George F. Hinrichs, Inc. v. E.B. Higley & Co.

• Court: Iowa Supreme Court
• Writing for the Court: EVANS, J.
• Citation: George F. Hinrichs, Inc. v. E.B. Higley & Co., 202 N.W. 746, 199 Iowa 765 (Iowa 1925)
• Decision Date: 17 March 1925
• Docket Number: 35975
• Parties: GEORGE F. HINRICHS, Incorporated, Appellee, v. E. B. HIGLEY & COMPANY, Appellee; A. M. SCHANKE, Receiver, Appellant

202 N.W. 746

199 Iowa 765

GEORGE F. HINRICHS, Incorporated, Appellee, v. E. B. HIGLEY & COMPANY, Appellee;

A. M. SCHANKE, Receiver, Appellant

No. 35975

Supreme Court of Iowa, Des Moines

March 17, 1925

Appeal from Cerro Gordo District Court.--M. H. KEPLER, Judge.

APPLICATION in a receivership case by a creditor, against the receiver praying that the receiver be directed to pay to the applicant the dividends due him upon his approved claim. The resistance of the receiver discloses a dispute as to the basis upon which the dividends due the applicant should be computed. The application was granted, and the receiver was ordered to pay to the applicant the dividends computed upon the basis claimed by the applicant. The receiver was also ordered to pay to the applicant six per cent interest upon the dividends during the time they were withheld. The receiver appeals.--Modified and affirmed.

Modified and affirmed.

Senneff Bliss, Witwer & Senneff, for appellant.

Smith & Feeney, for appellee.

EVANS J. FAVILLE, C. J., and ARTHUR and ALBERT, JJ., concur.

OPINION

EVANS, J.

I.

The record discloses that, on March 5, 1920, the applicant, Hinrichs, Incorporated, commenced an attachment suit against the defendant, E. B. Higley & Company, upon a claim for $ 42,382. On the same date, a receiver was appointed for the defendant company, who took possession of all the property of the company. The plaintiff was a corporation resident in New York City, and the defendant was a corporation resident in Mason City, Iowa. Each was engaged in the butter and egg business in its respective locality, and they transacted much business with each other. Subsequent to the bringing of the attachment suit, the plaintiff filed its claim with the receiver. Its attachment suit was neither dismissed nor pressed for prosecution. The claim filed by it with the receiver amounted to about $ 46,000, as of March 5, 1920. The receiver rejected the claim in toto. The court approved the order of rejection, without prejudice to the right of the claimant to amend its claim in certain particulars, or at its election to amend its petition in the attachment suit and to prosecute such suit to judgment. This order was made in June, 1922. On June 29, 1922, the receiver served upon the plaintiff in the attachment suit an offer of compromise, whereby he offered that judgment might be entered in favor of the claimant for $ 26,431. This offer was duly accepted on July 10th. In September, the court duly approved the offer and acceptance, and entered judgment as of July 10, 1922, establishing the claim of the plaintiff in the amount thus stipulated. A prior order by the court had directed the receiver to declare dividends and pay the same to the claimants upon the basis of their claims as of March 5, 1920. The contention of the receiver is predicated upon the terms of this order. This contention is that the allowance to the claimant of $ 26,431, necessarily included interest from March 5, 1920, and that, therefore, such claim so allowed should be reduced to the present worth of such claim as of March 5, 1920. According to the computation of the receiver, this would reduce the claim of the plaintiff to the sum of $ 23,194; and the receiver tendered dividends on such sum.

We think the fallacy of the receiver's position is the assumption that the compromise amount of the plaintiff's claim included interest from March 5, 1920.

Both parties are agreed that, in receivership proceedings, no account is taken of interest accruing upon the claims from the date of the receivership. That is to say, so far as the receiver is concerned, and as between the mutual rights of creditors, no interest accrues upon any claim after the date of the receivership. After such date, the property in the hands of the receiver is deemed in custodia legis. Needless to say that this rule has no reference to the liability of the debtor for interest, in the event that the estate should prove solvent, or that it should thereafter become solvent. On the other hand, if it should so be that the estate should prove solvent, as the appellant says in his brief it is likely to do, then the question here litigated would become entirely immaterial, in that every creditor would receive his full claim, and no one of them could be interested in the receipts of the other.

The order of the court declaring a dividend to be computed upon all claims as of March 5, 1920, had no effect upon the rule of law already existing. If all reference to such date had been omitted in the order, the effect of the order would be precisely the same. The claim filed by the claimant...