Clark v. Craig

• Decision Date: 08 July 1874
• Citation: 29 Mich. 398
• Court: Michigan Supreme Court
• Parties: John Clark v. William H. Craig and others

29 Mich. 398

John Clark v. William H. Craig and others

Supreme Court of Michigan

July 8, 1874

Heard May 7, 1874

Appeal in Chancery from Wayne Circuit.

Bill to enforce preferred claim against an assignee for benefit of creditors. Complainant appeals. Affirmed.

Decree affirmed, with costs of this court in favor of the defendants.

T. C Owen and D. C. Holbrook, for complainant.

E. C Hinsdale and C. I. Walker, for defendants.

OPINION

Campbell J.

This cause arises out of a general assignment made by defendant Hutchins to the defendants Craig and Walker, June 8, 1857, and the bill was filed to obtain payment of a debt claimed to have been due under the trust, and to have been left unpaid wrongfully.

The assignment contained two preferred classes, those in schedule A to be paid first, and those in schedule B next; the creditors not specified coming in for the residue. The name of complainant appears in schedule A, as holding a note for nine hundred and seventy dollars and seventy-fourcents, and in schedule B as a creditor (without giving the nature of the debt) for a precisely similar amount.

The property assigned, besides credits and accounts, consisted of what remained of a considerable stock of goods,--chiefly groceries,--and the assignees put the disposal and management of the concern into the hands of the assignor, with some help from clerks; and for about a year he continued to dispose of the property and settle the business in the store which he had before occupied. At the end of that time the store was vacated and the clerks discharged, and the remnant of the goods was removed into a warehouse, which was soon after destroyed, and the goods perished with the building, and without insurance.

The return filed in this court does not contain the dates and items of all the matters of account. As nearly as we are able to infer from the papers on file, it appears that the principal part of the business was completed in a little over a year from the date of the assignment, the remainder of the receipts being mostly in scattered and moderate amounts for several months thereafter.

A payment was made on complainant's debt at some time not mentioned, which is assumed to have been since the assignment. In September, 1862, he procured Hutchins to renew the note, which was near outlawing. He then brought suit, and obtained a personal judgment against Hutchins in June, 1863. The present bill was filed shortly after, and is based upon the alleged misconduct of the assignees in wasting the property, neglecting the trust, and failing to pay complainant, when the other preferred creditors have been paid. The bill alleges complainant's debt to have been among the first to be paid in full. The account, as finally balanced by the court below, upon exceptions required the assignees to pay so much of the debt as was preferred, and must have done so on the ground that all the other preferred debts had been paid, as the fund fell short a considerable sum of being enough to pay complainant after allowing the charges and payments already expended.

Complainant appeals, claiming pay for his whole debt, and insisting that the assignees are responsible. He especially claims that two items should be charged to them, one a sum of two thousand dollars, the alleged value of certain lands transferred, and the other three thousand dollars, the value of goods burned, and that they should not be allowed their clerk hire.

The assignees of a failing debtor are bound to use reasonable diligence in attending to and closing up the trust. For any damage which results from their culpable negligence, they may be called upon to answer. And the court below applied this principle in compelling them to contribute sufficient to put complainant on the footing of the other preferred creditors.

The question arises whether their liability should be extended further.

Upon a general and cursory examination of the record, and upon the argument, a strong impression was created that there had been very great carelessness on the part of the assignees, and that it had been long and continuous. A fuller and more elaborate examination, while it shows a great degree of personal inattention on their part, also shows that it has been less serious in its nature and its consequences than we were at first led to infer. And the action of the complainant seems to have been such as to put him in a different position concerning his right to complain than he might, perhaps, have occupied under different circumstances.

The policy of the assignees, in giving the chief control of the business to the assignor, was not illegal, if they believed it to be the best course to get the value of the assets. It is not claimed to have been fraudulent or collusive. It is sworn positively that it appeared to be and actually was the best course, and there are no facts tending to show the contrary.

It also appears that most of the property was sold and most of the assets realized in not much more than a year, and the whole, with few exceptions, in a little over two years. There is no evidence which shows culpable delay in realizing the proceeds of the fund, and the expenses, which are sworn to be just and reasonable, do not appear to be otherwise.

For any mere delay in payment, interest is in law regarded as a sufficient compensation. And complainant can, for such a reason, have no legal or equitable ground of complaint, except on his own account. He has received interest on the preferred debt. His right to payment on the other debt will depend on the state of the fund, and will be referred to presently.

We think that complainant has shown no cause for serious personal complaint against the assignees for their action, although his legal rights are vindicated and are not now denied.

The sums...