insolvent amount to $8,538; and it is contended by appellant that the most the court should have done was to order the receiver to pay these objecting creditors their ratable proportion of the $3,400 which the court added to said item of $2,350, the price for which the property was fraudulently sold. In support of this position the case of In re Shotwell, 49 Minn. 187, (51 N. W. 909, and 52 N. W. 1078,) is cited. As far as that case applies that rule as against the creditors who expressly authorized the unwarranted acts of the assignee, and thereby estopped themselves from objecting to those acts, we are willing to follow that case, but no further. But while that case seems to hold that the benefit of the objection does not inure to the creditors not objecting, my associates who were then on the bench state that counsel for the appealing creditors not objecting stated in open court that they did not object to the unwarranted act there in question. We are of the opinion that the order of the court declaring the sale fraudulent, and charging the assignee with the value of the property, inured to the benefit of all the creditors who had not waived their right to attack that sale by taking some position inconsistent with that right.

The ninth assignment of error — the objection to the evidence as to the value of the property so fraudulently sold by the receiver — is not well taken; the evidence was competent.

The tenth assignment of error — the objection to the evidence of Schurmeier — is not well taken. Schurmeier testified that before his firm of creditors filed their objections he learned from Shea, the insolvent, his version of the affair “as given by him here in court today about this sale.” This seems to be an effort to identify the time of other conversations as to which testimony had already been given. It was a matter of little importance, and to determine whether or not it was material would require much discussion, and the consideration of many details: If not material, it was not prejudicial. This disposes of all the questions raised, and the order appealed from should be affirmed. So ordered.

(Opinion published 59 N. W. 494.)