Court Opinion

ID: 6662099
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:02:57.547861+00
Date Added: 2024-06-11T16:00:11.289812
License: Public Domain

Sedgwick, J.,
dissenting.
A debtor cannot compel his creditors “to accept a share of the proceeds of the firm assets.” The majority opinion ably and laboriously establishes that proposition.' A debtor may induce his creditors to agree to a fair and equitable distribution of all the assets. If a creditor consents to a sale of all of the assets of his debtor at public auction, and a purchaser at such sale has reason to believe and does believe that the -creditor has consented to the sale, and so pays full value for the assets, such creditor ought not after-wards to be allowed to assert any claim against the goods so purchased. There is apparently no controversy as to the facts in the case. The business of the debtor was in a very bad condition. There were about 40 creditors, one of whom had a claim more than the total value of the assets. Some of the creditors, including this defendant, had begun litigation on their claims. The debtor could take advantage of the bankruptcy law, and so compel all creditors to take a pro rata portion of the assets and cancel their claims. The expenses of such proceedings would exhaust substantially all of the assets and leave little or nothing for any creditor. It was thought that the creditors would, under the circumstances, agree to a more reasonable remedy; whether they had suits pending or had judgments or had taken no action on their claims coul'd make no difference. Every other creditor was fully notified of every step in the proceedings. Other creditors who had suits pending also consented to the sale at auction by making no objection to the proceedings. When they learned of the transfer in trust for all creditors, they might at once have attached the goods, or if they remained silent with full notice of the contemplated sale, and so estopped themselves to claim the property itself, instead of the proceeds thereof, they might still have attached the proceeds in the *35hands of the trustee. Either of these courses would have raised the question of the application of the bulk sales law, and would have made its discussion necessary. Not having taken either of these remedies, they could have presented their claims to the trustee in accordance with the arrangement. It was clearly intended by all parties that the creditors would present their claims to the trustee for the pro rata share when the property was sold and the money in the hands of the trustee for distribution. The assignment to the trustee for the benefit of the creditors is clear upon this point. About 39 creditors took that course, and after this plaintiff liad paid full value for the goods, and while the money was in the hands of the trustee, one undertook to take the goods from the purchaser at the sale. But the majority opinion says: “There could be no estoppel because by the very terms of the assignment no creditor could be bound by it unless he filed a claim with the trustee, and, in addition, filed a release of the debtor for all liability for his debt in excess of any dividend received.” That is, a creditor could.remain silent and make no objection to the sale, because he did not file his claim with the trustee before there were any funds in his hands to distribute. When should he “release the debtor for all liability?” When the goods were turned over to the trustee to be sold for all the creditors, it devolved upon the creditors to consent or object to the proposed sale and distribution. If they consented, there was nothing for them to-do until the proceeds of. the sale were in the hands of their trustee, when they could present their claim and release.
In Nebraska a man can assign his property for his creditors without complying with the assignment act. If he does, it will be valid, unless it is fraudulent. That is, unless he attempts directly or indirectly to keep some of the property for himself. If he does that it is fraudulent and void. If it is all to go to his creditors, it makes no difference whether he treats them all alike or not, since he has the right to prefer creditors. If he assigns to one creditor *36more than enough to pay his claim, and expects to get some advantage to himself by so doing, such assignment would be void. All of the above propositions are decided in Meyer v. Union Bag & Paper Co., 41 Neb. 67, and the many cases there cited.
The questions in our case are: (1) Can the creditors and the debtor agree to sell the debtor’s property and divide the proceeds prorated among the creditors? (2) If the debtor proposes to do so, and asks the creditors to agree that he may, and 39 out of 40 creditors agree to it, do the common rules of estoppel apply to the fortieth creditor who allows the others to suppose that he consents also? (3) Will a purchaser at the sale who pays full value for the property, supposing that the creditors are selling it, be protected in his title, as against a creditor who purposely allows' the purchaser to suppose that as one of the creditors he is making such sale?