Yanish v. Pioneer Fuel Co.

• Decision Date: 16 February 1895
• Citation: 62 N.W. 387,60 Minn. 321
• Parties: YANISH v. PIONEER FUEL CO.
• Court: Minnesota Supreme Court

60 Minn. 321

62 N.W. 387

YANISH

v.PIONEER FUEL CO.

Supreme Court of Minnesota.

Feb. 16, 1895.

(Syllabus by the Court.)

A creditor commenced an action against an insolvent debtor to recover a pre-existing debt, and obtained judgment by default for want of an answer, and docketed the same; but the complaint was not filed in the clerk's office until the day before the judgment was entered. Ten days after the entry of such judgment the debtor made an assignment for the benefit of his creditors under the insolvency law of 1881. The assignee brought this action to set aside the lien of said judgment on the debtor's real estate, on the ground that the same is an unlawful preference under the statute. On the trial the court found that when the creditor commenced said action the debtor knew he was insolvent, and the creditor had reasonable cause to believe that the debtor was insolvent, but that during the pendency of the action the debtor remained passive, and neither hindered nor facilitated in any manner the obtaining of said judgment. Held, the statute imposes on the insolvent debtor the duty of preventing such preferences, and from the facts so found it appears that the lien of said judgment on said real estate is an unlawful preference, and should be set aside.

Appeal from district court, Ramsey county; John W. Willis, Judge.

Action by Edward Yanish, as assignee, against the Pioneer Fuel Company, to have a judgment lien declared an unlawful preference. Judgment was ordered for defendant, and from an order denying a new trial plaintiff appeals. Reversed.

O. E. Holman, for appellant.

Jones & McMurran and Kitchell, Cohen & Shaw, for respondent.

CANTY, J.

On September 25, 1893, the St. Paul Electric Manufacturing & Construction Company was indebted to the defendant, the Pioneer Fuel Company, on a pre-existing debt, and on that day the latter commenced an action against the former to recover said debt, and on October 18th-23 days thereafter-entered and docketed judgment by default for want of an answer, but the complaint was not filed in the clerk's office until the day before the judgment was entered. Ten days thereafter-on October 28th-the electric company made an assignment for the benefit of its creditors under the insolvency law of 1881. A part of its assets consisted of certain real estate on which said judgment became a lien, and this action is brought by the assignee to set aside the lien of that judgment on that real estate, on the ground that the same is an unlawful preference under the statute. The action was tried by the court below without a jury, and the court found as findings of fact: “That at the time of the commencement of the action hereinbefore described the St. Paul Electric Manufacturing & Construction Company was insolvent, and had been for more than three months prior thereto, and at said date knew itself to be insolvent. That said Pioneer Fuel Company at said time had reasonable cause to believe that said electric company was so insolvent. That said St. Paul Electric Manufacturing & Construction Company, during the pendency of said action, remained perfectly passive, and that it neither hindered nor facilitated in any manner said Pioneer Fuel Company in obtaining said judgment; and that there is no evidence in this case that either the said electric company or the said Pioneer Fuel Company did any act whatever with a view of allowing said Pioneer Fuel Company to obtain a preference over any creditor of said electric company.” On these findings the trial court ordered judgment for defendant, and from an order denying a new trial plaintiff appeals.

Section 4 of chapter 148, Gen. Laws 1881, provides: “Conveyances and payments made and securities given by any insolvent...