Court Opinion

ID: 7002897
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:45:14.082363+00
Date Added: 2024-06-11T16:09:58.561657
License: Public Domain

Mb. Justice Bigelow delivered the opinion of the court. The errors assigned on- the record question the correctness of the order of the Circuit Court in dismissing anpellant Taylor’s amended bill and in dismissing the several intervenors’ petitions, and refusing to grant the relief prayed for. The case has been ably argued by the numerous counsel engaged in it, but so far as we can see from the arguments but two questions are presented to us for consideration. One question concerns the deed of Henry Seiter and wife, of July 22,1894, to the Lebanon Dairy and Creamery Company, covering the lands sought to be reached by the'bill in this case. Ihe other question concerns the validity of Seiter’s original deed of assignment, as supposed to be affected by the creditors’ agreement and the order of the County Court, with the conveyances made to the trustees, Parsons, Blount and Sexton. As a large portion of the arguments of counsel for appellants has relation solely to the deed of the lands made by Seiter and wife to the Lebanon Dairy and Creamery Company, we do not choose to pass the arguments by unnoticed, for, although we are of the opinion that the fact whether the deed was delivered or not, has little, if anything, to do with the case, we are fully aware, from the earnestness of the various arguments of counsel for appellants, that the point is made in the utmost faith, that if the deed was not delivered before Seiter made his assignment the land was open to seizure by appellants in the manner adopted by them. It is claimed by appellants that all of Seiter’s original stock of the creamery company was unpaid for by him. All of the evidence in the record on that point is to the effect that this claim is entirely without foundation. But suppose nothing had been paid on it; how does that affect either the appellants or the appellees ? We are unable td see how either party can be affected by such a fact, so far as the title to the land in this case is concerned. It is a fact undisputed by any evidence in the record that when the stock of the creamery company was increased by a further issue of $65,000, Seiter subscribed for and took the entire 650 shares, and he agreed to pay for it by conveying to the creamery company the land sought to be reached by the bill in this case; that immediately on the issuance of the stock, he, with his wife, made and acknowledged a deed for the land to the creamery company, and he testified that as grantor he delivered the deed to himself as president of the creamery company, and there is no evidence to the contrary; but, as he further testified that the reason he did not have the deed recorded at once was because he had previously deeded a part of the land to Rufus hT. Ramsay to secure a loan of money he had made from Ramsay, and that while he had given to Ramsay other col» lateral security to secure the loan in place of the deed of the land, he had not yet received the deed from Ramsay, and for this reason he withheld his deed to the creamery company from record until the day he made his assignment to Weir, which was five months after the date of the deed to the creamery company, this testimony is construed by counsel for appellants as meaning that Seiter was acting in his private capacity in withholding the deed from a complete delivery, and this may be correct; but whether it is or not we express no opinion. It is clear from the evidence that the creamery company had purchased the land and had paid for it all that it is alleged in the bill in this case to have been worth. Under such circumstances, if Seiter had scheduled the land in his assignment as his property and the assignee had inventoried it as assigned property, the assignee could not have held it as assets of the assigned estate, against the creamery company, in a proceeding against the assignee to specifically enforce the contract for a deed, made by Seiter, as the uncontradicted evidence is that the creamery company was in possession of the land under the contract of purchase at the time Seiter made his assignment. Under such circumstances, where no actual fraud is shown, should a court of chancery decree a sale of the property to pay Setter’s creditors, or should it presume that as done which ought to have been done, and refuse any relief whatever because of the manifest unjustness in taking the property of one who had honestly purchased and paid for it, and is in possession of it, to pay the debts of another, even though the “ another ” happens to be the person from whom the property was purchased ? It would at least seem that justice would require that a presumption should take the place of a missing fact in such a case. But since, in our opinion, no such presumption needs to be indulged in this case, because of the fact that before any of appellants had recovered judgment against Seiter, on which the bill in