State ex rel. Enderlin State Bank v. Rose

• Decision Date: 31 March 1894
• Citation: 58 N.W. 514,4 N.D. 319
• Court: North Dakota Supreme Court

58 N.W. 514

4 N.D. 319

STATE ex rel ENDERLIN STATE BANK v. RODERICK ROSE

Supreme Court of North Dakota

March 31, 1894

Original application by the Enderlin State Bank for an order to show cause why a writ of certiorari should not issue to Roderick Rose, Judge of the Fifth Judicial District Court.

Conditional order.

Writ issued.

Ed Pierce, Edward Engerud, and Newman, Spalding & Phelps, for petitioner.

G. K Andrus and Ball & Watson, for repondent.

OPINION

CORLISS, J.

We are asked to issue a writ of certiorari to Hon. Roderick Rose, judge of the district court for the fifth judicial district. It is agreed by counsel that the facts before us are the same facts which would be disclosed by a return to the writ. Our decision, therefore, will not only settle the preliminary question whether the writ should issue, but also the ultimate question whether the order of the District Judge sought to be reviewed by this proceeding was valid or void. An assignment for the benefit of creditors was made by one Reuben P. Jennings, an insolvent, to M. H. Kiff. The assignee accepted the trust, and the assignment was duly recorded. The inventory required by the statute was duly filed, and the necessary bond given by the assignee. The assignor resided, and the assignment was recorded in Barnes County, in the Fifth Judicial District of the state. Subsequently, the relator, a creditor of the assignor, commenced an action against him in the District Court of the Fourth Judicial District. In that action a warrant of attachment was issued, directed to the sheriff of Barnes County, and under this warrant the sheriff levied on the property which was in the hands of the assignee under the assignment. Thereupon Judge Rose, upon the application of the assignee, and without notice, made the following order: "In the matter of the assignment of R. P. Jennings to M. H. Kiff, assignee. Upon reading the affidavit of M. H. Kiff, assignee, and of R. P. Jennings in the above entitled matter, and upon consideration thereof, it is hereby ordered that Hans C. Stenshoel, sheriff of Barnes County, North Dakota, forthwith deliver to M. H. Kiff, assignee, all the stock of merchandise, moneys, and personal property, of all kinds whatsoever, formerly belonging to said Reuben P. Jennings, which he, the said sheriff, took from said M. H. Kiff, the assignee, by virtue of attachments issued out of the District Court of Ransom County, North Dakota, in the cases of The Enderline State Bank v. Reuben P. Jennings, and George R. Newell & Co. v. Reuben P. Jennings; and it is further ordered that the said assignee proceed under the said assignment according to law, and hold the proceeds of the sales of the assets until the validity of the said attachments can be determined, and until the further order of this court. Done at Valley City, N.D., December 13th, 1893. Roderick Rose, Judge. To Hans C. Stenshoel, Sheriff of Barnes County, N.D." The order was not made in any action or special proceeding pending before the court, and for that reason it is here contended that it is utterly void for want of jurisdiction. It is this order which we are asked to annul by this proceeding. But it might not be decisive of this question that the order was made in a summary manner. If the position taken by the learned trial judge, that the property attached was in custody of law, is correct, then it may well be that the court had power to restore, in a summary manner, the possession of the property to the officer of the court from whom it had been taken. See Sabin v. Adams, 5 Wash. 768, 32 P. 793. Therefore, whether the court had power to make this order depends upon the solution of the single question whether the property was in the custody of the law when the sheriff seized it. If it was not, it is too obvious to justify discussion that the order was absolutely void.

