In re Lounsberry

• Decision Date: 24 June 1929
• Docket Number: 39393
• Citation: 226 N.W. 140,208 Iowa 596
• Parties: IN RE ASSIGNMENT FOR BENEFIT OF CREDITORS OF HORACE C. LOUNSBERRY. DES MOINES NATIONAL BANK, Appellant, v. LELAND BATES, Assignee, Appellee
• Court: Iowa Supreme Court

226 N.W. 140

208 Iowa 596

IN RE ASSIGNMENT FOR BENEFIT OF CREDITORS OF HORACE C. LOUNSBERRY. DES MOINES NATIONAL BANK, Appellant, v. LELAND BATES, Assignee, Appellee

No. 39393

Supreme Court of Iowa, Des Moines

June 24, 1929

Appeal from Story District Court.--T. G. GARFIELD, Judge.

The Des Moines National Bank filed in the office of the clerk of the district court a claim against Leland Bates, as assignee of Horace C. Lounsberry, for benefit of creditors. The assignee because the claim was filed with the clerk, instead of with him, as provided by Section 12728, Code of 1927, did not recognize it in his report to the court; whereupon claimant filed application for an order directing the assignee to recognize it, and setting date for hearing on the claim. George Peterson, a creditor, whose claim had been allowed made resistance to the application of the Des Moines National Bank, alleging that the claim was not filed as provided by statute, and asking that it be not recognized, and that the court order the assignee to resist it. The Central Pocahontas Coal Company and a number of other creditors also filed resistance to the Des Moines National Bank's application asking that the Des Moines National Bank claim be not recognized, and that its application be dismissed. They also filed objections to the assignee's report. Later, the assignee filed a resistance to the bank's application. Hearing was had, at which the attorney for Peterson appeared for Peterson and others. The attorney who filed the resistance for the Central Pocahontas Coal Company and others appeared. Trial was had, resulting in denial of the bank's application. The bank appeals.--Dismissed.

Appeal dismissed.

Carr Cox, Evans & Riley and Addison & Smedal, for appellant.

Welty & Soper, Harry Langland, and C. G. Lee, for appellee.

MORLING, J. ALBERT, C. J., and FAVILLE, DE GRAFF, KINDIG, WAGNER, and GRIMM, JJ., concur.

OPINION

MORLING, J.

I.

Objection is made to the jurisdiction of this court, for the reason that the notice of appeal is not addressed to any of the objectors except the assignee. The notice is addressed "to Leland Bates, assignee, and C. G. Lee, attorney for Leland Bates, assignee, and Welty & Soper, attorneys for Leland Bates, assignee," and to the clerk of the district court, and to none other. It reads: "You and each of you are hereby notified that the Des Moines National Bank, claimant, above named, has appealed" from order entered January 23, 1928, denying claimant's application, and asking for order directing the assignee to recognize its claim, and granting time within which to file its claim, and from all adverse rulings. "You and each of you are further notified that said cause will come on for hearing at the next" term, etc. The notice is not addressed to any of the objecting creditors, or to any of their attorneys. It nowhere, not even in the title, names or refers to the objecting creditors or their objections. The notice bears acceptance of service, which is signed in the name of the assignee, by his attorneys, is signed by the clerk, is signed in the name of one of the objecting creditors, by his attorney, and signed by the attorneys for other objecting creditors, as such attorneys. No exception was taken to the objections filed by the creditors, or to the right of such creditors to appear and to object and to be heard. They were heard. The estate is insolvent. If the appellant's claim is not allowed, the recognized creditors will receive but a small fraction of the amount of their claims. This fraction will be considerably reduced by the allowance of the claim of the Des Moines National Bank. Appellant in argument says that it "has nowhere contended that the parties moving to dismiss were not interested in the appeal; but appellant has contended, and still contends, that the interests of all the creditors and claimants in this estate are and have been fully represented and protected by the assignee for the benefit of creditors, and the service of the notice of appeal upon the assignee, such notice having been addressed to him, is sufficient * * *."

It may be conceded that it was the duty of the assignee to appear and resist the appellant's application, at least if the assignee believed that such application ought not to be sustained. It is provided by Section 12730, Code of 1927:

"Any person interested may appear within three months after such report is filed and contest the claim or demand of any creditor by written exceptions thereto filed with the clerk, who shall forthwith cause notice thereof to be given to the creditor, * * * returnable at the next term, at which term the court shall proceed to hear the proofs and allegations of the parties in the case, and render such judgment thereon as shall be just * * *."

