McKibbin v. Ellingson

58 Minn. 205 | Minn. | 1894

Giufillan, C. J.

Plaintiffs brought an action on promissory notes, in Ramsey county, against Elling'son, and in that suit brought garnishee proceedings against Turner. • On the disclosure, the latter claimed title to the money or property sought to be reached. Thereupon the plaintiffs filed a supplemental complaint against the garnishee defendant, and he filed his answer thereto. The plaintiffs demurred to the answer, and from an order sustaining the demurrer the garnishee defendant appeals.

Upon the allegations of the complaint admitted by the answer, and those of the answer, these are the facts: Ellingson resided and did business in, and all his property, consisting of real and personal property, was in, the state of North Dakota; and, being insolvent, on February 3, 1893, he, at Minneapolis, in this state, executed and delivered to Turner, who resided in Minneapolis, an assignment to him for the benefit of his (Ellingson’s) creditors. The assignment was never filed in the office of the clerk of any district court of this state, but, as required by the laws of North Dakota, it was recorded in the office of the register of deeds of the county in which Ellingson resided, and all the requirements of the law of North Dakota respecting such assignments were complied writh.- The assignee took possession of the assigned property; and the money in his hands at Minneapolis, where the garnishee summons was served, was proceeds of sale of such property.

.Of course, if the assignment was valid and passed the title to the property, that title would be respected everywhere and wherever the assignee might subsequently carry the property or its proceeds.

It is claimed that it was invalid — First, because, having been executed in this state, it was a Minnesota contract, and its validity must be judged by the law of this state, and that, not having been filed as required by our statute, it was void; second, if, because its subject-matter was in North Dakota, and it was intended to tala' effect and be onerative and be carried out there, it was a North Dakota contract, then it was void by the law of that state.

Though we were to deem it executed in this state, still it would not come within our statute regulating assignments. That statute does not assume to regulate assignments executed in this state by nonresidents, who have no property and no place for carrying on business in this state, and the trusts created by which are to be carried .out in another state. That is evident from the requirement (1.878 G-. S. ch. 41, § 23) that the assignment shall be filed in the office of the clerk of the District Court in the county wherein the debtor resides, or wherein the business in reference to which it is made has been principally carried on, — a requirement which a nonresident, having no property and no business in the state, could not comply with. The statute does not assume to regulate the business of nonresidents whose sole property and business is out of the jurisdiction of this state; so that if it is to be deemed a contract executed here, to be judged by the law here, inasmuch as the statute does not apply to it, its validity is to be determined by the rules of the common law.

But it is not to be deemed as fully executed in this state. The parties were contracting with reference to the laws of North Dakota, creating a trust to be performed there, and which would be valid there, and they intended to do what the law of that state required to make the trust operative and effectual there; and what they contemplated in the way of executing and making the assignment effectual was not completed until it was taken to, and, as required by tbe law of that state, recorded in, tbe county of tbe debt- or’s residence. As soon as it was fully executed, so as to take effect where it was intended to take effect, by doing- what the law of that state requires, it became to all intents and purposes a North Dakota contract, to be judged by the law of that state. By the law of this state, an assignment for the benefit of creditors is of no effect till it is filed, so as to become the basis of a judicial proceeding. Till filed, the assignment is not completed. Suppose a debtor, resident-in this state, having- a business and property only in this state, should, in some other state, — say, where such assignments are prohibited, — sign, seal, and deliver an assignment intended to be filed here, and to be operative only here, and which should be brought here and filed. Would we hesitate to say that the filing- was the final act of execution, that the assignment wps to be deemed as executed here, and that it was a Minnesota contract, to be judged as to its validity by our law? We think not. No matter where the partial execution, the writing, signing-, sealing, and delivering might be done, it would be deemed executed in that state where the final act to make it go into effect was intended to be and was done. This assignment was finally, fully executed in North Dakota. <•

This makes it unnecessary to go into the large field of inquiry, when a contract is executed in one state, but intended to be performed in another, by the law of which state is its validity and the sufficiency of its execution to be determined?

The objection to its validity as a North Dakota assignment is that it appoints as assignee a nonresident of that state. The statute of that state on the subject of assignment for the benefit of creditors is fully set out in the answer. We are not referred to any decision of the court in that state; and we assume that, except as otherwise provided by the statute, the validity of an assignment is to be determined upon the principles of the common law. We are referred to two provisions of the statute (section 4663, subds. 4, 5), but we do not see that they prescribe what effect the appointment of a nonresident assignee shall have on the validity of the assignment. We take it that it is to be determined by the common law. By the common law, the appointment of an unfit assignee, as distinguished from one incapacitated by law to take and execute the trust, was a badge of fraud, — was evidence of a fraudulent intent on the part of the assignor to secure to himself some control over the disposition of the" assigned assets. Thus, the appointment of one incompetent from ignorance of business, from blindness, from inability to ■read and write, from residence at so great a distance from the place where the trust must be executed as to suggest that he will not attend to it himself, is a badge of fraud. In the same category comes residence of the assignee in another state. But none of these rendered an assignment void ipso facto. It was only as they established a fraudulent intent that avoided it. In the case most relied to avoid this assignment (Cram v. Mitchell, 1 Sandf. Ch. 251), there were three assignees, — one blind, one unable to read and write, and the other a nonresident of the state. The court, in its opinion, discusses each and all of these as tending to show an intent by the assignor to keep the control in his own hands, and hinder and delay creditors, and, as to the nonresidence of one of the assignees, said: “So, if a failing debtor, whose property was all situated in this city [New York], and whose principal creditors resided here, should make an assignment to three merchants residing in Boston, and who, although creditors of the assignor, could not give their personal attention to the management of the trust, without some satisfactory explanation it would be apparent that the assignor had created a necessity for a substitution in the conduct of the estate which would be likely either to give him control of the assets, or to afford him opportunities to retain and appropriate them to his own use.”

In Guerin v. Hunt, 6 Minn. 375 (Gil. 260), it was held that the selection of an incompetent assignee (in that case, one unable to read or write) from an improper motive will avoid an assignment, but, in the absence of such motive, it will only furnish ground for removing the assignee, and that such incompetency is a badge of fraud. That is in accordance with the tenor of all the decisions. '

There is no allegation in either of the pleadings of any fraudulent Intent in making the assignment. The statement of evidence tending to prove that intent is not, in pleading, equivalent to an allegation of the intent.

The question, when will a transfer, valid by the law of the owner’s domicile, but which would not have been valid if executed here, be held to pass the title to personal property situated here, as to creditors of the owner resident here, and seeking a remedy here against such property is not in the case, because, by the law of the state-where the assignor resided, and where the property was situated, the title passed, and the subsequent removal of the property to this state would not displace such title.

Order reversed.

Buck, J., absent, sick, took no part.

(Opinion published 59 N. W. 1003.)