290 N.W. 584 | Minn. | 1940
In substance the findings of fact are: December 24, 1937, Martin O. Peterson filed in the United States district court at Fort Dodge, Iowa, his petition in bankruptcy, and on the 27th of that month was adjudged a bankrupt; that on January 27, 1938, plaintiff was appointed trustee of the bankrupt's estate, qualified, and obtained leave to bring this suit; that in an action pending in the district court of Yellow Medicine county, this state, defendant Mclntyre, November 17, 1932, obtained a judgment for $1,885.85 against said Peterson and his wife, a transcript of which was filed and docketed June 19, 1936, in the office of the clerk of the district court of Lac qui Parle county, this state; that an execution upon said judgment, issued August 25, 1937, was placed in the hands of defendant Smaagaard, the sheriff of last named county, who on the next day by virtue of said writ levied upon the two-fifths interest of said Martin O. Peterson in the crops then growing on certain described land in said county and upon his interest in the cash rent under the terms of a lease between Peterson and one Schultz, his tenant, to satisfy $1,281.24, then unpaid on said judgment; that upon due notice said sheriff sold the property so levied upon to the highest bidder, and realized therefrom $777.60, above expenses, which sum he paid over to defendant Mclntyre and returned the execution satisfied in that amount; that in obtaining said judgment and in levying the execution Mclntyre was represented by her attorney, who at the time of such levy and sale had reasonable cause to believe "that said Peterson was then insolvent and that said levy, seizure, and sale under said execution would operate to give said defendant Mclntyre a greater percentage of her said claim than other creditors of said Peterson of the same class"; and no demand was made on the defendant sheriff to release the levy made. The conclusion of law was that the cause be dismissed on the merits. *236
The assignments of error go to the proposition that the findings of fact require a conclusion of law that plaintiff have judgment for $777.60 against defendants instead of for dismissal. Defendant Mclntyre's judgment was not a lien on the personal property of the judgment debtor Peterson until the levy, and since this levy was within four months of the filing of the petition in bankruptcy it was voidable in a plenary action, even though there had been a lawful sale prior to the bankruptcy, upon proof that such levy and sale operated as a preference under the provisions of § 60 (a and b) of the bankruptcy act (11 USCA, § 96 [a and b]). Had there been no more than a levy when the petition was filed by Peterson, the levy could have been vacated. Galbraith v. Whitaker,
We are also of the opinion that the findings of fact do not require a conclusion of law that plaintiff have judgment against defendant Mclntyre for $777.60, or any other sum. The practice established in state courts governs cases brought therein by a trustee in bankruptcy to recover preferential payments as to pleading, proof, and findings. Exler v. American Box Co.
"The complaint is devoid of any allegation showing any debt or debts outstanding against Mr. Peterson at the time he was declared a bankrupt, or that the herein involved judgment was listed by him in the bankruptcy proceedings as an existing undischarged liability, and the stipulated facts fail to specify either, and no *237 schedules of assets, debts, or liabilities were offered or received in evidence."
In the complaint it is alleged that the levy "operated to give such judgment creditor a greater percentage of her debt than other creditors of the same class." The finding and stipulation of facts is merely that the attorney of defendant Mclntyre had reasonable cause to believe that the "levy would operate" so to do. In Seager v. Armstrong,
"The evidence fails to show what assets came into the hands of the trustee, and what creditors are entitled to participate in the distribution, and hence it is impossible to determine whether the return of the defendant's goods has resulted in giving it a greater percentage of its debt than has, or will be, paid to other creditors."
In other state courts the same rule is followed in actions brought by a trustee in bankruptcy to recover preferences made or suffered by the bankrupt under the provisions of 11 USCA, § 96 (a and b). Crary v. Kurtz,
"Because of the omission to prove that any claims had been established against the estate, the decree of the district court must be, and is, reversed."
In Flint v. Chaloupka, supra, the trustee in bankruptcy sought to intervene in a creditor's suit, but the court said [
"There is another very potent reason why his application should have been denied. The petition of intervention does not allege that the trustee has not sufficient assets of the estate in his hands to pay the claims allowed and all other liabilities of the estate."
Plaintiff cites Frank v. Stearns,
Order affirmed.