Case ID: ohio-np_5/html/0102-01.html
Source: Caselaw Access Project
Author: {"author": "WICKHAM, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

(Delaware Co., Court of Common Pleas.)
    IN THE MATTER OF THE ASSIGNMENT OF JOHN W. JONE
    1. Where a person in failing- circumstances executes a deed conveying to his grantees all of his property consisting of real estate, in trust for his creditors, empowering- and directing- such grantees to convert the same into money, and, after satisfying certain liens, to distribute the residue to the general creditors .of the grantor. Hela: Such a deed is, in law, an ordinary deed of assignment for the benefit of all the creditors of the grantor, and the probate court has exclusive jurisdiction over the administration of the estate.
    
      2. An order of the probate court removing an assignee of an insolvent estate, is not a final order affecting- any substantial right of the assignee, and error can not be predicated thereon.
    (Decided December 4, 1897.)
   WICKHAM, J.

This is a proceeding in error brought, in this court to reverse the order and judgment of the probate court of this county.

The history of the case, as shown by the record, isas follows: On the 19th day of January, 1897, John W. Jones, a citizen of Delaware county and resident of Radnor township, executed and delivered to James W. Gallant and Stephen C. Thomas of Delaware county and Charles C. Wambaugh of Columbus, Franklin county, .certain deeds conveying to them about twelve.hundred acres of land, situated and lying in the counties of Delaware, Marion and Franklin, and of which the said John W. Jones was then the owner.

The deed for the Delaware county land, omitting- the description of the several tracts, which amount in all to about six hundred acres, reads as follows :

“Know all men by these presents: That I, John W. Jones, of the county of Delaware, and state of Ohio, in consideration of the sum of one and no one-hundredths dollars to me paid by James W. Gallant, of the county of Delaware, Steven C. Thomas, of the county of Delaware, and Charles M. Wambaugh, of the city of Columbus, county of Franklin and state of Ohio, the receipt whereof is hereby acknowledged, do hereby grant, bargain, sell and convey to the said James W. Gallant, Steven C. Thomas and Charles M. Wambaugh, as trustees for the purposes hereinafter mentioned, their successors and assigns forever, the following real estate, situated in the county of Delaware, in the state of Ohio, and bounded and described as follows:”

(Here follows a description of the property conveyed.)

“To have and to hold said premises, with all the privileges and appurtenances thereunto belonging, to the said James W. Gallant, Steven C. Thomas and Charles M. Wambaugh as trustees, their successors and assigns forever. This conveyance being made to the said James W. Gallant, Steven C. Thomas, and Charles M. Wambaugh as trustees for the following- purposes, to-wit: Said trustees to take immediate possession of said lands, subject to existing leases, to collect all rents, income and profits arising- from said lands and tenements, and to sell the same in such lots and parcels as they may deem best, whenever such sales can be made to the advantage and interest of my creditors,and said trustees are authorized and empowered to execute deeds to the purchasers of said lands whenever sales are made by them with or without covenants of warranty as they may deem best, and to give such time for the payment of the purchase money to the purchasers thereof as they may think proper, provided said deferred payments are secured by mortgage on the premises sold, and until said lands are so sold said trustees' are hereby authorized to rent or lease the' same in such manner as they may deem best to secure the best income therefrom. Said trustees are hereby authorized to pay all taxes and assessments levied upon said lands and tenements, and to make all necessary and proper repairs thereon, and out of the proceeds arising from the rents and profits and from the sale of said land and tenements, said trustees are hereby authorized and directed to pay and distribute the same as follows:
1st. To pay all liens upon said premises in the order of their priority.
2nd. To pay all my individual creditors as their claims are properly proven to said trustees, making- equal distribution among- them so that no preference, shall be given to one individual creditor over another.
3d. To pay to the creditors of Miller, Jones & Company the amount which may be found due to them from me as a member of said firm, making equal distribution among them as their claims may be ascertained and determined.
4th. Whatever surplus may remain after the payment- of all the above claims in lands or money, said trustees are to transfer or pay over to said John W. Jones, his administrators, executors and assigns. Ihe said trustees are to have a reasonable compensation for their services and expenses in the execution of this trust, the amount to be agreed upon by the parties hereto, or fixed by a court having proper jurisdiction in the premises and the same to be paid as provided for before distribution or payment is made to any creditoras herein provided for.”
“This conveyance is made at the same time with other deeds for grantor’s land-in Marion and Franklin counties to the same grantees so as to constitute one trust for said purposes, of all of grantor’s property.”
“And that I will forever warrant and defend the same with the appurtenances unto the said James W. Gallant, Steven C. Thomas, and Charles. M Wambaugh, their successors and assigns against the lawful claims of all persons whomsoever.”
“In witness whereof the said John W. Jones has hereunto set his hand this 19th day of January in the year of our Lord one thousand eight hundred and ninety-seven.”

