Thompson v. Sines

The opinion of the court was delivered by Gordon, J. Tbe appeal in this case is from a judgment and order of distribution, and.appellant seeks the review of various intermediate orders made in tbe course of tbe assignment proceedings. A motion to dismiss has been made upon various grounds. Tbe first is that it does not appear from tbe record that the notice of appeal, which was oral, was given at tbe time tbe judgment or order was rendered or made. Tbe notice as shown by tbe journal entry is as follows: “H. G. Thompson by bis counsel, Johnson Mckeus, Esq., gives notice of appeal in open court from tbe final judgment and order tbis day made in tbe above entitled cause, and also gives notice that be will appeal from tbe order entered Eebruary 24th,” etc. It appears from tbe record that tbe judgment was entered on that day, and, it further appearing that tbe notice was given in open court, it must be presumed that it was given at tbe time tbe judgment was rendered. It can not be presumed that tbe court would have permitted tbe entry of tbe notice at' any other time, or that tbe clerk entered, tbe notice without tbe direction of tbe court. Tbe second ground of — 361 — motion is that it can not be ascertained from the notice what the appeal is sought to be taken from. We think the notice designates with reasonable certainty from what orders the appeal is taken, and, if it does that, it is sufficient under the statute. Laws 1893, ch. 61, § 4, p. 121 (Bal. Code, § 6503). It is further urged that there is no longer any controversy between the parties. It appears from the record that the distribution ordered has in fact been made. This of itself, we think, affords no sufficient reason for dismissing the appeal. The appellant preserved proper exceptions to the ladings complained of, and perfected an appeal within the time allowed by law by giving notice and bond for costs, and the giving of a bond to stay the judgment and order was not a condition upon which his right to appeal depended. It is also urged that by accepting a sum which was by the order appealed from directed to be paid to the appellant, the appellant thereby waived 'a right to appeal. Disposing of a similar question in Hinchman v. Point Defiance Ry. Co., 14 Wash. 349 (44 Pac. 867), we said: “. . . it is apparent that the appellant is entitled in any event to all that he received, no matter what disposition is made of the case.” The ruling in that case is decisive of the question raised here, and upon the authority of it this branch of respondents’ motion must be denied. Lastly, it is urged that the appeal herein is not from any order which was prejudicial to the appellant. It is urged that the language of the notice, viz., “that he will appeal from the order entered February 24, 1897, fixing the amount to be paid the attorneys and other costs in the proceeding,” does not constitute a good notice of appeal, and that “ to take an appeal ” a party must give notice that he does, not that he will, appeal. It is manifest that by the — 362 — notice in this case appellant sought to bring himself within the provisions of section 1, subd. 7, of the act of 1893 (Laws 1893, p. 120, Bal. Code, § 6500), which in substance provides that an appeal from any final judgment shall also bring up for review any order made in the same action or proceeding either before or after the judgment, in case the record sent up on the appeal shall show such order sufficiently for the purposes of a review. While the language of the notice was somewhat unfortunate, we think it could not have misled the respondents, and indeed we think the notice of appeal need not have described anything more than the final order or judgment to have authorized us, under section one of the act, to review any order made in the same proceeding. The motion to dismiss the appeal must be denied. On the 28th of December, 1895, IL H. Day, a jeweler doing business in the city of Tacoma, was indebted to different persons in amounts aggregating $13,000. On that day he executed three chattel mortgages on “ all of his goods, wares, merchandise and fixtures,” for the purpose of securing certain creditors therein named. The first mortgage was given to E. D. Day to secure an indebtedness of $2,965.83, the second to Emma L. Day to secure an indebtedness of $982, and the third to O. G. Alvord to secure an indebtedness of $2,470.89. Two days thereafter the mortgagor made a general assignment of all his property, including that covered by the mortgages, for the benefit of all of his creditors, and in the instrument of assignment nominated J. W. Oloes as assignee. The property embraced within the assignment, not covered by these mortgages, consisted of an equity in lands and certain