Court Opinion

ID: 7108757
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:23:55.999574+00
Date Added: 2024-06-11T16:13:39.937426
License: Public Domain

Ladd, J.
The appellants are not in a situation to attack the proceedings in which the receiver was appointed, the attachments sued out, and the assignments of accounts as fraudulent, either when taken together as constituting a general 2 assignment with preferences or when separately considered. They have not recovered judgment their claims, and have no liens whatever on the property, nor interest therein, other than that every creditor has in the estate of his debtor. That a third party, who has not reduced his claim to judgment, and has no interest in or lien on the property affected, cannot question, the validity of an *54attachment levied thereon, or the bona, fides of its transfer, is too well settled in this state to' admit of argument. Shoe Co. v. Mercer, 84 Iowa, 537; Hill v. Denneny, 106 Iowa, 720; Goode v. Garrity, 75 Iowa 713; Faivre v. Gillman, 84 Iowa, 573. Even were a general assignment with preferences proven, the appellants are not in a position to derive any advantage from such a conclusion. In that event the receivership would necessarily fall, and, with it, the allowance 3 of the claims filed subject to* the determination of this controversy; and on their naked indebtedness they could not base an application for the sequestration of the property to its payment, nor for the appointment of another receiver, through whom to reach it. Code, section 3822; Clark v. Raymond, 84 Iowa, 251; Dickerson v. Bank, 95 Iowa, 392. Whether an appointment of a receiver may be construed as a part of a fraudulent assignment, we do not find it necessary to determine.
II. On the same evening of the application for the appointment of a receiver, an amendment to the petition, averring that the company was about to dispose of its property and assign its account to secure preferred creditors, was filed, and a writ of injunction issued, enjoining the company from so doing. Service was acknowledged by the general manager, though he denies having knowledge of the contents of the writ, and he put in the entire night scheduling the accounts, and assigned about thirty thousand dollars of them 4 to secure debts of the corporation. It is said the .transfer of the accounts was in violation of the writ of injunction prohibiting their assignment. If this be true, the parties suing out the writ waived its violation prior to' the appointment of the receiver, and joined in a stipulation that the debts secured theréby should be paid from the proceeds of their collection. The company had the right, but for the writ, to transfer its accounts as security to' its creditors, and any advantage derived from the prohibition of this act might be waived. Spelling Extraordinary Belief, *55section 1116. Tbc rights of tbo unsecured creditors under tbe receivership did not attach until the appointment, and at that time the only parties interested in the writ 'had agreed it should be disregarded. Under these circumstances we think the appellants may not insist that title to the accounts did not pass by virtue of their assignment.
III. The fact that the proceedings were begun for the appointment of a receiver did not suspend the right of creditors to attach, nor that of the company to assign its accounts 5 as security for the payment of its debts, if in doing so it acted in good faith. While there is some conflict in the authorities as to whether property of the debtor passes in custodia legis at the time the receiver is appointed, or when he assumes possession, all agree that the jus dis-ponendi is not affected by the application, and continues, at least, till the making of the order of appointment. Cook v. Cole, 55 Iowa, 72; Van Alstyne v. Cook, 25 N. Y. 489; Thompson Corporations, section 6919; 20 Am. & Eng. Enc. Law, 132.
IV. The receiver takes the debtor’s property subject to the payment, of all valid prior liens. Code, section 3825; Union Bank of Chicago v. Kansas City Bank, 136 U. S. 6 223 (10 Sup. Ct. Rep. 1013); Kneeland v. Trust Co., 136 U. S. 89 (10 Sup. Ct. Rep. 950); Van Alstyne v. Cook, 25 N. Y. 489. We have so held in the case of an assignee for the benefit of creditors, and there is no reason why the same rule should not obtain to’ a receiver. Meyer v. Evans, 66 Iowa, 184. Such incum-brances are entitled to, protection, and to payment from the property which they cover. State v. Superior Court of Chehalis County, 8 Wash. 210 (35 Pac. Rep. 1087); Walling v. Miller, 108 N. Y. 173 (15 N. E. Rep. 65); Ellis v. Water Co., 4 Tex. Civ. App. 66 (23 S. W. Rep. 856). As the liens of the attachment levies and assignments of accounts must, in any event, have been paid from the incumbered property, there is no ground for assailing the order to that effect, *56It was not only in the interest of those immediately, concerned, but beneficial to the general creditors, as it tended to conserved the estate. We have approved of a similar course by the assignee for the benefit of creditors, and there exists no reason for adopting a different rule with respect to property held by the reciever fo the liquidation of the indebtedness of a corporation. Bryant v. Fink, 75 Iowa, 516; Plow Co. v. Brees, 83 Iowa, 553; Cressy v. Manufacturing Co., 91 Iowa, 444. See In re Windhorst, 107 Iowa, 58.