This deed is.properly signed, witnessed and acknowledged, and it was filed with the recorder of Delaware county for record on the 19th day of January, 1897, the day of its execution, and was recorded on the 25th day of January, 1897, in vol. 107, page 419, of the Records of Deeds of Delaware county.

On the 15th day of October, 1897, The Northwestern Mutual Life Insurance Company, a corporation, by Sayler & Sayler, its attorneys, filed its application in the Probate Court of Delaware county, alleging that it is a creditor of the said John W. Jones, and praying that the said Gallant, Thomas and Wambaugh, the trustees and grantees in the deed of John W. Jones, be removed, and that a trustee be appointed by the court to administer said trust under the statutes of Ohio relative to insolvent debtors. This application was set for hearing on the 22d day of October, 1897 by the court. Due notice was given to the said Gallant Thomas and Wambaugh of the application and the time for the hearing thereof, and on the 22d day of October, said trustees appeared in court and filed a demurrer to said application. The demurrer was heard by the court and overruled, to which the trustees excepted. And thereupon leave was given to the trustees to file an answer to said application instanter which was aoeordinly done. Thereupon the matter came on to be heard on the pleadings and the evidence, and the court reserved the decision of the questions, made, until the 28th day of October, 1897.

On that day the court found that the said The Northwestern Mutual Life Insurance Company was, at the date of the execution of the deed above mentioned, a creditor of the said' John W. Jones; that on the 19th day of January, 1897, the said John W. Jones was then a resident of Delaware County, Ohio; that on said date he executed and delivered the deeds above mentioned; that the real estate conveyed by said deeds, was conveyed to the said trustees, in trust for the benefit of the creditors of the said John W. Jones; that said deeds were deeds of assignment under the insolvent laws of the state of Ohio, and that said trustees and each of them had failed to file the said deeds of assignment, or copies thereof, in the Probate Court of Delaware courity, Ohio, and the said trustees and each of them had failed to give bond as said trustees, although more than ten days had elapsed since the execution and delivery of the said deeds to said trustees.

And the court ordered and adjudged that the said trustees and each of them be removed as such trustees, and appointed John D. Van Deman, as trustee, to execute the trust, under and in pursuance of the statutes of Ohio relating to insolvent debtors. And the court further ordered that the original deed be filed in the probate court; which was accordingly done; and to all of which the said Gallant, Thomas Wambaugh did then and there except.

Afterward, to-wit, on the 16th day of November, 1898, said trustees removed, filed their petition in error in this court and for error of the probate court,claim:

1st. That said probate court had no jurisdiction of said subject matter.

2d. That the said court erred in overruling the demurrer of the defendants below to said application.

3d. That the said court erred in not dismissing said application.

4th. That the said court ought to have rendered judgment in favor of these plaintiffs in error instead of against them.

5th. Other errors apparent on the record.

Thereupon, on the same day, came The Northwestern Mutual Life Insurance Company and filed a motion, and moved the court to strike from the files the petition in error and bill of exceptions, for the following reasons:

1st. This court has no jurisdiction of the case over the said defendant in error.

2d. This court has no jurisdiction of this case over the subject matter of said petition in error.

3d. This court has no jurisdiction to hear and determine any matter set up in the record from the probate court, and no error lies from the decision and order of the probate court removing said trustees.

It appears to us that the first question in its logical order presented by the record, is, is the deed by which John W, Jones conveyed his lands to plaintiffs in error, a deed of assignment within the purview of the statutes of Ohio, relating to insolvent debtors?

