Prentice v. Coughran

157 N.W. 319, 37 S.D. 191, 1916 S.D. LEXIS 34

• Court: South Dakota Supreme Court
• Decided: April 11, 1916
• Docket: File No. 3908
• Status: Published

Opinions

WHITING, J.

The trial court held respondent to be the owner of six certain lots situate in this state. Respondent’s only source of title was as follows: In the year 1893 one P., the then owner of these lots, executed - and delivered, in the state of Illinois, a voluntary deed of assignment purporting- to assign, to the assignees therein named, all the grantor’s property of every kind) and nature for the benefit of tire grantor's creditors. This deed was thereafter filed for record in the county wherein the above-mentioned lots are situate. No' bond or inventory was evér filed witib said assignment in Minnehaha county or in any other .place. After the execution and recording of such deed, P. gave -to.' one B. a deed to two of said lots. Thereafter and in the year 1894, the assignees in the above deed of assignment gave fio B. a deed to’ all six of said lots. Thereafter B. gave a deed to all six lots to the plaintiff 'herein. The only question demanding our consideration is' tire trial court’s holding that, through this above instruments, plaintiff became the owner of such lands. Appellant’s claim of title rests upon a tax deed void on its face.

Appellant contends: (1) That not title to; these lots ever passed to the assignee; (2) that if title passed to the assignee, P.’s deed to B. was a nullity inasmuch as P. then had1 no' title; (3) that if title passed to the assignee, his attempted transfer to B. was ‘a nullity.

The assignment was good between the -parties thereto as a common-law assignment, and such parties could not deny but that the title to the lots passed to the assignee. As stated in Lacy v. Freeman, 93 Minn. 274, 101 N. W. 167:

“It is elementary that parties may make and enter into such contracts, bargains, and agreements- as they may deem best for their interests, and’ neither the Legislature nor the courts have the power or right to restrict' them in the exercise of that privilege, so long as their contracts are notn immoral or tainted with positive illegality. In the case at -bar Dittbe'nner was insolvent and unable to pay his debts, and to satisfy his creditors, or those who should participate in the transaction, be conveyed the -property in question to plaintiff, as trustee, under the agreement of plaintiff to convert the same into money and pay and discharge Dittbenner’s debts. The transaction amounted1 in effect to an assignment for Ijhe benefit of creditors, not an assignment under our insolvency statutes, or made in conformity with the statutory regulations of common-law assignments, bu-t a common-law assignment pure and simple. * * * The decisions are uniform in holding that, •so far as the rights of creditors are concerned, assignments of this character, where the statutes are not complied with, are void; but we have been cited to- no case where it has been held that such conveyances or assignments are void as between the' parties; to the transaction. The case is analgous to one where property is transferred by an insolvent debtor for the purpose of hindering, delaying ,or defrauding creditors. In such cases the court© hold' the transaction to be void as to creditors, but valid and 'binding between the parties. As said in Brasie v. Minneapolis Brewing Co., 87 Minn. 456, 92 N. W. 340 [67 L. R. A. 865] 94 Am. St. Rep. 709: ‘Transfers of propeiTy made for the purpose of hindering and defrauding creditors are not absolutely void. They are only voidable .at the election of the creditors defrauded. While 'the statutes pronounce such transfers void, the word “void,” as there used, is construed by all courts to mean “voidable.” ’ Section 4227, supra, simply declares conveyances and assignments for the benefit of creditors, where the statutes are not complied' with, void, and this must he construed as rendering such conveyances voidable only at the election of creditors, and that as between the parties they are valid and1 binding obligations, for the right to make a common-law assignment for the benefit of creditors exists independent of statutes. In re Bird, 39 Minn. 520, 40 N. W. 827.”

Therasson v. Hickok, 37 Vt. 454; Finley v. McConnell, 60 Ill. 259; Williams v. Kemper, etc., 4 Okl. 145, 43 Pac. 1148; Notes to Long v. Forrest, 23 L. R. A. 33; 4 Cyc. 146; 2 R. C. L. 688.

