In re Shotwell
| Decision Date | 23 March 1892 |
| Parties | In re Theodore Shotwell et al |
| Court | Minnesota Supreme Court |
January 29, 1892, Argued
Rehearing Granted 49 Minn. 170 at 186.
Appeal by the creditors of Shotwell, Clerihew & Lothman from an order of the District Court of Hennepin County, Hooker, J made July 7, 1891, approving and allowing the final report and account of Albert H. Lindeke, their assignee.
Theodore Shotwell, Alexander M. Clerihew, and William Lothman were partners in trade on June 20, 1888, at Minneapolis Minnesota, as wholesale merchants in dry goods, notions, and similar merchandise. They occupied a building on the southeast corner of First Avenue, south, and Second Street which they rented from George A. Brackett, the owner. On that day they made a general assignment under Laws 1881, ch. 148 of all their nonexempt property to Albert H. Lindeke in trust for such of their creditors as should prove their claims and file releases pursuant to that statute. He accepted the trust, gave bond in the sum of $ 1,200,000, and entered upon the discharge of his duties as such assignee. The assets were inventoried and valued at $ 682,849.67. He converted them into money, and realized therefor $ 591,999.38.
The claims of creditors presented and finally allowed amounted to $ 1,002,979.81. There was considerable litigation in settling these claims. Geo. A. Clark & Bro., of Boston, Mass., presented to the assignee a claim for $ 146,333, which he disallowed. The firm appealed to the District Court, where it was referred to George C. Ripley, Esq., for trial. He allowed the claim, and the assignee appealed to this court, where the judgment of the District Court was affirmed. Clark v. Lindeke, 43 Minn. 463. The same firm presented to the assignee another claim for $ 77,864, which he also disallowed. The firm appealed to the District Court, where it was again disallowed. The firm then appealed to this court, where the disallowance was affirmed. Clark v. Lindeke, 44 Minn. 112. William Clark, one of that firm, presented to the assignee another claim for $ 150,000, which he disallowed. The claimant appealed to the District Court, where it was again rejected, and he appealed to this court, where the disallowance was affirmed. Clark v. Lindeke, 44 Minn. 179. One of the creditors, on behalf of all, applied to the District Court for an order directing a distribution of the estate among the creditors without filing releases. The order was granted. The insolvents appealed to this court, where the order was reversed. In re Shotwell, 43 Minn. 389.
Some parties who had sold goods to the insolvents on credit replevied them on the ground that the sales were revocable at their election because of the fraudulent concealment by the purchasers of their insolvent condition. In this way, goods to the value of $ 13,640.18 were taken from the assignee. Some of the creditors brought suits in Wisconsin and the Dakotas, where parties lived who had bought goods of the insolvents on credit, and in those suits attached the debts or garnished the debtors. In this way $ 13,708.14 was diverted from the hands of the assignee.
The principal part of the assets was a stock of goods and fixtures in the Brackett building, valued in the inventory at $ 459,566.35. The assignee sold therefrom prior to September 14, 1888, in the ordinary course of business, merchandise to the amount of $ 41,053.09. He then made inventories of the residue, classified under different lines of trade, and advertised and exposed the goods for sale at auction according to the inventories, and received bids, but none were satisfactory, and he then offered the whole in one parcel. The assignee's brother, William Lindeke, bid eighty and five-eighths per cent of the value, as entered in the inventories, and his bid was accepted and he became the purchaser. He paid down $ 50,000 upon the purchase. Application was made to the District Court, and the sale was confirmed September 25, 1888, and the balance of the price, $ 294,046.08, paid the same day by check on the National German American Bank of St. Paul. This check and the one for the $ 50,000, the assignee at once deposited to his credit as assignee in that bank. To raise this money Wm. Lindeke had procured his friends to sign notes for his accommodation. These notes were payable on demand, and were discounted at this bank. He was one of the directors of the bank. A few days after his purchase of this stock of goods he sold it to the firm of Lindekes, Warner & Schurmeier for exactly the same price he gave for it, and got its checks, with which he paid the accommodation notes. The assignee and his brother the purchaser were both members of the firm of Lindekes, Warner & Schurmeier. The goods were removed from the Brackett building directly to their warehouses in St. Paul. The assignee then removed his account as assignee from the bank, and opened one with his firm, and gave it on October 3, 1888, his check on the bank for the money, $ 344,046.08. The firm gave the assignee credit on its books for the money, and it remained with the firm until dividends were declared and paid to the creditors of the insolvents. The first dividend was thirty per cent., made February 5, 1889. The second was ten per cent., made August 12, 1890. No dividend was paid on the claim allowed to Geo. A. Clark & Bro. until after the appeal to this court was determined on June 13, 1890. Thirty per cent. on that claim was then paid, together with $ 4,611.64 interest on the dividend during the delay. No interest was paid to the assignee by Lindekes, Warner & Schurmeier on the money left in their hands.
