Court Opinion

ID: 7969768
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:54:03.862387+00
Date Added: 2024-06-11T16:34:44.555299
License: Public Domain

START, C. J.
(dissenting). I dissent from so much of the decision of the court as, in effect, holds that in an action by an assignee in a voluntary assignment for the benefit of creditors under the insolvency laws of the state, to set aside a transfer of property, valid *291as between the parties but voidable as to creditors without notice, it will be presumed without proof that there are such creditors. Also to the conclusion that in this particular case the facts found by the trial court entitle the plaintiff to judgment. The trial court found that the defendant’s mortgage was given in the ordinary course of business to secure a present loan of money, without any intention of defrauding the creditors of the mortgagor. The mortgage was not filed until after the mortgagor had made a voluntary assignment in insolvency for the benefit of her creditors, but it was duly filed before the plaintiff purchased the chattels covered by the mortgage from the assignee. The purchaser brought this action against the defendant, who was in possession of the chattels as such mortgagee, to recover possession of them. Conceding that the plaintiff has the same right to avoid the mortgage as the assignee, it seems to me that the' findings fall short of showing that the plaintiff is entitled to judgment, for there is no finding that there were at the time of the sale to the plaintiff any existing creditors who could avoid the mortgage, or any creditors who had or were entitled to prove their debts against the estate of the mortgagor. The only finding referring directly or indirectly to the existence of such creditors is No. 5, which is in these words:
“That upon the 6th day of February, 1896, the said Nellie Slater [the mortgagor] made an assignment for the benefit of her creditors to one Andrew A. Warfield under the provisions of the insolvency laws of the state of Minnesota.”
In the absence of any statute changing the rule, an assignee in a voluntary assignment for the benefit of creditors stands in the shoes of his assignor; his rights and powers are not the same as those of a receiver in equity. It is only by virtue of G. S. 1894, § 4233, that such an assignee can avoid transfers of property by his assignor which are fraudulent .as to creditors. Flower v. Cornish, 25 Minn. 473; Merrill v. Ressler, 37 Minn. 82, 33 N. W. 117. But the statute, which is quoted in full in the majority opinion, gives to such assignees the same right, but no greater, to avoid fraudulent transfers, as the creditors whom he is considered as representing would have had to avoid such transfers if no assignment had been made. That is to say, if there are creditors who are entitled to avoid a transfer in a given case, the assignee is considered or presumed to represent *292them; hut the statute as it reads does not provide that, when the assignee brings an action to avoid a transfer alleged to be fraudulent as to creditors, it shall be presumed that there are creditors who are entitled to avoid the conveyances, from the simple allegation or finding that he is an assignee in insolvency for the benefit of creditors.
If the statute is to be amended by judicial construction so as to provide that, when the assignee brings such an action, it shall be presumed from the simple fact that he is such assignee that there are existing creditors who have proven their debts and are entitled to have the conveyance set aside, why not go further, and amend the statute so as to provide that it shall be also presumed prima facie that he is entitled to recover? If the creditors themselves brought such an action, they would be required to prove that they were creditors, and in a position to avoid the transfer. Why, then, should not their representative make like proof? It is suggested that it would be inconvenient for him to do so. This, if correct, would not justify an arbitrary construction of the statute so as to confer upon the assignee rights and advantages superior to those possessed by his principals, the creditors. But it would seem to be an easy matter for the assignee in any action brought by him to make proof of the existence of creditors, as proof of all claims must be filed. An examination of the paper books in previous cases brought to this court wherein assignees or receivers in insolvency have sought to set aside transfers fraudulent as to creditors or to recover the possession or value of property so transferred, shows that they have invariably proved the existence of creditors, where the fact was not admitted. Thus in Merrill v. Eessler, supra, the assignee expressly alleged in his answer the existence of creditors, some of whom had proved their debts. In Thomas Mnfg. Co. v. Foote, supra,'proof was made by the assignee of the existence of creditors. In Chamberlain v. O’Brien, 46 Minn. 80, 48 N. W. 447, which was an action by a receiver in insolvency to set aside a fraudulent conveyance, the complaint directly alleged the existence of creditors. The allegation of the complaint in the case of Gallagher v. Rosenfield, 47 Minn. 507, 50 N. W. 696, alleged that the insolvent was at the commencement of the action indebted to persons other than the mortgagor. In Baker v. Pottle, 48 Minn. 479, 51 N. W. 383, the receiver made proof *293of the existence of at least one creditor whose debt was contracted without notice of the alleged fraudulent mortgage. So, also, in Smith v. Pearson, 44 Minn. 397, 46 N. W. 849, the receiver made proof of the existence of creditors, some of whom had proved their debts. This practical construction of the statute by the bar of the state seems to me to be the correct one, and that in an action by an assignee inr insolvency or his vendee to set aside a fraudulent transfer of property, or to recover the possession of- it or its value, it cannot be presumed from the mere fact that he is such assignee that there are creditors who are entitled to have the transfer set aside. If this be so, then finding No. 5 in this case is not sufficient to justify the conclusion of law that the plaintiff is entitled to judgment, and the judgment appealed from should be affirmed.
BUCK, J. I also dissent upon the grounds stated by the CHIEF JUSTICE.