Section 2383, C. C., provides

“That an asignment "for 'the benefit of creditors is void against creditors of the assignor, and against purchasers and in-cumbrancers .in good faith and for value, if the assignment is not recorded and toe inventory * * * filed. * * *”

And section 2386, C. C., provides that until such assignment is recorded, inventory filed and bond given by asignee as required! by the statute, the assignee1 “has no authority to dispose of the estate. * * *” In construing similar provisions of toe California Code the court of that state, in Bryant v. Langford, 80 Cal. 542, 22 Pac. 219, rightfully said:

“The failure to give the bond did not affect toe validity of the deed. The execution and delivery of the deed vested toe title to the property in- the assignee. A failure on the part of the assignor to file an inventory, or a failure to record the deed, renders the assignment void as ‘against creditors of the assignor and against purchasers and incumbrancers in good faith and for value/ and until the inventory and affidavit have been filed, and 'the assignee has given th¿ required bond, such assignee has no authority bo dispose of the estate or convert it to the purposes of the trust. Civ. Code, §§ 3461-3468. But the title passes as between the assignor and assignee, and the assignment is irrevocable. Forbes v. Scannell, 13 Cal. 242; Warner v. Jaffray, 96 N. Y. 256 [48 Am. Rep. 616].”

Appellant contends that inasmuch as the assignee had no authority to dispose of these lots at the time he gave the deed to B., such deed' was void and passed no title. While he may have acted without statutory authority and his deed' been void as against the assignor and the creditors of such assignor, the assignee himself would be estopped to question the validity of such deed, and no one except 'the assignor or a creditor — the parties for whose benefit section 2386, supra, was enacted- — 'have any right to avoid same. Finley v. McConnell, supra.

The assignment and the assignee’s deedi were executed more than 17 years prior to the bringing of this action. After such lapse of time, we certainly -would be justified! in presuming that all the interested parties long -since acquiesced in- -the act of the assignee in -conveying such property, and that they - 'have received the -benefit of whatever consideration was p-aid for t-he assignee’s deed1. The following quoted from- the. opinion in Mitchell v. Green, 125 Minn. 24, 145 N. W. 404, a case “on all fours” with ‘this -case, is peculiarly applicable 'to- the case before' u-s:

“The making of such an assignment is the exercise o-f a common-law -right, and is in the nature of a contract; it is not the exercise of a right given by statute. The statute merely r-egulates and governs the manner of making the assignment and of executing the trust thereby -created. The title -is vested in the assignee by the voluntary act of the assignor, and the power to convey is conferred upon the assignee by the d-eedl of assignment and not by’ the’ statute. The statute merely -regulates the exercise of the power. Burrill on Assignments,' 24';. Lesher v. Getman, 28 Minn. 93, 9 N. W. 585; Mackellar v. Pillsbury, 48 , 51 N. W. 222; Lucy v. Freeman, 93 Minn. 274, 101 N. W. 167.

“Gaasch, the assignee, possessed) the legal title with power to convey. líe made ;a sale and executed a proper deed to Mitchell. If he executed such deed without first having the sale approved by the court, that fact did not make the conveyance an absolutely nullity, but, at most, merely rendered it voidable. Lucy v. Freeman, 93 Minn. 274, 101 N. W. 167; Weide v. Porter, 22 Minn. 429; Bristol Savings Bank v. Judd, 116 Iowa, 26, 89 N. W. 93; Breyfogle v. Stotsenburg, 148 Ind. 552, 47 N. E. 1057; In re Rider, 23 Hun (N. Y.) 91.

“As the deed was not void, but only voidable, and neither the assignors nor their creditors asked to have it set aside, the title passed 'to and vested in Mitohell. And all the parties in interest having acquiesced in the conveyance, defendant, a-n entire stranger to the proceeding, cannot be heard ■ to question it.”

The judgment appealed from is affirmed.

GATE'S, J., taking no part herein.