Lacey v. Newcomb

• Decision Date: 31 May 1895
• Citation: 95 Iowa 287,63 N.W. 704
• Parties: LACEY ET AL. v. NEWCOMB.
• Court: Iowa Supreme Court

95 Iowa 287

63 N.W. 704

LACEY ET AL.

v.NEWCOMB.

Supreme Court of Iowa.

May 31, 1895.

Appeal from district court, Polk county; C. P. Holmes, Judge.

Proceedings to set aside an order directing distribution of funds by assignee, and to establish plaintiffs' claim to a first lien upon the fund. Reversed.Gatch, Connor & Weaver and Lacy & Lacy, for appellants.

Earle & Prouty, for appellee.

KINNE, J.

1. Plaintiffs and their assignor executed leases to the Mahaska Coal Company upon all that part of section 1, in township No. 75, range 17 W., lying south of the Chicago, Rock Island & Pacific Railroad Company, of date October 16, 1889. One of these leases was executed by plaintiffs Laceys, and the other by C. Houtz and wife, since deceased. Plaintiffs are the owners of all rights under both leases. By agreement the two cases were consolidated and tried together. These leases are substantially the same, and are denominated by all of the parties thereto as leases. These contracts gave to the lessee the exclusive right to enter upon and mine coal underlying the above-described land. By their terms they also granted to the lessee five acres of the surface of the ground for all uses connected with the mine. Said lessee also had the right to erect and maintain air shafts, vents, escapes, and pumps necessary to properly mine said land; also to use and occupy a right of way, not exceeding ten feet in width, to and from said shafts, vents, escapes, and pumps, and the necessary water ways to carry off the water from said pumps, and the right to construct such railways and switch tracks over said five acres as may be necessary in operating said mine and shipping coal therefrom. The leases were to continue for 20 years, unless the coal was sooner exhausted. The lessee agreed to pay as rent or royalty “in full for all the use of the surface of said land, and for all the privileges above specified, and for all coal mined,” 6 1/4 cents per ton. It was also provided that the rent or royalty provided to be paid second parties for the rights thus granted shall not be less than $200 on the Houtz lease and $1,200 on the Lacey lease for each year. They also provided that the coal company should have a right of way across the land from the Rock Island Railroad track 75 feet in width. It was also provided that upon default made by second party for more than 60 days after notice thereof in writing given said second parties or its assignee, the lease should, at the election of first parties, terminate, and that upon the termination of the lease from any cause the second parties would give peaceable possession of said premises within three months, but should have that time in which to remove its structures and machinery, by paying the royalties then due; that if second parties fail to surrender said possession as above stated first parties might recover possession by action of forcible entry and detainer. It was also provided that the contract should not be assignableor transferable without the written consent of all the parties thereto. It appears that under said contract the coal company entered upon said premises, built their railroad track and switch, which occupied about four acres of the surface of the ground. Under the leases the coal company had the right to use about nine acres of the surface of the land in addition to the right of air and water shafts, right of way to and from them, and the right to overflow the surface with water, and to deposit on the surface material taken from its shafts. That on December 3, 1890, said coal company, with plaintiffs' consent, leased all of its property to one M. B. Foster, subject to the leases heretofore mentioned. Said leases also contained a provision whereby Foster might purchase the rights and interest of the coal company. Said leases made provision for the payment of the rent which would be due plaintiffs. Afterwards, and in December, 1890, the coal company made an assignment for the benefit of creditors to the defendant, Newcomb, who qualified as assignee during the same month. Prior to making said assignment the coal company had erected about one-half mile of railroad track upon said leased premises, and had possession of said right of way covered by the leases until the date of said assignment. They had excavated underground roadways through said land, drove entries in the same, and laid tracks, and operated said mine and land under the provision of said leases. They placed upon said land cars, mules, railroads, railroad irons, props, and timbers. That their personal property so placed there was of the value of over $5,000. It also appears that company at the time of its assignment owed as rent under said leases $1,090.89, with interest thereon. The assignee notified plaintiffs of the assignment, and they, in January, 1891, and within the time provided by law, made out their claim for the above amount in proper form, claiming the sum due as rent under the leases. It appears that the assignee received the claim on January 10, 1891, and placed it among his papers, but for some reason (it would appear, from neglect of his duty) failed to mark the same “Filed,” or to enter it upon his books, or to report it as a claim against the coal company. There is no pretense that plaintiffs' claim has been paid. It appears also that the leases from plaintiffs and their assignees to the coal company were especially valuable to the latter, as they afforded said company the means of reaching and mining coal under its own land. February 18, 1893, plaintiffs filed an amendment to their claim, in which they set forth the appointment of Newcomb as assignee; the fact that on December 15, 1890, he notified plaintiffs to file their claim; that they did so on January 10, 1891; that on May 2, 1891, said assignee filed a schedule of all claims that had been filed against said company; that by mistake or oversight the claim of plaintiffs was not included therein; that February 15, 1893, said assignee filed a report, showing that he had on hand for distribution the sum of $5,252.14; and that said distribution was made without notice to plaintiffs, and their claims were not included in his report as claims against said estate, and not passed upon by the court. It also appears that two or three times after sending their claims to the assignee plaintiffs wrote him about the same, but only once received an answer, and that to the effect that the claim had been filed; that they had no knowledge or notice of the hearing at the time the order was made distributing the assets of the estate, and as soon as they learned of said order they filed a motion to set aside and modify it, and for the allowance of their claim, and asked an order for its payment as a preferred claim for a landlord's lien on the fund. Notice of the hearing for an order of distribution was duly published. Under the order thus made the defendant the Valley National Bank and M. B. Foster became entitled either directly or by an assignment to all of the funds except $235.04, which was ordered paid into court pending a determination as to who was entitled to it. To the granting of the motion and allowance of the claim the Valley National Bank filed objections, because the court, on April 14, 1893, had adjudicated all matters pertaining to the distribution of the fund upon proper notice; that plaintiffs' claim had not been filed with the assignee, and that they did not file such a claim claiming a landlord's lien; that, if plaintiffs had such a lien, it is barred by the statute of limitations; that plaintiffs have no lien upon the property. Evidence was taken, which disclosed the facts heretofore set out, and the court held that the contracts were for the sale of coal on lands therein described, and that the relation of landlord and tenant did not exist; that plaintiffs had no lien upon the property, and were not entitled to be paid out of the proceeds of the sale of the property, and not entitled to a landlord's lien; and a decree was entered accordingly. From this ruling and decree plaintiffs appeal. The Valley National Bank is now the only defendant contesting plaintiffs' claim.