Counsel for plaintiffs in error, contend that it is not a deed of assignment,but a deed o£ trust; that the only way it can be declared to be a deed of assignment for the benefit of ail the creditors of John W. Jones, is upon suit brought in this court to have it so declared, on the ground of fraud.

They contend that the law permits a debtor to convey his property to a trustee, for the benefit of his creditors, by such a deed as the one in this case, so long as it is not in fraud of creditors, and in support of their contention they cite the case of Hoffman, Burneston & Co. v. Mackall et al., 5 Ohio St., 124, where it is held: “Where a debtor, in contemplation of insolvency, makes an assignment or conveyance of his property to trustees for the benefit of all his creditors, at a time when á part of his creditors are expecetd within a few days thereafter to obtain judgment against him, is not per se fraudulent and void, upon the ground that the deed contains a provision which authorized the trustees to sell the property at private or public sale, and upon credit, as they shall deem most expedient and beneficial to the creditors.”

“When a man finds that he has become insolvent, the most just and equitable act he can do is to surrender his property in trust for the benefit of all his creditors, and the hindrance and delay which such an assignment may occasion to the prejudice of particular creditors, seeking a priority of liens on the debtor’s property by judgments at law, and speedy collections by sales on execution, are simply unavoidable incidents to a just and lawful act, and not being fraudulent in the contemplation of the law, do not bring the instrument of assignment within the operation of the statute of frauds.”

They also cite Conklin & Shepperd v. Crum, 6 Ohio St., 612, The syllabus of hat case is as follows:

“An assignment was made by an insolvent debtor, of his property, for the benefit of all his creditors, containing a provision, ‘that the trustee shall sell and dispose of the property with convenient diligence, either at public or private sale, and for the best prices he can obtain therefor, for cash, or upon such terms of credit as he may deem advisable, to convert the same into money to the advantage for those interested in the premises, and to barter and exchange the same or any part thereof as he may deem proper for the benefit of the assignor, and to dispose of the same in .any manner whatsoever, as freely and lawfully as assignor could do himself, which the trustee may deem advisable to do, tending in his opinion to convert the same into money directly or indirectly for the benefit of all interested under this assignment, and to collect all such debts and demands as may be collectible, and to settle, compound, and adjust, and to discharge the same for payment in eash*or in property, or for part payment, only as aforesaid, any as well as all the claims .and demands due, owing, or accruing due to said assignor, •as well as all the claims in which the said assignor has any interest whatever, and fin’ally to make.at his discretion any such disposition of the property hereby assigned and transferred, or any part thereof, as the said assignor could do himself before the execution of these presents.’ Held:
“That the assignment is not, per se, fraudulent and void.”

These cases were decided in 1855, and counsel say they settle the main question in this case, that a debtor in this state has a right to make a deed of trust for the purpose of providing for the payment of all his creditors, and that a deed so made must stand until it is set aside on the ground of fraud.

On .the other hand, counsel for the Insurance Co. say that these eases are not good law at the, present time ; that in view of the legislation in Ohio, on the subject of assignments by insolvent debtors for the benefit of their creditors, since these eases were decided, they have been deprived of the importance they once had in the jurisprudence of this state. We are indebted" to the brief of Judge Sayler, for a history of the legislation in this state, on the. subject of insolvent debtors, from which we read, as we think it is both interesting and instructive.

“Under the constitution of 1802, and at the time when there was no probate court existing in Ohio,' the legislature passed laws directing the mode of proceeding in chancery. One of the early acts thus passed was the act of February 23, 1885, found in 1 Curwen’s Rev. Stat. of Ohio p. 161.

Also found in note in 1 Swan & Critehfield, 712, under the head of “Former laws and decisions.’ The act provided,

“That all assignments of property hereafter made by debtors to trustees in consideration (contemplation) of insolvency and with design to secure one class of creditors and defraud others, shall be held to inure to the benefit of all the creditors of the assignor, in proportion to their demands, and such trust shall be subject to the control of chancery as in other cases, and the court, if need be, may require security of the trustees for the faithful execution of the trusts, .or remove them and take the execution thereof upon itself as justice may require.”

