McClurg v. State Bindery Co.

• Decision Date: 31 October 1892
• Parties: McCLURG et al. v. STATE BINDERY CO. et al.
• Court: South Dakota Supreme Court

53 N.W. 428

3 S.D. 362

McCLURG et al. v. STATE BINDERY CO. et al.

Supreme Court of South Dakota

October 31, 1892

Syllabus by the Court.

An assignee for the benefit of creditors, in the absence of peculiar facts, has no such interest in the "matter in litigation" as entitles him to intervene to defend a purely personal action against his assignor.

Appeal from circuit court, Hughes county.

Action by A. C. McClurg & Co. against the State Bindery Company on an alleged indebtedness on account. While the case was at issue and pending, defendant made an assignment to Royal F King for the benefit of its creditors. The assignee, as such asked for an order to be permitted to intervene, which was denied, and he appeals. Affirmed.

Peacock & March, for appellant. Horner & Stewart, for respondents.

KELLAM J.

In September, 1890, the respondents brought an action against the defendant the State Bindery Company, a corporation under the laws of the state, upon an alleged indebtedness on account. The defendant company answered, and, while the case was at issue and pending, the defendant company made a general assignment for the benefit of its creditors to the appellant, King. As such assignee he applied to the circuit court, in which such action against his assignor was pending for leave to intervene for the purpose of defending against such action. Such petition was denied, and he appeals. There are no peculiar facts in this case. It presents the single question whether the assignee of an insolvent corporation has the legal right to intervene in an action against such corporation for the purpose of contesting its liability. In Gale v. Shillock, 30 N.W. 138, the territorial supreme court, and in Yetzer v. Young, 52 N.W. 1054 this court, held that, to entitle a party to intervene under section 4886, Comp. Laws, "the interest in the matter in litigation" must be that created by a claim to the demand, or some part thereof, or a claim to a lien upon the property, or some part thereof, which is the subject of the litigation. In this the subject of litigation is not property at all, but the personal liability of the defendant corporation for goods alleged to have been sold to it. The corporation had answered on the merits, and was presumably itself looking after its defense. By assigning its property it did not surrender its corporate existence, or its individuality. It was the same corporation as before, with the right to sue and defend. It still had, or might have, a board of directors, with a will and a policy of its own. It might prefer to conduct its own defense against this claimed liability, with neither help nor interference from the assignee. In this case there is nothing to indicate that the defendant corporation and the assignee were not acting harmoniously, but to hold that appellant had a right to intervene upon the simple ground that he was assignee would give such right to the assignee in every case. He might assert it even against the protest of the assignor. The authorities cited by appellant's counsel are not controlling. They are all cases where the immediate subject of the controversy was property. In such case the assignee may intervene, because by the assignment he becomes the custodian of all the assignor's property. The assignor expressly transfers it to him, and he is charged with the duty of taking, holding, and protecting it, but he neither assumes, nor does the law impose upon him, any obligation to protect the corporation itself. He merely takes its assets for collection and distribution. The corporation and its officers remain, with all the powers with which the statute has clothed them, the same after the assignment as before. Burrill, Assignm. (5th Ed.) § 299; Hurlbut v. Carter, 21 Barb. 221. In respect to the right of an assignee to intervene to defend an action against his assignor, we discover no reason for distinguishing between...