F. A. Drew Glass Co. v. Baldwin

27 Mo. App. 44, 1887 Mo. App. LEXIS 8

Opinions

Philips, P. J.

This controversy arises out of the-attachment proceedings of the plaintiff against the defendant, Baldwin, and an interplea filed therein, by Heard, the assignee of Baldwin, under a deed of assignment. The attachment was brought on the seventh day of January, 1885. Among the grounds alleged in the affidavit is, that the defendant is about to fraudulently convey and assign his property and effects so as to hinder and delay his creditors. On the following day the defendant made an assignment of all his property, for the benefit of all of his creditors, to the inter-pleader herein. Under the writ of attachment, the-sheriff seized “nearly all of'the property afterwards assigned.” The assignee duly qualified and entered upon his duties. On the thirteenth day of February following, the plaintiff came in and presented this very claim, together with another held by him against the insolvent, to the assignee for allowance. On its rejection by the assignee, he appealed to the circuit court, where the-claim was duly allowed, and judgment rendered. After this, when the attaching creditor was about to proceed to enforce his attachment, the assignee interposed an interplea, setting up the facts aforesaid, claiming the-property. To this interplea the plaintiff demurred. The court overruled the demurrer, and the plaintiff has appealed to this court. I make no question as to the general rule, that an assignee succeeds only to the rights and titles of the assignor, and that he acquires no greater or other rights and interests than those held by the assignor, at the time of the execution of the deed of assignment. Nor do I make any question as to the correctness of the rule that an assignment does not destroy ■nor affect any valid subsisting Hen at the time of the assignment; and that the assignee takes the estate cum onere. But I do not think the class of cases pertinent to this controversy, which hold that a mortgagee, or person sui generis, may prove up their claims, under the assignment, without abandoning their prior lien. In such cases there is a method, known to and practiced by the courts of equity, by which the court may ascertain and determine the pro rata share in the distribution of the assets, and the amount for which such prior lienor may enforce his lien.

The proceeding is entirely equitable, where the rights and interests of the prior lienors and the subsequent beneficiaries under the deed of assignment may be asserted and adjusted, ex aequo et bono. But in the case of an attaching creditor no such methods are known, because they would be utterly impracticable. And hence the appellant very prudently pretermits any discussion of this matter by saying it is not presented for consideration. But I respectfully submit that this question is necessarily involved in the discussion, as its solution will demonstrate the impracticability of the rule established by the opinion. It leads to such obvious absurdity, as to satisfy my mind that it cannot be the law. When the plaintiff presented his claim for allowance, the only question for the determination of the assignee was as to its justice ; was it owing by the defendant to the plaintiff ? The presumption of law would be that when the creditor thus presented his claim for judgment, without reserving his rights under the attachment, he had elected to abandon the proceedings in attachment, and come in to share with the other creditors, ¡pari passu, under the deed.

' Suppose the circuit court had had its attention called to the attachment proceedings, how could it have determined what pro rata share of the dividend should be applied to the debt of the attaching creditor, predicated upon the existence of the prior attachment, not then determined » The validity of the attachment lien is entirely dependent upon the fact, subsequently to be ascertained by trial, of the ability of the creditor to sustain his attachment. If the attachment should subsequently be dissolved, he would have no lien. On the other hand, if the attachment should be sustained, when the court came to render judgment for the debt, it could not consider the fact of the allowance before the assignee, for nothing would be paid thereon, nor, indeed, could be paid by the assignee, as the very property out of which the assignee could alone make such payment would be in the hands of the sheriff, in custodia legis, subject to the payment of the attachment debt before the assignee could touch it.

Whereas, under an assignment of property, subject to a mortgage or prior equitable lien, the property passes into the hands of the assignee cum onere, and he has something to sell — the equitable interest, coupled with the possession. In such case, the court can direct the matter of equitable dividend.' Again, if the appellant’s position be the law, there is nothing to prevent this plaintiff, after recognizing the validity of the deed of assignment, by having his claims allowed under it, from going back to his attachment suit, and sustaining it on the sole ground that the deed of assignment was and is fraudulent as to him.

This is one of the grounds of attachment — that defendant was about to fraudulently assign his property. For aught this court knows, and the presumption, rather, is, the affidavit was predicated of the fact that this act of assignment was then in contemplation and process of execution. What, then, would there be to prevent the plaintiff, on a trial of the issues arising on the plea in abatement, from proving the truth of the affidavit ? By the repeated decisions of our courts, the only issue on such trial would be the truth of the facts alleged in the affidavit. The merits are in nowise involved. Hicks v. Martin, 25 Mo. App. 359; Temple v. Cochran, 13 Mo. 116; Chenault v. Chapron, 5 Mo. 438; Cannon v. McManus, 17 Mo. 345.