2. Conceding that appellants were legally entitled to a landlord's lien (a question which is hereafter discussed), are they entitled to have the report of the assignee opened, and to be heard, and to a modification of the order? Our statute provides that an assignee for creditors shall give notice of the assignment, and mail to each creditor a notice to “present” his claim “under oath to him within three months thereafter.” Code, § 2119. It is his duty, at the expiration of three months from the time of first publishing notice, to report and file with the clerk of the court “a true and full list, under oath, of all such creditors of the assignor as shall have claimed to be such, with a statement of their claims,” etc. Id. § 2120. Within three months thereafter any person interested may appear and file with said clerk exceptions to the claim or demand of any creditor, when, after notice, a hearing is to be had. Id. § 2121. If no exceptions are filed, the court is, from time to time, to order the assignee to make dividends. Id. § 2122. By section 2123 the assignee is at all times subject to the orders of the court. It is certain that the assignee did not comply with the positive requirements of the statute. He never filed plaintiffs' claim. He did not file with the clerk the full and true list of creditors, as the statute requires. And in other respects the assignee was dèrelict in his duty. Had he complied with the law, plaintiffs' claim would have been reported with those of other creditors. The original claim showed on its face that it was made for rent due under a claimed lease. It is fair to presume that, had the assignee complied with the law, the Valley National Bank would have taken exceptions to the claim then, as it does now. Notice would then have...