The section of the assignment law upon which rests this contention of the learned trial judge is section 4675, Comp. Laws. We quote it in full: "After the lapse of six months from the date of filing his bond the assignee, on motion of any one of the creditors, with ten days' notice, accompanied by an affidavit of the creditor, his agent or attorney, setting forth his claim and the amount thereof, and that no account has been filed within six months, may be ordered by the court, or by the judge thereof, at any place in his judicial district, to render an account of his proceedings within a given time, to be fixed by the court, or the judge thereof, not to exceed fifteen days. All proceedings under this title shall be subject to the order and supervision of the Judge of the District Court of the county in which such assignment was made, and such judge may, from time to time, in his discretion, on the petition of one or more of the creditors, by order, citation, attachment or otherwise, require any assignee or assignees to render accounts and file reports of his or their proceedings and of the condition of such trust estate, and may order or decree distribution thereof; and such judge may, in his discretion, for cause shown, remove any assignee or assignees and appoint another or others instead, who shall give such bonds as the judge, in view of the condition and value of the estate, may direct, and such order or removal and appointment, shall in terms transfer to such new assignee or assignees all the trust estate, real, personal and mixed, and may be recorded in the deed records in the office of register of deeds of any county wherein any real estate affected by the assignment may be situated. And such judge may by order, which may be enforced as upon proceedings for contempt, compel the assignee or assignees so removed to deliver all property, money, choses in action, book accounts and vouchers, to the assignee or assignees so appointed, and to make, execute and deliver to such new assignee or assignees such deeds, assignments and transfers as such judge may deem proper, and to render a full account and report of all matters connected with such trust estate. Whenever any assignee so removed shall have fully accounted for and turned over to the assignee or assignees appointed by the judge, all the trust estate and make a full report of all his doings, and complied with all orders of the judge touching such estate, and also whenever an assignee has fully complied with his trust; he may by order of the judge be fully discharged from all further duties, liabilities and responsibilities connected with the trust. In either case he shall give notice by publication in some newspaper of the county, if there be one printed and published therein, if not, in a newspaper published at the capital of the territory, once in each week, for at least three weeks, that he will apply to such judge for such discharge, at a time and place to be stated in such notice, which time shall not be more than three weeks after the last publication of the notice. If upon the hearing the judge shall be satisfied that the assignee is entitled to be discharged, he shall make an order accordingly; or if, in the opinion of the judge, anything remains to be done by such assignee, he may require the performance thereof before making such order. Such order shall have the effect of discharging the assignee and his sureties from all further responsibility in respect to the trust, and such order shall not be refused on account of any failure on the part of the assignee to comply with the formal provisions of law, where no loss or damage to any one shall have occurred through such failure. Whenever the trust estate shall have been taken out of the hands of the assignee by proceedings in bankruptcy in the Federal Court, the assignee may in like manner be discharged, upon showing that he has fully accounted with the assignee in bankruptcy, and turned over to him the whole of the trust estate." The other provisions of the law need not be here referred to. It is very clear to our minds that our statutes regulating assignments for the benefit of creditors do not constitute either an insolvency or a bankrupt law. An assignment executed under them creates a mere trust. If valid, the title to the property vests in the assignee, in trust to be disposed of in strict accordance with the terms of the assignment, except in the single case of a preference. If the instrument contains a preference, the assignment is void, but the title is not kept from passing from the assignor on that account. In such a case the statute declares that the whole property becomes instantly a trust fund, to be administered in equity in the District Court for the benefit of all creditors alike. It was under this provision of the statute that the case of Straw v. Jenks, 6 Dak. 414, 43 N.W. 941, was decided. For that reason it is not in point in this case.

Why was it necessary to provide specifically that the property in such a case should become a trust fund, if in all cases the executions of an assignment, however void, placed all the property in the custody of the District Court, to be administered for the benefit of all creditors? The very first section of the assignment law (section 4660) provides that every such assignment is subject to the statutes relating to fraudulent transfers. This is a declaration that when the intent of the assignor in making the assignment is to delay or defraud creditors, it is void as to them, and that the innocence of the assignee will not save it, he not being a bona fide purchaser of the assigned property. Comp. Laws, § § 4656, 4666; Wait, Fraud. Conv. § 319. An assignment void as to creditors is, as to them, no assignment. The title to the property still remains in the assignor, and is subject to attachment by his creditors. Did the legislature intend that a...