accounts and choses in action. The assignee named in the instrument qualified and thereafter at a creditors’ meeting the respondent E. B. Sines was elected assignee in his stead. The — 363 — appellant was present at this creditors’ meeting and participated in the proceedings. The assignee thus elected qualified and entered upon the discharge of his duties. In April, 1896, various creditors filed a petition in the assignment proceedings assailing the mortgages referred to, and asserting that they were fraudulent and void as to the creditors. In this petition the assignee subsequently joined. The appellant and the other mortgagees mentioned answered the petition denying that their mortgages were fraudulent and alleging that the property assigned was reasonably worth $11,800. Upon the trial which followed the lower court adjudged all of the mortgages invalid, hut upon appeal this court reversed that judgment and held the mortgages valid (15 "Wash. 525). On the 18th day of February, 1896, the appellant filed with the assignee her claim, amounting to $1,232, and also a notice that her claim was evidenced by a promissory note secured by a chattel mortgage on the stock of goods held by the assignee, and that she claimed a lien on all of said goods, and the right to be paid in full before any of the creditors of the said assignor were paid any portion whatever. Thereafter, in May, 1896, the appellant made a demand on the assignee for the mortgaged property for the purpose of foreclosure, which was refused, and in January, 1897, she .moved the- superior court for an order directing the assignee to deliver to her the property covered by the mortgage. The motion was denied. Subsequently the court directed the assignee to sell the assigned property, including that mortgaged, and it was sold in separate lots for an aggregate sum of $4,386.50, only an insignificant sum being realized from the sale of the property not embraced within the mortgages. From the proceeds of the sale the court directed that the mortgage claim of F. D. Day, amounting to $3,346.67, should be paid in full. To this there was no objection made — 364 — below, and no complaint is made here. The court then found that there was due appellant on her note and mortgage the sum of $1,083.45, and an additional sum of $51.70 costs in the supreme and superior courts, making a total of $1,140.15. But the court directed that certain allowances and expenses incurred should be paid before any portion of the sum realized on the sale should be applied upon appellant’s claim. The allowances and expenses were as follows: For services of assignee, $150; for services of assignee’s attorney, $200; for costs of keeping goods and printing notice of sale, $128.45; and $51.70, costs of litigation in the former appeal, making a total of $530.15. It is the contention of the appellant that these allowances and expenses were not entitled to be paid in preference to her mortgage claim. It is urged that if the property had been delivered to appellant when demand was made by her upon the assignee, the cost of storage would not have been to exceed $20, and there would have been no attorney’s fees or assignee’s fees of any consequence, and that as appellant had nothing to do with starting the litigation she should not be required to pay for it. It is also insisted that the contractual right to take possession and foreclose contained in the mortgage authorized the appellant to proceed without any reference to the assignment, and that, unless a mortgagee under such circumstances is entitled to possession and to foreclose without regard to the assignment, the obligation of the contract is impaired. The principles involved in these various contentions have frequently received the attention of this court. Traders Bank v. Van Wagenen, 2 Wash. 173 (26 Pac. 253); Hamilton-Brown Shoe Co. v. Adams, 5 Wash. 333 (32 Pac. 92); Sabin v. Adams, 5 Wash. 768 (32 Pac. 793); Mansfield v. Bank, 5 Wash. 665 (32 Pac. 789); Cosh-Murray Co. v. Bothell, 10 Wash. — 365 — 314 (38 Pac. 1118); Meeker v. Sprague, 5 Wash. 242 (31 Pac. 628). In Sabin v. Adams, supra, we said: “ The sooner it is understood that when an estate is assigned it is in the possession of the court for orderly pro rata distribution, and that no one can interfere with it except at his peril, the sooner creditors will be able to realize fair dividends, and the objections to the law of assignments will disappear.” The result of the reasoning of all these cases is that, under our statute, when an assignment is made, the property of .the assignor passes into the possession of the assignee as an officer of the court and is brought at once within the jurisdiction of the court, which is invested with full power to direct and control