Case Name: Magnus, Appellant, vs. Sleeper, Assignee, etc., Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1887-09-20
Citations: 69 Wis. 219
Docket Number: 
Parties: Magnus, Appellant, vs. Sleeper, Assignee, etc., Respondent.
Judges: 
Reporter: Wisconsin Reports
Volume: 69
Pages: 219–224

Head Matter:
Magnus, Appellant, vs. Sleeper, Assignee, etc., Respondent.
August 31
September 20, 1887.
Assignment for benefit of creditors: Estoppel: Former adjudication.
A creditor of one who has made an assignment for the benefit of creditors, who has been served with due notice of an application to the court by the assignee for a final settlement of his account, duly filed, is a party to the proceeding and is concluded by an order made thereon allowing the account, directing distribution, and finding that such assignee has faithfully discharged the duties of his trust, unless he appeals therefrom; and he is estopped thereby from afterward proceeding to have the assignee removed on the ground of fraud and maladministration occurring prior to the application for dischai-ge.
APPEAL from the Circuit Court for Jefferson County.
On November 5, 1883, one Joseph Bursinger executed an assignment of his property for the benefit of his creditors, to Jonas H. Sleeper, the respondent, and the same was filed in the proper clerk’s office on the following day. The as-signee qualified as such, and proceeded to execute his trust in attempted compliance with the statute. E. S. ch. 80.
The appellant, A. Magnus, was scheduled as a creditor of the assignor, and filed due proof of his claim as required by sec. 1699, E. S. January 20, 1885, the respondent filed in the circuit court an extended report of his acts in the execution of his trust as such assignee, which includes statements of the property received by him, and of his receipts and disbursements, under the assignment. The report shows, amoDg other things, that the property so assigned had all been disposed of ; that he had paid no dividends to general creditors, and that there remained in his hands a balance of nearly $9,000. It also shows that a garnishee suit, which had been brought against the respondent by one Backhaus, a creditor of the assignor, and which had been determined in favor of the latter by the circuit court, was about to be appealed by Backhaus to this court. (It was so appealed and this court adjudged that the assignment was made with the intent to defraud the general creditors of the assignor. 66 Wis. 68.)
March 28, 1885, the respondent, in obedience to an order of the court, made at the instigation of certain of the creditors of the assignor, requiring him to do so, gave notice in the manner prescribed in sec. 1701, E. S., to all the creditors who had proved their claims against the assignor, that on the following April 20th, at an hour and place therein designated, he would apply to the court for a settlement of his account as such assignee. Thereupon more than fifty of the creditors joined in filing numerous specific objections to the account of the assignee theretofore filed. The appellant did not join in this proceeding.
The hearing on such application and objections was continued from time to time until June 8, 1886, when a full healing thereof was bad, and on the 30th of the same month the court made an order in and by which the account of the assignee ivas allowed, confirmed, 4nd adjusted, the balance in his hands ascertained, and directions given for its distribution for expenses and to the creditors entitled thereto. It is found therein that the respondent “had faithfully discharged the duties of his trust as such assignee.” It was also therein ordered that upon making such distribution of the balance in his hands, and filing due proof thereof in the court, “ said assignee, Jonas II. Bleeper, be finally discharged of and from all duties and responsibilities as such assignee, and that thereupon the bond heretofore entered into by said Jonas II. Bleeper, as such assignee, with his sureties thereto, and which was filed in the office of the clerk of this court on the 6th of November, 1883, be discharged and vacated.”
January 6,1887, the appellant, A. Magnus, filed his petition In the circuit court, and obtained thereon an order on the respondent to show cause why be should nof be removed from bis office of assignee. It is unnecessary to state tbe contents of tbe petition further than to say that neglect of bis duty and many acts of fraud and maladministration are charged therein against tbe assignee as grounds for bis removal. February 7, 1887, tbe order to show cause was beard. Tbe assignee interposed no formal answer to the petition for bis removal, but on such bearing filed proof of payment of tbe claim of Backhaus, and tbe distribution of tbe balance in bis bands, for expenses, services and to creditors, according to the requirements of tbe order of June 30, 1886, and relied upon such order as cause against bis removal. Tbe court refused to remove the assignee, and made an order discharging tbe rule to show cause. The petitioner, A. Magnus, appeals from such order.
For the appellant there was a brief by Frisby ds Gilson, and oral argument by Mr. Frisby.