this case was founded, and before any proceedings were begun by any of appellants to subject the land to the payment of any of their judgments, the title to the land and the dominion over it had passed into the assignment, where appellants concede it should have gone, on the filing of the deed of assignment for record, therefore we express no opinion in the matter whether there was a valid delivery of the deed to the creamery company before Seiter contemplated making an assignment, or whether, from the undisputed facts, the presumption should be indulged that the deed was delivered before the assignment was contemplated by Seiter. No question is raised as to the terms contained in the deed of assignment made by Seiter to Weir. It is not pretended that it contained provisions which would make it fraudulent in law, such as were contained in Hardin v. Osborne, 60 Ill. 93; Gardner v. Commercial National Bank, 95 Ill. 298; or Bowen v. Parkhurst, 24 Ill. 257. For anything appearing in the record, the deed of assignment executed by Seiter on December 10, 1894, was a general assignment for the benefit of all creditors, without reservations in his own favor, and free from any powers in favor of the assignee other than are contained in the statutes regulating assignments for the benefit of creditors. When the deed was delivered to the assignee, Seiter thereby completely relinquished his dominion over his property; it was then beyond his power, either by his acts or by his purposes, to invalidate the assignment he had made. After the delivery of the deed, all such property, both in law and in equity, as in the judgment of the law was within the operation of the deed of assignment, became subject to the jurisdiction of the County Court. Freydendall v. Baldwin, 103 Ill. 325; Feltenstein v. Stein, 157 Ill. 19. Any agreement, however fraudulent, concerning the assigned estate, made between any or all of its creditors, and any orders made by the County Court in the administration of the estate, no matter how wrong or erroneous, can neither as a question of law or fact, be deemed the act of Seiter. The creditors’ agreement appointing the three trustees to manage the property assigned to Weir, was in substance and in fact an administrative order of partial distribution rendered by the County Court. That this agreement-order contains provisions which would render a deed of assignment for the benefit of creditors void, may be admitted; but the agreement-order is not the act of Seiter. It was probably never contemplated by him when he made his assignment that his property should be administered as provided in such order; but whether this conjecture is true or not, this agreement-order of August 17, 1895, made months afterward, can not be held to invalidate the assignment which Seiter created without taint or blemish in its inception; and therefore the first above quoted decisions are not applicable. The error in counsel’s argument lies in the tacit assumption that the agreement-order is in some way the act of Seiter. Such an agreement entered into between some of the creditors would not bind other creditors, who had proved their claims before the assignee, nor would the agreement be binding on the court. But once the court sanctioned such an arrangement, it became in substance a decree of the court in the administration of the estate that must be appealed from at the proper time, by any person who was a party to the assignment and who considers himself injured thereby; not to appeal is to be concluded by the rule of res judicata as to all property embraced within the assignment, no matter how erroneous the order may be as measured by the assignment statute and the adjudication of the courts in interpretation thereof. But appellant Taylor never filed his claim with the assignee; as to all property under the dominion of the County Court he is a stranger. It does not'lie in his power by means of a creditor’s bill to draw in question the legality of the agreement-order entered under the direction of the County Court. Unless Seiter’s deed of assignment of December 10,1894, was fraudulent in its inception, no claimed wrongs committed afterward by his creditors or his estate, or claimed improvident orders of the County Court in pursuance of such wrongs, can be of avail to appellant Taylor on his creditor’s bill; for the theory of such a bill is the fraudulent purpose or effect of the grantor’s deed to hinder and delay his creditors in the collection of their claims, a state that can not exist with an assignment made as the law directs. Feltenstein v. Stein, supra; Weir v. Mowe, 182 Ill. 444. If the assigned estate is not administered by the County Court in conformity to law, the remedy is to compel the execution of the trust, according to law, and the intent of the assignor as expressed in his valid deed. To allow a creditor’s bill or an attachment to be levied on property which has already been assigned by a valid deed of assignment, either because the assignee is colluding with some