Under this section the common pleas court on the chancery side thereof had justification of such assignments made in contemplation of insolvency with design to secure one class of creditors and defraud others. That act was supplanted in 1838 bjr see. 3, found in 1 Curwen’s Statutes, p. 424, and is also found in 1 Swan & Critehfield in a note, page 712; and is as follows:

“All assignments of property in trust, which shall be made by debtors to trustees in contemplation of insolvency, with the design to refer one or more creditors to the exclusion of others, shall be held to inure to the benefit of all the creditors in proportion to the irrespective demands; and such trust shall be subject to the control of chancery, as in other eases and the court, if need he, may require security of the trustees for the faithful execution of the trusts, or remove them and appoint others, as justice may require.”

That section relates to assignments in fraud of creditors, and made with intent to prefer one or more creditors to the exclusion of others, and the chancery court had jurisdiction.

The sections above quoted, are substantially preserved in the present insolvent debtors act under secs. 6343 & 6344. At that time secs. 6335 & 6336, and the following sections down to sec. 6343, did not exist in Ohio, nor was there any other act relating to insolvent debtors which referred at all to the matters contained in secs. 6335 to 6343.

There was no probate court at that time, under that name. All of the present probate business was taken care of by the common pleas courts. At that time, therefore, all trustees under deeds of trust for the benefit of creditors, when it became necessary to seek action by the courts, were required by the chancery acts and practice to go into a court of chancery and obtain relief, and persons seeking to set aside fraudulent conveyances were required to go into a court of chancery under the acts above referred to, for relief.

In 1851 we adopted the new constitution of Ohio. In this new constitution, under article 4 sec. 7, the probate court is established and organized, and under sec. 8 the jurisdiction of the probate court is prescribed, giving it jurisdiction in probate and testamentary matters, the appointment of administrators, and guardians, the settlement of accounts of executors etc., and such other jurisdiction, in any comity as may be provided by law. That section does not give jurisdiction to the probate court over assignments for the benefit of creditors under the Insolvent Debtors’ Acts.

After the adoption of that constitution of 1851, the legislature passed an act, to-wit: on March 14, 1853, found iu Swan’s Rev. Stat., 468; Curwen’s Statutes at large, p. 2239; and also in the note in 1 Swan & Critchfield, p. 712 which is as follows:

“Sec. XVI. That all assignments of property in trust, which shall be made by debtors to trustees, in contemplation of insolvency, with the design to prefer one or more creditors, to the exclusion of others, shall be held to inure to the benefit of all the creditors, in proportion to their respective demands; and such trusts shall be subject to the control of the courts, which may require security of the trustees for the faithful execution of the trust, or remove them and appoint others, as justice may require.”

This section was the only section at that date, to-wit: 1853, in force in Ohio relating to insolvent debtors, except the statutes wherein commissioners were appointed for the relief, of imprisoned debtors. This act of 1853 is the same as the act of 1838, and the act of 1835, above referred to, both of which are contained in 1 Swan & Critchfield, 712.

This last act of 1853, however, drops out the reference to the court of chancery, and places the jurisdiction “subject to the control of the courts.” Át that time, in 1853, the common 'pleas court took jurisdiction under that section of the act.

It was not until April, 1859, that laws including the present insolvent debtors’' law of Ohio, were passed. On April 6, 1859, the legislature passed the first general act regulating' the mode of administering- assignments in trust for the benefit of creditors, which is found in 56 Vol. of the Statutes, 231, also 4 Curwen’s Statutes at large, 352, and being the same law found in 1 Swan & Critchfield, p. 709, etc, except that sec. 1 of the act of 1859 was amended and added to in 1860.

In that act of 1859, under sec. 1, which is in almost every respect copied in sec. 6335, of the Revised Statutes, under the title of “Insolvent Debtors”, it is provided, in substance, that whenever an assignment shall have been made to trustees of property for the benefit of creditors, it shall be the duty of the trustees within ten days to appear before the probate judge of the county, produce the original assignment, or a copy thereof, aud cause the same to he filed, in the probate court and enter into bond, etc.