They contended that it was an abuse of discretion not to remove tbe assignee, be being an improper person for assignee, because interested in a fraudulent mortgage, and having misapplied the assets in paying it, instead of suing to set it aside. Oram v. Mitehell, 1 Sand. Cb. 253; Feed v. Emery, 8 Paige, Cb. 417; Guerin v. Hunt, 6 Minn. 375; JBaelchaus v. Sleeper, 66 Wis. 77; Holden v. Meadows, 31 id. 284; Kuelhamp v. Ridding, id. 503; MeLachlan v. Staples, 13 id. 448; Kerr on Fraud, etc. 293, 294 and notes. The report filed by the assignee did not comply with tbe statute in respect to a final report, but is in fact merely interlocutory, and tbe accounting and order are not conclusive upon the creditor.
Ra/rlow Pease, for tbe respondent.

Opinion:
LyoN, J.
In Baelchaus v. Sleeper, 66 Wis. 68, a direct attack was made upon tbe assignment now under consideration, and it was held that the same was executed with intent to defraud tbe general creditors of the assignor. Backhaus thereupon, became entitled to pajunent of his claim out of the fund in the hands of the assignee, and the same was properly so paid. No such attack is made by the appellant, but he is in court admitting the validity of the assignment, and only demands the removal of the assignee named therein, and that some other person be appointed to execute the trusts of the instrument.
It may be conceded that the petition, standing alone, states sufficient cause for removing the respondent, and appointing another to administer the trusts arising under the assignment; and also that the allegations of the petition in that behalf are not expressly denied. The question then arises whether the order of June 30, 1886, is conclusive against the prayer of the petition.
The account rendered b^ the respondent January 20, 1885, upon which the order of June 30, 1886, is founded, is a substantial compliance with the requirements of sec. UOl, R. S. Were it not so, each creditor of the assignor has had his day in court to make objection to it, for each of them, including the appellant, was served with due notice of the application for a final settlement of such account. A large number of such creditors (but not the appellant) availed themselves of that right by filing voluminous objections to the account, and resisting its allowance by the court. The appellant was served with proper notice of the application by the respondent to the court for a final settlement of his account. He was therefore a party to that proceeding, and is concluded by the order of June 30, 1886. At least, he is concluded by everything in it which the statute contemplates it shall contain. The statute requires the court to hear any objections made by any creditor, to take proper evidence, and to settle and adjust the accounts and the compensation and expenses of the assignee, whether objection thereto be made or not. It also provides that the order of the court thereupon "shall be conclusive upon -all pai'ties, including the sureties of the assignee." The statute also gives the assignee, or any creditor, the right to a bill of exceptions, and an appeal to this court from the order of the circuit court. Sec. 1701.
It is plain that, before the court is prepared to make the final order for the settlement of the assignee's account, it must determine whether he has fully discharged the duties of hi,s trust, and it could not properly approve the account, without determining that he has performed those duties. Having so determined, it is proper to recite such determination in the order of approval, although it may fairly be inferred from the allowance and approval of the account. In this case the order contains a recital that the assignee has faithfully discharged the duties of his trust, and in addition thereto approves and allows his account. All of the alleged misconduct and neglect of duty, charged against the respondent in the appellant's petition, occurred before the application for a settlement of the assignee's account, and are, therefore, negatived by the order of June 30, 1886.
When a matter in issue between the parties has once been judicially determined by a court of competent jurisdiction, it cannot again be the subject of controversy between such parties, "or those in privity with them, so long as such adjudication remains in force. No rule is more firmly established in the law.' The order of June 30, 1886, adjudicated and negatived every charge against the respondent contained in the petition for his removal, whether of neglect of duty or actual maladministration of his trust. The order has never been reversed or vacated, but remains in full force. Hence it is binding upon the appellant, and he cannot be heard to controvert the findings upon which it is based. So, when the appellant presented his petition to the circuit court for the removal of the assignee, it had become verities in the case that the assignee had faithfully performed the duties of his trust, and that nothing remained to be done by him but to distribute the trust funds in his hands as directed by the court. On the hearing of the petition for his removal, he showed that he had made such distribution. That terminated his duties as assignee, and the court afterwards made an order for his discharge and the1 release of his sureties.
Under these circumstances the removal of the assignee would have been an absurd, and idle proceeding, and, the court very properly refused to remove him. The. appellant's only remedy was by appeal from the order of June 30,1886. Had he obtained a reversal of that order on the merits, he would have been in a position to petition for the removal of the assignee. But while that order remains of force, he cannot be heard to allege the previous misconduct of the assignee.
By the Court.— The order discharging the rule to show cause why the assignee should not be removed, is affirmed.