creditors for a preference or because the County Court enters erroneous orders in the distribution of the estate, would be for one set of laws to nullify what another set of laws has created. We do not say that either the creditors or the assignee or the County Court did any wrong in fact by the agreement-order of August 17, 1895; it may have been a proper thing to do; but it can not be tolerated that such interveners in this case as filed their claims with the assignee and received dividends from the assigned estate be permitted at the same time to enjoy the benefits of the assignment and to assail it by creditor’s bills. So strongly has this principle cbeen enforced that in a case where the deed of assignment itself was void on its face, the court held the creditor, who by some significant act has made himself a party to the assignment, may not take any steps to impair its validity. Rapalee v. Steward, 27 N. Y. 310. So far as appellant Taylor is concerned, his position is consistent all the way through; but not having filed his claim with the assignee, he can in no way challenge or assail the distribution of the assets of the estate; he is not a cestui que trust at the assigned estate. The question then arises: what does the assigned estate consist of under the rules of the law, and what does the evidence in this case show to have been done to bring Setter’s property rights now in contention by this bill, under the operation of the assignment running in the County Court ? As to the lands in question, we do not deem it important to determine whether there was a preference created by Setter’s deed to the creamery company when he made the assignment, or whether the deed was void for want of delivery, or whether the outstanding deed from Seiter to Ramsay was fraudulent; or whether Seiter could have compelled the Ramsaj' heirs to reconvey the lands to him, because the deed was a lawful conveyance by him to Ramsay, to secure a lawful debt, which had been paid so that the equitable title resulted to Seiter. Disregarding for the moment the outstanding deed from Seiter to Ramsay, it is too plain for discussion that if the deed to the creamery company was void for want of delivery, then the lands were still Seiter’s, and they passed to the assignee by virtue of the deed of assignment; and it is equally plain that if Seiter could have compelled the Ramsay heirs to reconvey the lands to him, then the equity title of Seiter to the lands would also pass by the deed of assignment to Weir; and adopting, by analogy of reasoning, the distinction made between a fraudulent conveyance and a preference, as pointed out in Ahlgren v. Huntington, 85 Ill. App. 639, we see no reason why the assignee should not be the very party to call in the legal title from the Ramsay heirs. (See Preston v. Spalding, 120 Ill. 208; Davis et al. v. Chicago Dock Co., 129 Ill. 180.) We are of opinion that the decision in Bouton v. Dement, 122 Ill. 143, is not applicable to this case; but it is not important to determine whether the assignee or the creditors of the estate were the proper parties to initiate such a proceeding, for reasons to be hereafter stated. The frictional point of this controversy is found in appellant’s contention that by reason of the fact (a matter that we do not pass upon) that Seiter borrowed state money from Ramsay as state treasurer, and gave a deed as security for the return of such money, such deed was a mere voluntary conveyance by Seiter to Ramsay, in that the consideration was illegal and void, as determined by the Supreme Court in Witbeck v. Estate of Ramsay, 183 Ill. 550; and it is further urged that by reason of such voluntary conveyance by Seiter to Ramsay, the deed is conclusively fraudulent, and that therefore Seiter’s deed of assignment could not operate upon a prior fraudulent transfe for the lands, and that inasmuch as the creditors of Seiter, who proved their claims before the assignee, have taken no legal steps to set aside this fraudulent conveyance and bring the property within the operation of the assignment before appellant filed his bill, therefore he has acquired a lien on the lands by virtue of his creditor’s bill. We are not prepared to say whether the Ohicago creditors occupy the same position in reference to Seiter’s assigned estate that they have been adjudged to occupy in reference to Ramsay’s estate. If it should be admitted that the claims of the Chicago creditors are merely spurious debts, it by no means follows that the assignment itself will not be sustained for the benefit of creditors whose debts are bona fide. There is no evidence that Seiter intended any portion of his property for the Chicago creditors; if they are creditors of the estate at all, it is on the principle of subrogation in having paid Ramsay’s debt to the State, and thereby succeeding to the collaterals which Ramsay held against Seiter. In the event that in the judgment of the law, the Chicago creditors shall, as against Seiter’s estate, be deemed no creditors at all, such