Court Opinion

ID: 3867257
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:01:10.998017+00
Date Added: 2024-06-11T13:51:36.445648
License: Public Domain

The first group of exceptions, relating to the form of action, raises the question whether an action at law can be brought against an assignee for the benefit of creditors, to test the validity of a claim which he has disallowed. Pub. Laws R.I. cap. 631 and cap. 820, provide that a person having a claim against an insolvent debtor shall present it to the assignee, and if he disallows it, the claimant shall, within sixty days from notice, bring suit to test the validity of the claim, or be barred from any participation in the assigned estate. It is urged by the defendants, in support of their exceptions, that the remedy thus given is in equity and not at law and that no verdict or judgment can be rendered against the assignees, because they have made no promise. The purpose of the statute is plain. It is to aid assignees, by enabling them to reduce to a certainty the claims for which they may be liable, and by compelling speedy proof of a doubtful claim. Before the statute an assignee could have been seriously hindered in the execution of his trust. He had no means of determining the validity of a claim, and he could not compel a claimant to establish it. He had, therefore, either to distribute to one *Page 36 
who might not be entitled or to refuse to do so at his peril. But the court had given relief in equity, to a limited extent, in cases like this; e.g., upon a bill by the assignee for instructions, Allen v. Gardiner, 7 R.I. 22; and upon a bill by creditors to establish a lien on funds in the hands of the assignee, Smith v. Millett, 12 R.I. 59. Then came the statute to require that speedy steps be taken to establish disputed claims. The assignee is to give notice that he disallows a claim and within sixty days the claimant is to bring suit against the assignee to test the validity of his claim. Here we are met with the question: What sort of a suit does this mean? The respondents urge that it must mean a suit in equity, because that is the usual and technical designation of a proceeding in equity, asaction is at law. While this is the common use of the terms we do not think the words suit and action are used with such exactness in the statutes as to warrant the conclusion that they are only to be taken in this limited sense. Indeed, they are often used in application to both classes of cases, and we so find them in our statutes, Pub. Stat. R.I. cap. 204, § 1, cap. 207, § 33. We have already held that under this statute it is proper to bring a suit in equity; because it seeks to enforce a trust, which is a primary object of equity jurisdiction; Osborn
v. Colwell, 17 R.I. 196; Peabody v. Tenney, 18 R.I. 498. We did not say, for we did not need to say, that an action at law could not be brought. In Stone v. Corcoran, 17 R.I. 759, the provision that no action shall be brought against an executor or administrator within one year after his appointment was held to mean an action at law; because, clearly, it could not have been intended to grant immunity for a year from injunction or other proceedings in equity. These decisions were not based upon an inherent meaning of the words used in the statutes, but because of the propriety of the remedy in one case and the evident purpose of the statute in the other. The question before us must be solved in the same way. The word suit is the more general term and is broad enough to cover either form of proceeding; but not so the provisions of the statute. There is no provision for a merely declaratory *Page 37 
judgment for the amount due; or judgment against assets merely. At law, it must be a personal judgment against the assignee for which he must be personally liable; or else the court must either legislate into the statute something by implication which is not there, or vary the common form of judgment so as to make it amount only to a declaratory decree in equity. Under a judgment at law, execution would run against the assignee individually, or if the court should change it to run against the trust estate, if this could be done, still it could then be levied upon the estate for its full amount and in advance of a dividend. In short, if the statute contemplated an action at law, since it could not mean to make the assignee personally liable, the court must depart from its form of judgment and execution, and work out a method of procedure against him as trustee, which, if it could be done, would be utterly foreign to the established practice at law, and would, after all, amount only to a decree in equity to enforce the trust. We cannot think that the proceeding at law was contemplated. The machinery of the law court is not adapted to the result to be reached, and none is provided. On the other hand the procedure in equity is exactly fitted to such a case; it had been so used before; the subject matter is within a recognized branch of equity jurisdiction, and so we think the suit in equity must have been the one intended by the statute.
It is claimed, however, that the defendants are estopped from objecting to the form of action, because they have neither pleaded nor objected to it for the four years during which the case has been in court, and because it is said in the agreed statement of facts that suit was duly brought in accordance with the statute on the disallowed claim. There is no estoppel by the agreement. The statement is contained in a preliminary recital and not in the facts agreed. It was evidently not intended to be an admission of the validity of the suit, for this was the first question at the trial, upon the reading of the agreed statement of facts. Where there has been long delay in objecting to an irregularity, and the case in such a condition that the court can proceed with it properly, *Page 38 
the irregularity will be deemed to have been waived and the case will go on. But that rule cannot be applied to this case, for here the whole trouble is in going on. We do not see how to do it and hence we are constrained to hold that the first two requests of the defendants should have been allowed. As this disposes of the case it is not necessary to discuss the other questions raised.
New trial granted.