V. But the appellants have filed their claims, and these have been allowed. This gave them the right to insist, through their petition of intervention, on the just distribution of the assets of the estate, and that no preferences be given save those fixed by law. The creditors obtained nothing by virtue of their stipulation save the recognition and protection of existing liens, and, if more was attempted, it will be of no avail. It would be a novel practice which would permit creditors, not parties to the action, present in, court, by 7 stipulation to provide for the payment of themselves by the receiver of corporation to the exclusion of others. It may well be doubted whether they yielded anything in surrendering the property, to the receiver, which might nof have been, required of them, as it would seem creditor have no vested rights in methods or remedies. See Gluck & B. Receiver, section 41; Ellis v. Water Co., supra; Walling v. Miller, supra; Wishall v. Sampson; 14 How. 52. The conflicting views on this point are well put in the, opinion of the court in State v. Superior Court of Chehalis County, supra, and the dissenting opinion of Chief Justice Dunbar. It is not necessarily involved, and we do not pass upon the question. In Hubbell v. Investment Co., 97 Iowa, 135, the right of the parties to a contract or action to agree on the appointment of a receiver was recognized, Here the creditors were not parties. The very basis of the action was the insolvency of the corporation, the necessity of a receiver protect its property, and the distribution *57of its assets in satisfaction of its debts. All the secured creditors conld do was to insist on the protection of their liens, and this they were entitled to regardless of the appointment. The court was authorized to include provision in its order for the-payment of the valid incumbrances, but, in view of the insolvency of the corporation, that portion directing payment from property on which the specific liens did not exist should have been set aside. The policy of the law is opposed to preferences, and, if a part of the property may be disposed áA'agtéfeíñ'eüt;“^hy ñm'ífibdf''it^’bhayif^U'hf it, JJ.IU .11 1IJUIJI.'/ «W ... U1..K/-H.110 >iUJ ..J.n “» . , jyper^foyg the^pepessity^oii^.^epeiyer^s^^j.iie.^ppij^t yrilgnpt aid ■ -in-creating preferences;,, and -will- only. recognize -thos&■ existing "Wh'eñ’ 'm'dMü'g'”thh-'ófdét"rif ‘ app'diütín,éM.,Vj'‘The‘,reófeÍhér is IlLU'u f../nV',/--.t il J»H. JWt ' IIJ, JMVi i.J’JL ¿JI'/'Y T •» merely the minister of the court, which, through, him,,holds the property for the benefit of those entitled to it. The prop- . erfcy -is .'held - for-’ the- - equal- ''advantage • of- ally And' preference orally agreed upon at the time*of his appointment, not based on existing liens, must be disregarded, as their enforcement would be inequitable1 arid firijfist.1
YI. The receiver collected on the assigned accounts one thousand five hundred thirty-seven dollars and twenty cents more than enough to satisfy the indebtedness secured thereby, and this balance the court directed to be applied in payment of the claims of the attaching creditors. As seen, this could not 8 be done by virtue of the stipulation. But it is said that the levy of the writs of attachment on the books of created an inchoate lien oh the debts minuted therein. In Pump Co. v. Miller, 105 Iowa, 674, we held that a levy on books of account is not a levy on the debts charged therein. The authorities adjudging such a levy inchoate are based on statutes essentially different from ours. See Elliott v. Bowman, 17 Mo. App. 698. This balance should have been distributed'to all the creditors. We discover no reason for interfering with the order in reference to costs. —Modified and Affirmed.