Kerslake v. Brower Lumber Co.

Mr. Chief Justice Bean, after stating the facts, delivered the opinion of the court. 1. The assignees of the wagon road company claim a preferred lien on the fund in the hands of the receiver by virtue of the attachment of August 14, 1894, and in support thereof insist that the prior deed or assignment to Thompson was illegal and void, because (1) it was not a statutory assignment for the benefit of creditors; (2) it was not assented to by the wagon road company, and therefore not binding on it; and (3) it was made for the purpose of hindering, delaying, and defrauding creditors. But, as we understand the law, none of these objections can be urged by the petitioners in this proceeding. They can not claim the benefit of a fund derived under a deed of assignment, and at the same time insist that [48] such deed is illegal and void. The rule is that one who wishes to repudiate an assignment or trust deed on that ground must bring an appropriate proceeding for that purpose, instead of claiming the fund thereunder: “In the case of a voluntary assignment,” observes Mr. Chancellor Walworth, “where the assignor creates his own trusts, a creditor who comes in to claim a share of the fund under it must be content to take such share of it as the assignor intended to give him, and can not claim that which was intended to be given to the assignees in trust. A creditor of the assignor, whether provided for by the assignment or not, who wishes to repudiate the trusts of the assignment on the ground that they are illegal and a fraud upon the honest creditors of the assignor, must apply to set aside the assignment as fraudulent and void against him as a creditor, instead of coming in under the assignment itself as a preferred creditor or otherwise”: Pratt v. Adams, 7 Paige, 615, 641. And Mr. Chief Justice Gibson says: ‘ ‘ The books are full of cases which show that a party shall not contest the validity of an instrument from which he draws a benefit, nor affirm it in part and disaffirm it in part”: Irwin v. Tabb, 17 Serg. & R. 419. See, also, Frierson v. Branch, 30 Ark. 453; Adler-Goldman Commission Co. v. People’s Bank, 65 Ark. 380 (46 S. W. 536); O’Bryan v. Glenn, 91 Tenn. 106 (17 S. W. 1030, 30 Am. St. Rep. 862); McLaughlin v. Park City Bank, 22 Utah, 473 (63 Pac. 589). The reason of this rule is that a creditor is not entitled to two inconsistent and adverse rights. He is required to elect which one he will adopt, and the election of one is necessarily the rejection of the other. So that neither the wagon road company nor its assignees are entitled to claim the benefit of the proceeds of property acquired and disposed of under the deed of trust from the lumber company to Thompson, and at the same time deny the validity.of the deed. But it is argued that they are not making such a claim, and that the suit in which Malcolm was appointed receiver was in the nature of a creditors’ bill to set aside and avoid the deed from the lumber company to Thompson, and such was the [49] effect of the order removing’ Thompson and appointing Malcolm, thereby giving a preference to the prior attachment of the wagon road company. Bnt there are no allegations in the complaint or findings by the court upon which such an argument can be based. The plaintiffs did not seek to avoid the transaction between the lumber company and Thompson, but to enforce them. Their complaint contains no allegations upon which a decree setting aside the deed could be based, it simply charges Thompson with repudiating his trust and violating his duties as a trustee, and for that reason asks that he be removed, and some suitable person appointed to carry out the trust; and such was the decree of the court. The assignment to Thompson was recognized as valid by all the parties to the proceeding’s and by the court. It is true, the court made a finding that the property theretofore transferred to him was in equity the property of the company, and that he had no beneficial interest therein; but it did not find that the transaction was illegal, fraudulent, or void, nor did it render any decree to that effect. On. the contrary, the decree appointing Malcolm as receiver recognizes the validity of the trust deed or assignment, and appoints him to carry out its provisions. The money in the hands of the court for distribution when the decree appealed from was entered was received in pursuance of such decree, and it is not open to any of the parties seeking to share in such distribution to question in this proceeding the validity of the deed to Thompson. The only question presented by the appeal of Messrs. George, Gregory & Duniway was the amount to which they were entitled as attorneys, and, as the trial court was in a better position than this court to determine that question, we are not disposed to disturb its findings. The decree, of the court below will therefore be affirmed, the costs of this appeal to be paid out of the surplus remaining in the hands of the receiver after the claims allowed by the court below have been satisfied. , Aeeirmed.