On August 1, 1886, Shotwell, Clerihew & Lothman rented of George A. Brackett his five story brick block on the southeast corner of First Avenue, south, and Second Street, in Minneapolis, with engine, boilers, elevators, and machinery therein, for the term of five years from that date, agreeing to pay him rent therefor as follows: $ 10,000 per annum for the first two years; $ 11,000 for the third year, and $ 12,000 per annum for the last two years. The rent was to be paid in monthly installments on the last day of each month. After the assignment the assignee continued the possession of the building under the lease, and paid rent up to November 1, 1888, and then removed and surrendered the possession. The owner then presented his claim for rent for the two years and nine months unexpired of the term, $ 32,000; but offered to compromise for $ 6,000. The assignee, after consulting his attorneys and some of the principal creditors, accepted this offer, and on April 20, 1889, paid Mr. Brackett the $ 6,000, and took from him a bond with sureties to repay the money, and save the assignee harmless, in case the court refused to approve the compromise. No one of the creditors objected to this settlement except Geo. A. Clark & Bro.
The assignee employed Messrs. Wilson & Lawrence as his attorneys and counsel in the business, and they acted for him up to the death of Mr. Wilson, on April 10, 1890. Their charge for services was $ 10,000. After that date Mr. Lawrence acted, and charged $ 2,500 more. Mr. C. W. Bunn was employed to argue the three Clark appeals in this court, for which he charged $ 1,000. In the various replevin and attachment suits above mentioned local attorneys were employed, and paid altogether about $ 1,800. On this final settlement of the assignee's account he employed Hon. Walter H. Sanborn and Hon. John M. Shaw, and they each charged him $ 1,500. The assignee asked the court to approve these charges for legal services, and to allow him for his services as assignee $ 25,000.
On April 11, 1891, the assignee presented to the District Court his final report and account, and asked to have his proceedings, expenditures, and charges approved, and a final dividend declared. Many of the creditors appeared and filed objections, and contended that the stock of merchandise sold September 14, 1888, was in fact purchased by the firm of Lindekes, Warner & Schurmeier, of which the assignee was a member, and at about $ 80,000 less than the appraised cash value, and that he and his firm had realized more than $ 100,000 profit out of the transaction, which in law should be accounted for and added to the assets of Shotwell, Clerihew & Lothman. The creditors also claimed that the assignee and his partners had the use of the money for a long time, and that he should be charged with interest. They objected to the expenditures reported, and to the attorneys' fees, and his claim for his own services, as excessive, and Geo. A. Clark & Bro. objected to the payment of the $ 6,000 to Mr. Brackett.
The matter came on to be heard before the District Court on May 6, 1891, oral evidence was given by the parties in interest, and the assignee was examined on oath. All the checks and vouchers were produced, and the bank accounts, and the assignee's account with the firm of Lindekes, Warner & Schurmeier, and submitted in evidence. On July 7, 1891, the District Court made and filed findings of fact, and approved and allowed the assignee's account, and overruled all the objections, and ordered a final dividend of seven and a half per cent. A case was made, settled, and signed, setting forth the assignee's petition for final discharge, the objections thereto filed by creditors, and all the exhibits offered and the oral evidence of the witnesses examined. The creditors then on September 16, 1891, appealed to this court, and the clerk of the District Court made return by sending here a copy of this settled case.
After the decision of this court, counsel for appellants obtained a rehearing upon two of the minor questions involved, and the decision was, after argument, modified as to one of them, as stated in the opinion...
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