Case ID: cal_114/html/0191-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Henshaw, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Sac. No. 89.
    Department Two.
    September 8, 1896.]
    F. G. WARD, Sheriff, Respondent, v. MATT. HEALY, Appellant. M. ASHER, Intervenor and Respondent.
    Execution—Insolvency—Priority of Right to Proceeds.—The lien of .an execution creditor upon personal property in the hands of the sheriff, and the right to a sale thereof in satisfaction of his judgment, is not affected by the subsequent adjudication of the judgment debtor as an insolvent, and the appointment of the sheriff as receiver of his estate
    Id.—Intervention by Assignee.—In an action by a sheriff, claiming as a receiver of an insolvent debtor, to recover from a purchaser the price of personal property sold, in which the purchaser sets up a prior right to the proceeds of the sale as an execution creditor of the insolvent, the assignee of the insolvent may intervene, but in his complaint in intervention must allege the fact of the assignment to him, and establish it by evidence.
    Id.—Accounting by Receiver.—Upon a recovery by the plaintiff in such an action he would recover as receiver, and the assignee in insolvency would be entitled to have him account for the proceeds in the insolvency proceeding, without resorting to a separate action in equity.
    Appeal from a judgment of the Superior Court of Lassen County and from an order denying a new trial. W. T. Hasten, Judge.
    The facts are stated in the opinion of the court.
    
      Spencer & Raker, and F. G. Spencer, for Appellant.
    
      Shinn & Shinn, for Respondent Ward.
    
      Goodwin & Goodwin, for Respondent Asher.
   Henshaw, J.

These appeals are from the judgment and from the order denying defendant a new trial.

Plaintiff for cause of action set forth that upon May 25, 1893, one James M. Smith was, by the superior court, adjudged to be an insolvent debtor, and, on said day, plaintiff, sheriff of the county, was appointed receiver of his property. Upon the eighth day of June, 1893, plaintiff “gave the bond required by said order and entered upon the discharge of his duties as receiver, and acting as such receiver took possession of sixty head of horses belonging to the insolvent.” Thereafter he gave due and legal notice that upon June 24, 1893, he would as receiver sell said horses at public auction. Defendant claimed some interest in or lien upon the horses, and sought an order from the court prohibiting the sale. Thereupon such proceedings were had in the matter that the following stipulation was entered into between defendant and the receiver, and spread upon the minutes of the court: “Counsel now agree that the sheriff now proceed to sell the property now in his keeping, and advertised to be sold this day, belonging to the said insolvent, the proceeds of said sale to. be held by him subject to the decision of this court as to its disposal.” In pursuance of this stipulation plaintiff proceeded to sell, and did sell, the horses at public auction to defendant for the sum of six hundred and fifty-eight dollars and fifty cents, and delivered them to defendant upon the day of the sale. Plaintiff has demanded payment of said sum, which defendant refuses to pay.

Defendant for answer denied that plaintiff was the receiver in insolvency, denied that plaintiff sold the horses as receiver, but admitted and averred that he sold them as sheriff. He admitted also his purchase of the horses at the sale, and likewise admitted that he had failed to pay the purchase price. But in this regard he alleged that, before the appointment of plaintiff as receiver, he was a judgment creditor of said James M, Smith, and had caused to be issued and placed in plaintiff's hands as sheriff for levy a writ of execution. Plaintiff, as sheriff, levied upon, took into, and retained in possession the said horses under and by virtue of the writ of execution before "the insolvency proceedings of said Smith were commenced. This possession continued until after the sale. It was the lawful duty of plaintiff as sheriff to sell the horses under the writ for the benefit of defendant, and it was defendant’s right to become a purchaser at the sale, and have the proceeds of the sale applied as a payment upon his judgment.

M. Asher intervened as assignee in insolvency, asking that defendant be compelled to pay the purchase price to plaintiff, and that plaintiff be directed to account to him for the same.

There were thus presented three different claims. The plaintiff, who sued as sheriff, contends that he did not soil as receiver nor under execution, but under the stipulation, and is therefore entitled to recover the money and hold it until directed by the court to turn it over either to the assignee or to the judgment creditor. The intervenor demands the money as part of the insolvent’s property, while the defendant insists that the purchase price should be applied in reduction of his judgment.