No fact or event, intervening after the filing of the affidavit, not tending to prove the fraud alleged, would be admissible under the plea in abatement. The issue is solely statutory.

It thus becomes manifest to my mind that the law contemplates no such absurd results and contingencies in its administration. It will not permit a party to occupy such inconsistent positions in the prosecution of his rights. He ought not, with the judicial sanction, to be allowed to play with the other creditors the unequal game of “heads I win, tails you lose.” He must either affirm the validity of the deed in toto, or stand out on his asserted prior, exclusive right. His attachment, in the very nature of the case, is antagonistic to the assignment. If it stands, there is nothing for the assignment to operate upon.

It is wholly unlike the instance of a prior mortgage or equitable lien. There the prior right is founded on contract — the assent of the debtor to create the lien. When the debtor, in such case, assigns all his property, the assignee takes that portion affected with the prior lien. The possession goes to the assignee. The creditor, in such case, is secured only by a lien on part of the assets. He may well be admitted to prove up his' claim, so that he may be let in to share, upon equitable principles, in a pro rata dividend for any unpaid balance after exhausting his security — the court having the. power to adjust the equities under the order of distribution. Not so in the case of an attachment. The proceeding, as to the debtor, is in invitum. Under the writ of attachment, it is the duty of the officer to seize property sufficient to satisfy the debt; and he is liable to the creditor if he stops short of this. Drake Att., sect. 190. The plaintiff is supposed to point out to the officer the property, and direct him to so levy.

In the case at bar, the sheriff seized about all the property the defendant had, and, of course, about all that would have passed to the assignee under the deed. In contemplation of law, he had enough to satisfy his debt. It is from this idea the well-settled rule of law has sprung, that, where the execution is levied on sufficient personal property to satisfy the judgment, and the property is afterward voluntarily released by the creditor, it amounts to a satisfaction of the judgment debt. The property attached in this case was thereafter in custodia legis. The assignee never obtained possession of it. He could not have delivered under any sale he might have made. No title would pass by a sale of the mere equity of .redemption. Yeldell v. Stemmons, 15 Mo. 443; Boyce v. Smith, 16 Mo. 317.

Therefore, when the plaintiff presented this claim to the assignee for allowance, and had its judgment, there is no logical escape, in my op inion,-from the legal* conclusion that he thereby recognized, in the first place, the validity of the deed of assignment; second, that the very property which he now claims to hold under a prior seizure, and took into the. custody of the law, passed under the deed; otherwise his judgment, for which he has so zealously contended before the assignee, would be futile and fruitless ,* and third, that he must be held to have intended to come in on an equality with the other general creditors, and to have the assignee to sell the property seized under the attachment. As this could only ensue by his abandonment of the attachment, it must logically and inevitably follow that he made Ms election to take under the deed. From tMs conclusion I am unable to discover any rational mode of escape.

It is claimed that the case of Valentine v. Decker (43 Mo. 583), is not in point, because there the attack was made on the deed of assignment after the assailant had recognized its validity. But what difference, in principle, can it make, where the creditor comes in under the deed, thereby recognizing its validity, and then falling back on his attachment, the enforcement of which practically nullifies the assignment, and is a direct assault upon the effect of the deed of assignment \

The principle contended for by me is directly asserted by the Supreme Court of Massachusetts in Jones v. Tilton (1 N. E. Rep. No. 9, p. 741). There the creditor brought attachment to reach funds under the trustee process. After the service of the writ he gave his verbal assent to the deed of assignment. The court say: “ Such assent, if given before the commencement of the action, would debar the plaintiffs from making the attachment, and, being given afterwards must defeat the attachment. * * * The assignment being valid, and the plaintiffs having assented to it, the trustee was properly discharged. ’ ’ This language covers the case ;' and was not loosely employed by a court of such high character.

In Harrison v. Mock (10 Ala. 185), the debtor made an assignment for the benefit of all of his creditors. The trustee at the time of the assignment had a judgment against the assignor. He accepted under the deed of assignment, and then undertook to sell the property under execution on his judgment, the execution being out in the hands of the officer at the date of the assignment. It was held that having accepted the trust, he was bound to take ratably with the other general creditors, “that by accepting the trust he waived his special lien on the property.” This is precisely what, in effect, the plaintiff is attempting to do in this case.