the disposition to be made of the property; and the distribution of the assignor’s estate among his creditors when unaccompanied by fraud, etc., works a discharge of the assignor from further liability. In Cosh-Murray Co. v. Bothell, supra, we held that: “When an assignment for the benefit of creditors has been made by a debtor, a creditor cannot, during the pend-ency of the insolvency proceeding, maintain another form of action against the assigning debtor.” There is a wide distinction between an assignment under our statute, and a common law assignment or the statutory assignment provided for under various state laws, where the assignor remains liable for the debts unpaid, and the creditor may, notwithstanding the assignment, maintain an action on the original claim. Limbocker v. Higinbotham, 52 Kan. 696 (35 Pac. 783); Lawrence v. McVeagh, 106 Ind. 210 (6 N. E. 327); Coburn v. Boston, etc., Mfg. Co., 10 Gray, 243. In this state an insolvency proceeding is equitable in its character. The object of it is two-fold, viz., to distribute the assets of the insolvent among his creditors, and to dis — 366 — charge the assignor from any further liability on account of any indebtedness existing prior to the making of the assignment. It follows that the respondent Sines, as assignee, was warranted in refusing appellant’s demand for the possession of the property, and that the fund in his hands was chargeable with the reasonable expenses incident to the assignment proceeding. How such expenses should be in any case apportioned between the respective funds in which secured and unsecured creditors share must be determined by the court in the exercise of a sound discretion. The mortgage creditor or lien holder should never be charged with a greater proportion of the expenses than is just and fair. Meeker v. Sprague, supra. In the present case, in consequence of a failure to realize anything of a substantial character from the proceeds of the estate not mortgaged, the entire expense was charged to the fund derived from the sale of the mortgaged property. This works a hardship upon appellant. The returns from the sale of the assets were- disappointing to all concerned. It seems to have been expected that the sum realized would equal or exceed $10,000. Even appellant seems to have shared in this expectation, as her answer to the petition of the creditors alleged that the assets were fairly worth $11,800. The actual gross receipts, however, were less than $5,000, and it is not contended that this resulted from any mismanagement on the part of the assignee. "We think that, in a case where it appears that the assets of an assignor are so encumbered by mortgages and liens that nothing substantial will remain for the general creditors, a creditor who assails the validity of such mortgages or liens should be required by the court to make provision for the payment of the costs of such litigation and the expenses incurred by the delay which it occasions, in the — 367 — event of bis attack proving unsuccessful. Had such a course been pursued in tbe present case, it would bave made a fair and equitable adjustment of tbe costs and* expenses possible. Tbe appellant, however, made no demand or request therefor. Her whole contention was based upon tbe theory that she was entitled to ignore tbe assignment and recover from tbe assignee tbe possession of tbe mortgaged property. But, while we think tbe court did not err in refusing to direct tbe assignee to turn tbe mortgaged property over to appellant, we think it was error to direct that tbe costs incurred in tbe supreme and superior courts be paid from tbe mortgaged property in preference to appellant’s claim. These costs should bave been borne by tbe creditors who saw fit to assail tbe validity of tbe mortgage. Having-failed tO' maintain their claims they can not be permitted to bave tbe costs of their unsuccessful litigation paid from tbe mortgaged property in preference to tbe claim secured by tbe mortgage. It follows from what has been stated that tbe assignee was entitled to compensation for bis services, and tbe amount allowed him was not unreasonable. It also follows that bis counsel were entitled to reasonable compensation, and tbe allowance made to them was little enough. So much of tbe order appealed from as directed tbe payment of tbe costs incurred in tbe supreme and superior courts—in tbe proceedings which involved tbe validity of tbe mortgages—in preference to appellant’s claim, is reversed. In all other respects tbe several orders are affirmed, and tbe cause remanded for further proceedings in accordance with this opinion. Neither party will recover costs upon this appeal. Scott, O. J., and Anders and Keavis, JJ., concur. Dunbar, J., concurs in tbe result.