Sec. 2 of the act of 1859 is almost identical with sec. 6336 of the Revised Statutes under title of “Insolvent Debtors,” and provides that if the assignees do not, within the ten days, comply with the provisions of the first section, by filing the deed of assignment and giving bond', on application of the assignor, or any creditor, the probate judge shall remove the assignees and appoint a trustee in their place.”

Thus we learn that in 1859 the jurisdiction over insolvent debtors, and assignments for the benefit of creditors, was first placed in the probate court. Prior to that time all such deeds and conveyances came within the jurisdiction of the chancery side of the common pleas court, hut under the act of 1859 the entire jurisdiction was removed from the common pleas court and placed in the probate court.

All decisions, therefore, which were made prior to 1859, do not fall within the present assignment laws of Ohio, and the cases cited by counsel for plaintiffs in error having been decided in 1855, can not he considered to have been made with a view to our present isolvent debtors’ statutes.

Curwen in his fourth volume of the Statutes of Ohio, in a note to page 3352, cites a number of decisions, including Hoffman v. Markall, 5 Ohio St., 124, and says that, “None of these cases arose upon construction of this chapter.”

There can be no question that the act governing voluntary assignments, commencing with sec. 5335, is a special act made especially applicable to assignments for the benefit of creditors, and being a special act making special provisions for deeds of assignment to be controlled by the probate court, it becomes exclusive and deprives all other courts of jurisdiction of such deeds. This is fully sustained by the authorities.

In Betz v. Snyder, 48 Ohio St,, 503-4, the court say, “The whole subject of assignments by insolvent debtors for the benefit of their creditors, is specially provided for and regulated, in detail, by chapter 4 of title 2, of the Revised Statutes. By the first section of that chapter, (section 6335), it is made the duty of every assignee, within ten days after the delivery of the deed of assignment to him, to cause it to be filed in the probate court of the county in which the assignor resided at the time of its execution; and it enacts that every “such assignment shall take effect only from the time of its delivery to the probate judge.” “Upon the filing of the assignment, the assignee is required to enter into a bond for the faithful preformanee of his duties; and from that time, the administration of the assignment became a pending proceeding to the probate court, and so continued until the trust is fully executed.” “The probate court is invested with complete jurisdiction of the whole subject matter of assignments, and of its administration to final completion.”

In McNeil v. Hagerty et al, 51 Ohio St., 255 the court say on page 262, “Our statutes, sections 6335 to 6338, place the disposition of insolvent estates within the control of the probate court, and direct the duties of the assignee, and the procedure in the administration of the trust.”

To the same effect are Lindeman v. Ingham, 36 Ohio St., 1; Blandy v. Benedict, 42 Ohio St., 295; Kemper v. Campbell, 44 Ohio St., 210; Sayler v. Simpson, 45 Ohio St., 141; Clays v. Banking Co., 50 Ohio St., 528; Havens v. Horton, 53 Ohio St., 342; Wilson, Assignee, v. Swigart, 31 Bull., 353.

Counsel for plaintiff in error draws a distinction between trustees and assignees. But an assignee is a trustee to every case. A trustee is one to whom property is committed in trust whether for some specific use or for the benefit of general creditors.

A trustee is also an assignee when the property held in trust by him has been assigned to him. The plaintiffs in error in this case were, before their removal by the probate court, both trustees and assignees, — trustees for the general creditors of John W. Jones, of the property assigned to them by him.

A deed of assignment in the ordinary form, conveys a trust estate to the assignee, and it is his duty under the statute to file the deed in the office of the probate court of the proper county, within ten days, give a sufficient bond, and proceed to administer the trust. After paying the debts of the assignor and costs of administration, the residue is paid to the assignor. That was' what was intended by_ the deed from John W. Jones tu the plaintiffs in error. Nothing more, nothing less. Why,, then, was it not a deed of assignment within the purview of sections 6335 and 6336?

We think it was, and that the fact that it was not drawn in the form in which deeds of assignment are usually drawn, and the further fact that the assigneés are called “trustees”, and the stipulations in the deed, as to the disposition of the property and the distribution of the proceeds arising therefrom, including the payment to the trustees of a reasonable compensation for their services, which are only the provisions of the law in matters of assignment, will not operate to change the character of the instrument.