As to plaintiff’s contention that he did not sell either as receiver or under the execution, but under the stipulation, it need but be said that unless he sold either as receiver or as sheriff under execution levy he had no legal right to sell Smith’s property at all. He could not sell in both capacities; he had no authority to sell except in one or the other. Smith was not a party to the agreement, and the only legal effect of the stipulation was that the rival claimants agreed to jjermit the sale, leaving for future determination the question whether the sale should be legally regarded as made in the insolvency proceedings or under the execution.

lathis action a decision upon that question is sought.

It is undisputed that if the execution levy was made before the insolvency proceedings were commenced, and the levy was not released at the time of or before the sale, the judgment creditor’s rights are prior and superior to those of .the receiver; and the sale should be treated as made under the execution.

■ The court found that the sheriff did not levy upon the horses under the execution, and did not take the horses into his possession until after the adjudication of insolvency. These findings are attacked, and we think successfully. It is uncontradicted that the writ of execution was placed in the sheriff’s hands and receipted for by him upon May 15, 1893. The order of adjudication of insolvency was made May 25, 1893. The evidence upon the subject is that of Frank Strong, a deputy sheriff. He is asked:

“ Q. Did you make a levy on the property under that execution? A. Not that day; I had previous to that, sometime about the 15th of May.
“ Q. You brought the execution to us last night and showed us you had found it, and you found it in the sheriff's office. A. Yes, sir; but I don’t recollect ever seeing that execution after I went out to levy on the execution; I left the writ at home and only took copies with me.”

He further testified that on or about the fifteenth day of June he went out to Madeline plains and took the horses from the charge of the sheriff’s keeper into, his own immediate custody; that he attended, to all matters connected with the taking and sale of the horses; that the sheriff personally had nothing to do with them, and that the sole official position which he held was that of deputy sheriff.

It is also in evidence, without conflict, that defendant’s attorneys instructed the sheriff not to release his levy under the writ, and to sell the property levied upon.

The only answer which respondent’s counsel make to this evidence of a levy upon May 15th is that appellant’s counsel know that it “had reference to a levy upon real estate, and had no relation to any matter in question in this suit.” To which appellant’s counsel retort that “they know the witness meant what he said, and that his statement did not have reference to a levy on real estate.”

With this wide divergence of knowledge upon their part we are left to draw our own information from the record itself. In that no intimation appears of any levy upon real estate, or that the evidence is not addressed to the taking of the horses; and it may also be suggested that, if the evidence had no relation to any matter in question, it was the plain duty of respondent's counsel to see that it was eliminated from the bill of exceptions.

If then, as appears from the foregoing, the property was in the sheriff's custody under execution levy at the time of the adjudication of insolvency and the appointment of the receiver, defendant's' lien thereon, and his right to compel a sale thereof in satisfaction of his judgment, was in no way affected by those proceedings. (Vermont etc. Co. v. Superior Court, 99 Cal. 579.)

From what has been said it necessarily results that a new trial must be ordered, in view of which it becomes pertinent to consider some of the other contentions of appellant.

The complaint in intervention nowhere averred that an assignment had been made to Asher, the intervenor. Upon the trial no evidence was offered to show any assignment to him. It is the assignment which vests title in the assignee. The averment of such assignment was necessary in pleading and essential in proof. Otherwise the assignee has no standing in the case, and neither pleads nor establishes in himself a cause of action. Defendant’s demurrer to the complaint in intervention should have been sustained, and his motion for a non-suit against the intervenor for failure to prove the assignment should have been granted. (Insolvency Act of 1880, secs. 17, 18; King v. Felton, 63 Cal. 67.)

So far as the complaint in intervention joins with the plaintiff in seeking a recovery against the defendant, it is within the rules permitting an intervention; but its demand that the plaintiff as receiver be compelled to account with the intervenor as assignee is at least superfluous. If plaintiff recovers the moneys at all he recovers them'as receiver. As receiver he is an officer of the court in insolvency. The assignee, without resorting to a separate action, may call him to account before the court in insolvency, and there have his accounts adjusted and settled without resort to a separate action in equity.

The judgment and order are reversed, with directions to the trial court to sustain defendant's demurrer to the complaint in intervention, with leave to the intervenor to amend.

McFarland, J., and Temple, J., concurred.