Thompson v. Reeves

Opinion by Mr. Justice Bean. The only question for our consideration is whether the voluntary assignment of a debtor of all his property for the benefit of his creditors, in conformity with the provisions of the assignment law of eighteen hundred and seventy-eight, (Code, §§ 3173-3187, except § 3175,) suspends or stays the right of a creditor to maintain an action for the recovery of a personal judgment against his debtor during the pendency of the assignment. It is conceded that the question thus presented must be determined under the assignment law as it stood prior to the amendment of eighteen hundred and eighty-five (Hill’s Code, § 3187), providing for the discharge of a debtor when his estate is made to realize at least fifty per cent, of his indebtedness over and above all expenses of the assignment. Under this law an assignment is a voluntary act of the debtor for the benefit of his creditors, and not for his own benefit. By it his property is to be distributed pro rata among all his creditors, and to such a disposition of the property they are held to have assented. But the statute nowhere provides for or requires the suspension of a [48] creditor’s right to maintain an action and recover a personal judgment against his debtor. Indeed, the fair implication is that such action may be maintained, for by section 1 of the act it is provided that the assignment shall have the effect to dissolve or discharge all attachments in actions where judgments have not been rendered at the date of the assignment, but suffers the action itself to proceed to judgment, and makes the costs and disbursements thereof and attorneys’ fees allowed by law preferred claims against the estate. The object of the law is to provide for the equal distribution of the estate of an insolvent debtor among his creditors, and not to protect him against the payment of his debts, or to suspend or interfere with the right of a creditor to proceed in the proper court to establish his claim by action. The effect of an assignment, it is true, is to vest the estate in the assignee, so that it cannot be seized by process against the assignor, but must be distributed under the orders of the court having jurisdiction of the assignment; but there is nothing in the statute to prevent a creditor from suing his debtor and litigating his claim if he so desires. It only prohibits him from seizing the assigned property under process issued on any judgment that he might obtain. This is the construction of similar statutes in other states (Lawrence v. McVeagh, 106 Ind. 210, 6 N. E. 327; Parsons v. Clark, 56 Mich. 414, 26 N. W. 656), and seems to have been recognized as the correct construction of our statute by this court in Dawson v. Coffey, 12 Or. 513, 8 Pac. 838, in which it was held that a creditor must establish his claim by a judgment, or in some way obtain a lien upon the property before he can resort to a suit in equity to set aside an assignment for fraud. It follows from these views that the judgment of the court below must be affirmed. Affirmed.