fact would not be proof of a fraudulent intent of Seiter when he made his deed; he may still have believed that the debts which he owed Ramsay’s estate were good in law, for as a matter of fact he owed Ramsay’s estate for the state money he had borrowed. But even if we are wrong in this view of the matter, the rule of law on the particular point now adverted to is stated by Burrill in his work on assignments, section 82, and is as follows: “ The preponderance of authority seems to be in favor of the opinion that the assignment will be held good as to all debts that are bona fide; and this rule would undoubtedly prevail in those states where provision is made by statute for testing the validity of the claims presented to the assignee for payment under the assignment, citing Macintosh v. Corner, 33 Md. 607; Hempstead v. Johnston, 18 Ark. 137; Hardcastle v. Fisher, 24 Mo. 75. Ample provision for such a test is found in sections four and five of our assignment law. Should it be admitted that the Chicago creditors hold spurious claims, the fact remains that there are still creditors, exclusive of the Chicago parties, whose claims are bona fide, and who before the 17th of August, 1895, had proved up their claims before the assignee. By such proof of claims their rights in the estate became vested. (Levy v. Chicago National Bank, 158 Ill. 88; Weir v. Mowe, 182 Ill. 444.) The record fails to show the exact amount of admittedly valid claims proved up before the assignee; certain it is, that the St. Louis banks were among these bona fide creditors, and that their claims alone amounted to more than $106,000. That these creditors could, by the institution of legal proceedings, have compelled the claimed fraudulent conveyance to Bamsay to be set aside for the benefit of the assigned estate, does not admit of discussion (Hinckley v. Reed, 182 Ill. 440), provided such legal steps were taken before appellant filed his bill. If before the filing of such a bill, Bamsay’s heirs have, without legal compulsion, yielded up by their deed to Seiter’s assignee, property which was fraudulently conveyed to their ancestor, then such act simply puts the property into its proper channel. The Seiter creditors, who hold bona fide claims, had an equitable remedy to compel the Bamsay heirs to put the property where it belonged, even though Seiter’s assignee was powerless to do so. If the lands reconveyed by the Bamsay heirs, came to a lawful resting place, it can not make any difference whether it came there with or without legal proceedings, nor whether a proper or an improper party took the initiative to bring it within the operation of Seiter’s assignment. Bid, then, the land come to the hand of the assignee before appellant filed his bill ? It did in substance, if not in form. It is true that the lands were not conveyed directly by Bamsay’s heirs to Weir, the assignee, but such was the transaction by legal intendment. We view the transaction to be the same as if the Bamsay heirs had deeded the land to Weir, the assignee, and he in turn, by direction of the County Court, had deeded them to the three trustees, in conformity to the order of partial distribution, of August 17, 1895. The method adopted saved the trouble and expense of making and recording an extra deed. If the act of the Eamsay heirs in deeding these lands to the trustees, had not had the sanction of the County Court, there would be much force in appellant’s contention that the lands are still in the hands of the trustees, tainted with the claimed fraudulent conveyance between Seiter and Eamsay; and so it must be held, that all of Setter’s property which came rightfully into the assignment, no matter by what instrumentality, and which is now being administered by the County Court, is withdrawn from all ordinary remedies at law or in equity, which belong to creditors who do not file their claims. For anything that appears in this bill, it might, irrespective of the claims of the Chicago creditors, have taken every dollar of property which has come into the assignment, to pay all bona fide claims in full; and if bona fide creditors have agreed to share the estate with those who are no creditors at all, that must be their concern. If, however, it shall appear that in the assigned estate there is more .than enough to pay the admittedly valid claims filed- against it, and that such excess is in danger of being dissipated in payment of illegal or fictitious claims, then, if equity affords a remedy to such of appellants as have not filed their claims with the assignee, it is plain that such remedy will have to respect the assignment in the County Court, and the powers of the assignee there, and be confined to purging the trust fund of such alleged fictitious or illegal claims upon it. That question is not before us on this record and we express no opinion concerning it. The action of the Circuit Court being in accordance with the views herein expressed, the decree dismissing the bill and the petition of the intervenors is affirmed.