In re Church & Graves Manuf'G Co.

• Decision Date: 14 January 1889
• Citation: 40 Minn. 39
• Parties: In the matter of the CHURCH & GRAVES MANUFACTURING COMPANY, Insolvent.
• Court: Minnesota Supreme Court

Page 39

40 Minn. 39

In the matter of the CHURCH & GRAVES MANUFACTURING COMPANY, Insolvent.

Supreme Court of Minnesota.

January 14, 1889.

Appeal by the Mille Lacs Lumber Company and Peter P. Swensen, as sheriff, from an order of the district court for Hennepin county, Young, J., presiding, made in the above-entitled matter, setting aside a levy, etc.

T. R. Palmer, for appellants.

Cross & Carleton, for respondent.

GILFILLAN, C. J.

On the 15th February, 1888, the above-named company, a corporation, executed an assignment of all its property for the benefit of its creditors, under and pursuant to Laws 1881, c. 148. On December 9, 1887, the Mille Lacs Lumber Company recovered in the district court, in Hennepin county, a judgment for a large sum against said assigning corporation, which judgment was on said day duly docketed in said county. The complaint on which said judgment was entered was not filed till the day of such entry. After the filing of said assignment, execution was issued on said judgment, and on February 21, 1888, levied upon real estate belonging to the judgment debtor at the date of the assignment. On April 16, 1888, in said insolvency proceeding, the district court, on the application of the assignee, made an order dissolving the levy of said execution, directing the execution to be returned, the levy to be released and discharged of record, and enjoining the judgment creditor from issuing any further execution on said judgment until the estate of the judgment debtor shall be closed under the direction of the court, and distributed according to law, and until the final order of the court. From this order the Mille Lacs Lumber Company appeals.

The respondent makes, in support of the order, this proposition, — and the order cannot be sustained by any less radical proposition, — that, because the complaint on which the judgment was entered was not filed 20 days before the entry thereof, the lien of the judgment upon the land ceased upon the making of the assignment and qualifying of the assignee.

Section 2 of chapter 148 makes it a cause for the appointment of a receiver that a debtor, being insolvent, confesses judgment, or does any act or makes any conveyance whereby one creditor shall obtain a preference over the others, or omits to do any act which he might lawfully do to prevent any one of his creditors from obtaining preference contrary to the intent of the act. Though merely suffering judgment to be taken is not expressly mentioned in section 2, yet, as section 3 makes it a misdemeanor for an insolvent debtor either to confess or suffer judgment with intent that any one of his creditors shall obtain a preference over any other of his creditors, the so suffering judgment to be taken with that intent is a cause for appointing a receiver. Section 4 provides for the assignee or receiver avoiding, by action, conveyances and payments made and securities given (which would in some cases, at any rate, include judgments entered) by any insolvent debtor, or a debtor in contemplation of insolvency, within four months of making an assignment as provided in section 1, with a view of giving a preference, etc. These are the only provisions of the act that may be regarded as inhibiting the entering of judgment, and in each instance the confessing or suffering it must be tainted with the intent to give a preference in order to make it obnoxious to the act. Of all the act after section 1, section 4 is the only one which has reference to avoiding or defeating a judgment or any of its incidents; and it is clear that to avoid it, (unless section 1 in some way works that result,) an action for the purpose...