Tribune Co. v. Canger Floral Co.
| Decision Date | 28 November 1941 |
| Docket Number | Gen. No. 41276. |
| Citation | 312 Ill.App. 149,37 N.E.2d 906 |
| Parties | TRIBUNE CO. v. CANGER FLORAL CO. ET AL. (CLINE, GARNISHEE). |
| Court | United States Appellate Court of Illinois |
OPINION TEXT STARTS HERE
Appeal from Municipal Court of Chicago; J. H. McGarry, Judge.
Separate actions by Tribune Company, a corporation, against Canger Floral Company, a corporation, and against Ben Mages, wherein plaintiff recovered judgments, and instituted separate garnishment proceedings against H. W. Cline, as trustee under assignments by principal defendants of their assets for distribution among their creditors. Garnishment proceedings were consolidated for trial. From a judgment discharging garnishee, plaintiff appeals.
Judgment reversed and judgments entered in favor of plaintiff. Kirkland, Fleming Green, Martin & Ellis, Joseph M. Taussig, John M. O'Connor, Jr., and Thomas F. Scully, all of Chicago, for appellant.
Rappaport & Rappaport, of Chicago, for appellee.
In June, 1938, Tribune Company, plaintiff, procured a judgment for $93 and costs against the Canger Floral Company for unpaid advertising. In January, 1939, plaintiff procured a judgment for $35.15 and costs against Ben Mages, also for unpaid advertising. Executions issued and served pursuant to both judgments were returned “no property found.” Plaintiff instituted separate garnishment proceedings against H. W. Cline as garnishee in aid of the respective executions. The garnishee's answers of “no funds” were contested and the two cases were consolidated in the trial court. After a trial by the court without a jury, the issues were found against plaintiff and judgment was entered discharging the garnishee. This appeal followed.
Cline, the garnishee, operated an agency whose business consisted principally of liquidating the assets of financially distressed enterprises among their creditors. The principal defendants, Canger Floral Company and Ben Mages, contacted the garnishee for the purpose of settling their business debts and winding up their respective business enterprises. Pursuant to arrangements made between the principal defendants and Cline, the former separately conveyed to the latter as “trustee” all their assets for distribution among their creditors by written “assignments for the benefit of creditors.” Both of the principal defendants then delivered their assets to Cline, who sold same. The allegation in the garnishee's answers that he had “no funds” in his possession belonging to the principal defendants is predicated upon the instruments of assignment which he claims completely divested said defendants of all title to or interest in the assets assigned to him by them or in the proceeds realized from the sale of such assets. It was admitted upon the trial that the assets received by the garnishee “trustee” under the two assignments were sufficient to pay in full the claims arising out of plaintiff's judgments against the principal defendants, and it was further admitted that when Cline was served with the summonses in garnishment he had in his possession sufficient funds realized from the sale of said assets to pay such claims.
Inasmuch as there are some differences in the provisions of the respective assignments, it is appropriate to briefly consider them separately.
Under the terms of the instrument by which the defendant Mages sought to accomplish his assignment, he purported to transfer all of his assets to the garnishee as “trustee” for distribution to his creditors. His assignment contained the following provision: “It is understood that no distribution will be made to creditors until all consents are in.” It also provided: “* * * and after the payment of necessary and reasonable costs and expenses in the execution of this trust and payment of such claims as may be preferred under and by virtue of the laws of this state, distribute on a pro rata basis the balance of the trust fund to my general creditors as their interest may appear.”
A letter in the following form, bearing the same date as the Mages' assignment, was mailed to and received by plaintiff:
“The Chicago Association of Credit Men
“December 1, 1938.
“Chicago, Illinois.
“Gentlemen:
“For some time past the above mentioned debtor has been operating at a loss. Realizing that he could not continue and wishing to conserve his remaining assets for the benefit of his creditors he has today executed an assignment to me as Trustee.
“There will be a public sale of the assets on the premises Tuesday, December 6, at 11:00 A. M. and, for the purpose of discussing the affairs of the debtor, there will be a meeting of the creditors in this office on Tuesday afternoon, December 6, at 3:00 P. M.
“The preliminary statement submitted indicates assets and liabilities as follows:
“These figures are subject to check and will be available at the meeting.
“So that we may know we have your cooperation in connection with this matter, won't you please sign and return the enclosed consent form, together with an itemized statement of your account.
“Trustee.”
Accompanying Cline's letter was this consent form:
“The undersigned, a creditor of Ben Mages d.b.a. Ben Mages Sport Store, 4226 Archer Avenue, Chicago, Illinois, does hereby consent to the assignment of all the assets of every kind and description of the said Ben Mages, d. b. a. Ben Mages Sport Store to H. W. Cline, as Trustee for the benefit of creditors, and does hereby agree to accept the pro rata share paid on the undersigned claim from the fund derived from the liquidation of the aforesaid assets in full settlement of all claims of every name and nature against the said Ben Mages d.b.a. Ben Mages Sport Store.
“The undersigned further authorizes the said H. W. Cline to execute a full release of the annexed account of the said Ben Mages d.b.a. Ben Mages Sport Store after distribution of the proceeds derived from the assets has been made.
“The undersigned agrees not to institute proceedings for the collection of the annexed account during the life of this Trusteeship.” (Italics ours.)
Plaintiff did not sign this consent, advising Cline that it considered the assignment invalid as to it. Checks sent by Cline to the creditors of Mages in the course of the liquidation of the assets received by him under Mages' assignment bore this form of indorsement: “This check is accepted in accordance with a certain trust agreement to which we have or hereby become a party.” Plaintiff refused all of such checks and returned same uncanceled to Cline.
Defendant Canger Floral Company by a similar instrument assigned all of its assets to Cline as assignee for the benefit of its creditors. While this defendant's assignment for the benefit of creditors contained no reference to the obtaining of consents from the creditors, letters enclosing mimeographed consent forms identical in language with those used in connection with the Mages assignment, except that this defendant's name was substituted as debtor, were mailed to the creditors of the Canger Floral Company, including plaintiff. Cline testified that this was the usual procedure followed where assignments were made to him for the benefit of creditors. Plaintiff did not sign the consent. In the course of the liquidation of the Canger Floral Company assets, Cline, as “trustee,” mailed plaintiff two checks as its pro rata share of the assets of said company. The second check, carrying the notation “final dividend at 3.50%,” bore the following form of indorsement: “Received of Harry W. Cline, trustee, the amount of this check as our pro rata of the net proceeds realized from the insolvent estate of Canger Floral Company and in consideration thereof hereby release said insolvent and said trustee from further liability.” (Italics ours.)
Cline testified that this was the general form of indorsement used by him on dividend checks in his business of liquidating the assets of debtors under assignments made by them for the benefit of their creditors. Plaintiff returned both checks to Cline, advising him that it considered this...
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