Court Opinion

ID: 6236605
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:33:59.397288+00
Date Added: 2024-06-11T08:58:04.142253
License: Public Domain

Mr. Justice Sterrett
delivered the opinion of the court,
• It has been definitively settled that by the final confirmation of a sale, made by an assignee for the benefit of creditors under the Act of February 17th 1876, the land is converted into money, as of that date, and at the same time discharged from all such then existing liens as are intended to be divested by the sale ; and that the liens so divested are to be paid out of the proceeds of sale, according to their priority on the day of confirmation, with interest to that date: Carver’s Appeal, 8 Norris 276; Tomlinson’s Appeal, 9 Id. 224; Herbst’s Appeal, Id. 353. In two of these cases, it is expressly ruled that interest on the liens divested should be computed to the day of confirmation only, and not to the date of payment of the purchase-money. "When the liens, due and payable presently, are sufficient in amount to exhaust the purchase-money, the sale should be for cash, unless all parties interested unite in requesting a time sale. In the case before us, the state of the liens was not such as to justify a sale on time; but no objection was interposed by any of the creditors whose claims were due, and the sale was made, as directed by the court, for one-third cash and the residue in two equal payments in one and two years with interest.. The sale having been thus made and confirmed, the hand-money, less expenses, &c., should have been applied to payment of the oldest liens, in their order, as far as it would reach. The second payment should have been distributed to the liens next in order, and in addition thereto, the interest on that instalment should have been ' divided pro rata among the same creditors in proportion to the amount each was entitled to receive out of the principal; and, in like manner, the last instalment should have been distributed to the lien creditors next in order, and the two years’ interest thereon divided among them in proportion to their respective shares of the principal. In this way the second and third classes of creditors would have received the interest which accrued on the respective instalments as a compensation or equivalent for the delay in payment of their respective claims. But, instead of thus paying some of the creditors in full, according to *526the priority of their respective liens as they existed at the date of the confirmation of sale, the assignee made payments to the older creditors on account, leaving comparatively small balances due some of them.
In the schedule of distribution reported by the auditor and adopted by the court, interest appears to have been computed on the respective liens to January 8th 1879, two years after the sale was confirmed. In this there was error, and the case must be remitted for re-distribution of the fund in accordance, as nearly as may be, with the principles above indicated, taking into consideration, however, the respective dates and amounts of the payments made on account. The interest collected by the assignee justly and equitably belongs to the creditors who are entitled to the principal from which it accrued, and it should be distributed among them in proportion to the amount of their respective distributive shares and the length of time the payment of these shares is respectively postponed on account of the deferred instalments of purchase-money. Those who received nearly the full amount of their claims out of the hand payment, will be entitled to a relatively small proportion of the accrued interest, and those who received nothing until the last instalment matured, will be entitled to more relatively than those who received a portion of the second instalment.
The manner in which the assignee stated his account is not to be commended. The items of expense, &c., pertaining to the execution of the trust, and payments to creditors on account of their distributative shares, are blended together. This should never be done, The account should exhibit, on the one side, the several sums realized from the trust estate, and on the other, the expenses incurred in executing the trust, so that the full net balance for distribution may appear. To this may be appended a schedule giving the dates and amounts of payments to creditors on account of distribution. '
If the items of interest amounting to $808.63 for which the assignee has taken credit in his account were-not paid to the respective creditors, he is not entitled to credit for the same. In the schedule reported by the auditor, the amount distributed among the creditors is about $7284, from which it appears that the assignee has been allowed credit for the items of interest referred to. This is not correct, unless the interest was actually paid by him.
The third assignment is not sustained. The learned judge at first reduced the compensation of the assignee to $500, but after-wards referred the matter to the auditor, who reported in favor of allowing the amount claimed. In view of the circumstances stated by the auditor, it is by no means clear that the court erred in adopting his recommendation.
The first assignment is very general and not in accordance with *527the rules of court requiring each error to be particularly specified.
Decree reversed at the costs of the appellee, and record remitted to the court of Common Pleas with instructions to distribute the fund in accordance with the foregoing.opinion.