In Hone v. Henrique (18 Wend. 240), it was held that an auctioneer, who ordinarily had a lien on the money arising from sales made by him for his compensation, and although his fees arose prior to the filing of the creditor’s bill to set aside the sale, was not entitled to his priority, because by selling under the assignment he had signified his acceptance of its provisions, and must come in with the others.

In Adlum v. Yard (1 Rawle, 171), the court say : “The plaintiff having accepted a dividend on the only terms on which it was offered, is as effectually concluded from claiming a repugnant right, as if he had asserted the validity of the deed of trust in a court of record.” And this is approved by our Supreme Court in Gutzwiller v. Lackman (23 Mo. 174). The doctrine of election now applies to this case. Frierson v. Branch, 30 Ark. 443. Bispham in Principles of Equity, section 295, says: “An election in equity is a choice which a party is compelled to make between the acceptance of a benefit under an instrument, and the retention of some property already his own, which is attempted to be disposed of in favor of a third party by virtue of the same instrument.” “The doctrine rests upon the principle that a person claiming under an instrument shall not interfere by title paramount to prevent another part of the instrument from having effect according to its construction; he could not accept and reject the same instrument.” Frierson v. Branch, supra. And Perry on Trusts (vol. 2, sect. 597), asserts the doctrine, that a party, by accepting under a deed of trust, “ waives all claims and liens upon the property inconsistent with the deed.” And in the most recent case of Stoller v. Coates (88 Mo. 515), the doctrine is recognized and affirmed, that a creditor, by having an allowance in his favor before the assignee against the general assets, is estopped from asserting a prior equity for the conversion of the fund, as against Mm. The case of Grant v. Chapman (38 N. Y.) is not in point. The attaching creditor did not prove up under the assignment and then fall back on the attachment. The assignment specifically provided for a preference in favor of the attaching creditor for the amount proved; and the assignment, in providing that the assignee should then recognize it, did no more than the law would have compelled Mm to do.

In Gummersell v. Hanbloom (19 Mo. App. 274), the doctrine here contended for is expressly recognized, Sampson claimed under a chattel mortgage, which, if enforced, practically nullified the deed of assignment ; and as it was taken in anticipation of the deed of assignment, Hall, J.,said: “It is certain that Sampson cannot claim under both the mortgage and the assignment. The rights given by the mortgage and the assignment are inconsistent. It is equally clear, from the statement made by Sampson, in presenting the notes to the assignee for allowance, that he intended to and did claim those inconsistent rights.” In presenting Ms claim to the assignee he expressly reserved his rights under the mortgage ; and his claim was disallowed. Under "the facts of that case the language of the court was proper enough, as the exclusive claim asserted by the mortgagee to the goods made it inconsistent with his attempt to come in under the deed of assignment, confessedly intended to defeat that mortgage.

This, too, becomes the stronger, as against the position assumed herein by the minority, as the assignee there had something to sell to satisfy any allowance made by him, as he • had the possession of the goods, and could have delivered the same to the purchaser, subject to the equity of redemption from the mortgage. Whereas here the assignee had nothing, if not the attached property. Therefore, by unreservedly submitting his claim under the assignment, he elected to have this property administered under the deed of assignment; and he cannot thereafter proceed as if he had not done so. In the recent case of Eppright v. Kauffman (90 Mo. 25), the principle I contend for is recognized. After presenting and having allowed his claim before the assignee, the plaintiff obtained judgment, nem. con., on his claim in the circuit court against the assignor.. He then attempted to subject to its payment certain bank stock, which he supposed had not passed under the deed of assignment. It was held that the allowance by the assignee had all the force and effect of a judgment by a court, of record, and became in rern judicatum; and, therefore, could not be affected by the mere act of taking judgment afterwards on the claim in the circuit court, and attempting to make it out of property which he innocently supposed had not passed under the deed of assignment. But, in respect of the other aspect of the case, as to his right, after recognizing the validity of the assignment, and then proceeding as if he had not done so, Sherwood, J., who delivered the opinion of the court, observed: “That where a party has accepted an assignment he cannot then proceed as if he had not done so, and in such case the assignee has a remedy by injunction to restrain him from further action.”

This is precisely, in effect, what the plaintiff is attempting in this case. He accepted the assignment, and by then falling back on his attachment, which was to thwart the operation of the deed of assignment, he is attempting to “proceed as if he had not done so.” And if injunction would lie to restrain him, the assignee had the unquestionable right to interpose, by interplea, and set up the facts to accomplish the same end.

The demurrer was,. in my opinion, properly overruled by the circuit court, and its judgment should be affirmed. It is so ordered.

Hall, J., concurs; Ellison, J., dissents.