By express statute, therefore, the creditors whose claims were allowed, and who were, therefore, interested, were given the right to make themselves parties to the proceedings and contest appellant's claim. They were not left dependent upon the assignee, or upon his exercise of his duty. They had the statutory right to appear and contest, and to contest on their own account, and in their own right and interest. Reard v. Freiden, 184 Iowa 823, 169 N.W. 245; Johnson v. Johnson, 132 Iowa 457, 107 N.W. 802.

The assignee had no right to control their objections,--no right to dismiss or prejudice them or interfere with the proceedings thereon, or to obstruct rendition of judgment on them. The judgment sustained the creditors' own objections, as well as the objections made by the assignee, and was pro tanto the objecting creditors' judgment. The assignee in this state has the status of an officer of the court, analogous to that of a receiver. In re Assignment of Cuddy v. Becker, Mayer & Co., 146 Iowa 250, 254, 124 N.W. 1071; Hamilton-Brown Shoe Co. v. Mercer, 84 Iowa 537, 51 N.W. 415. He is at all times subject to the order and supervision of the court, and has little discretionary power. Code of 1927, Section 12735; Hamilton-Brown Shoe Co. v. Mercer, 84 Iowa 537, 540, 51 N.W. 415. Obviously, the court would not undertake to limit or restrict the right of creditors to make contest and control their own proceedings expressly given to them by Section 12730. The objectors (with the assignee) thereby procured a judgment which would finally bar the Des Moines National Bank from participating in the already deficient fund which the assignee held for distribution among the objectors and other creditors. The appellant's claim and application were against the fund in the hands of the assignee for distribution, which, on the face of the record, belonged to the creditors, including the objectors, whose claims had been allowed, and in which, on the face of the record, the Des Moines National Bank had no right to participate. Peterson, the Pocahontas Coal Company, and other objectors were parties to the litigation, adverse to the appellant. Farr v. Howerton, 184 Iowa 1049, 1052, 169 N.W. 394. They were present, objecting, resisting in their own persons, as they had the right to be, not only under the general intervention statute, but by the specific provision of Section 12730. A reversal of the judgment would adversely affect their rights, and service of notice of appeal upon them was essential to the jurisdiction of this court. Farr v. Howerton, 184 Iowa 1049, 1052, 169 N.W. 394; Fairchild v. Plank, 189 Iowa 639, 650, 179 N.W. 64; Hafer v. Medford & C. L. R. Co., 60 Ore. 354 (117 P. 1122, 119 P. 337). It probably would not be denied that, if the decision had been adverse to them, they would have had the right to appeal. Andrew v. Sac County State Bank, 205 Iowa 1248, 218 N.W. 24; In re Attorney-General v. North America Life Ins. Co., 77 N.Y. 297.

Appellant argues that the notice of appeal was, in fact, served upon the objectors, because the acceptance of service was signed by their attorney, and that the address in the notice of appeal is required only for the purpose of guiding the officer in making service and of identifying the party to be served. In a case involving the sufficiency of notice of expiration of time for redemption from tax sale, this was given as one of the reasons for requiring notice to be addressed, but it was not the only reason. Steele v Murry, 80 Iowa 336, 45 N.W. 1030. See, also, Pilkington v. Potwin, 163 Iowa 86. If the notice must, as to the officer serving it, furnish its own evidence of whom it is meant for, if the officer is entitled to have the notice itself designate the party entitled to it, and upon whom it is to be served, how much more is the one for whom it is intended, and whose rights are to be affected by it, entitled to require that the notice furnish such information. But the point has been ruled against appellant's contention in In re Estate of Anderson, 125 Iowa 670, 101 N.W. 510. See, also, Fairchild v. Plank, 189 Iowa 639, 179 N.W. 64; Sleeper v. Killion, 166 Iowa 205, 211, 147 N.W. 314. When notice is required to be given to one to put him to taking measures for the protection or defense of his right or claims, on penalty for neglect of having them cut off, the notice must be such as to show on its face, both to him and to those who are required to act upon it, or to decide whether the requisite notice has been given, that it is intended to be notice to him. Any other rule would be fatal to due process, and leave questions of jurisdiction to conjecture. It is not disputed, and...