The contention of counsel for plaintiff in error that as nothing appears on the face of the deed in question to show that John W. Jones was insolvent at the time of the conveyance, we can not presume he was insolvent, and, therefore, the trustees took a good title to the property conveyed for the purposes stipulated in the deed, we think is unsound.

The deed purports to convey all' the property of John W. Jones, for the benefit of his creditors, and we think that fact alone carries with it the presumption that he was unable to pay his debts; that he was insolvent and, like all assignors for the benefit of their creditors, made the conveyance to relieve himself from the pressing demands of his creditors, and to discharge his obligations, so far as his property would do so.

To hold such a deed to be in effect, anything else than an ordinary deed of assignment, would deprive the probate court of its jurisdiction in matters of assignment for the benefit of creditors. Any insolvent debtor could convey all his property to a trustee for the benefit of his creditors; the trustee would take the property, and the probate court would have no jurisdiction over him, or the estate to its administration. Thus, the statutes which, we have seen, confer especial and exclusive jurisdiction in all matters of assignment for the benefit of creditors on the probate court, would be evaded and rendered inoperative, and the piobate court ousted of a part of its jurisdiction.

John A. Cone and T. E. Powell, on behalf of Trustees removed.

J. D. Van Deman, Wolford & Crisinger and Sayler & Sayler, on behalf of J. D. Van Deman.

Entertaining these views as we do, we think they dispose of all the questions arising on the petition in error and record, and the only remaining question is the one made by the motion to strike from the flies the petition in error and bill of exceptions on the ground of want of jurisdiction of this court.

It is contended by counsel for defendant in error that the order removing the plaintiffs in error, was not a final order from which error can be prosecuted.

Section 6707 of the Rev. Stat. provides that, “An order affecting a substantial right in an action, when such order in effect determines the action and prevents a judgment, and an order affecting a substantial right made in a special proceeding, or upon a summary application in an action after judgment, is a final order which may be vacated, modified, or reversd, as provided in this title.”

Error lies only from final judgments, decrees or orders, the determination of which affects a substantial right.

' Kusley v. State, 3 Ohio St., 508; Watson v. Sullivan, 5 Ohio St,. 42; Halbrock v. Connelly, 6 Ohio St., 199; Hobbs v. Beckwith, 6 Ohio St., 252; Steubenville v. Patrick, 7 Ohio St., 170.

In Brigel v. Starbuck 34 Ohio St., 280, it was held that an order removing an assignee was not appealable. On page 287, the court sa.y, “an examination of our legislation and decisions shows that it has been the general policy in this state, not to permit an appeal from an order appointing or removing a trustee, and that. this extends to guardians. * * In view thereof, of the nature of an appeal, and not of the effect of allowing it in cases like the present, it seems to us that it was not intended to apply to such cases — That an order or decision to be subject of appeal must be definite or final in its character, and that it may be stated as a general rule, that an order to be appealable must affect property rights and not merely the administration of the trust. We do not think the original assignees had such interest in the trust as to enable them to litigate the question of their displacement by an appeal to the court of common pleas, nor do we think any creditor could litigate the question in that form.”

We think, for the same reasons, that the assignee can not prosecute error. He has no substantial personal or property right to be affected by his removal. He has no interest in the administration of the estate except to perform his duties according to law and the order of the court. He is entitled to nothing but compensation for his services and re-numeration for expenss paid out by him; and when no services have been rendered, and no expenses incurred, how can it be said that he has any right affected by his removal. "

The interest of the creditors in the payment of their claims, and of the assignor in discharging his debts, are paramount to everything else in the administration of the estate, and to permit an assignee removed, to litigate the question of his removal, and thereby to hinder, embarrass, and delay the administration of the estate, would be to thwart the purpose of the law which is to adjust the rights of the creditors of the assignee with all reasonable dispatch.

For the reasons assigned, we think the motion to strike the petition in erroand bill of exceptions from the files should be sustained,and the petition and bill dismissed.

The conclusion we have reached on the motion would have made it unnecessary for us to consider the case on its merits, but at the request of counsel we have done so, and our conclusion is, that there is no error shown by the record in this case.

(Affirmed, by the Circuit Court of Delaware county, Dec. 18, 1897.)