Union National Bank v. Doane

Mr. Justice Craig delivered the opinion of the Court: ° As to the validity of appellants’ claim against the insolvent estate, we perceive no substantial objection to it. The claim was presented, under oath, to the assignee within the time and in the manner required by the statute, and no exception was filed to the claim by any person, as may be done under section 5 of the act concerning voluntary assignments. But in addition to this, if the validity of the claim was a proper subject for investigation on the hearing of the petition, the injunction bond and the order or judgment assessing damages, in connection with the other evidence before the court, was sufficient, priliia facie, to establish the claim, and as no evidence was introduced against the claim, it must be regarded as fully established. The court, in the decree, found that Holden acted as agent of Doane, who was the real party in interest in the transaction; but it is claimed that Doane was an entire stranger to the proceedings. This position is not sustained by the testimony. The evidence of George M. Bogue, which was not contradicted, shows plainly that Doane was the real party in interest. He testified: “Claims aggregating $74,091.21 were purchased in the name of Edward J. Holden prior to October 12, 1888. The money to do this was furnished to me by Mr. Doane. The talk I had with Mr. Doane previous to buying these claims was, that he would buy the claims through me, but in the name of Holden. ” At the time of the transaction Holden was a clerk of Doane, working on a salary, and while the business was done in his name, it is apparent from his evidence, and also from the evidence of Doane, that Holden had no interest whatever in the claims against the insolvent which were purchased, or in the assets which were turned over to him for such claims. But the main question presented by the record is, whether the county court had the power, by the decree or order entered therein, to change or modify the order of October 12, 1888. The Assignment act confers jurisdiction on the county court to execute and carry out the provisions of the act. Creditors are allowed three months from the date of publication by the assignee to present their claims. Section 4 of the act (Laws of 1877, p. 117,) requires the assignee, at the expiration of three months from the time of first publishing notice, to file with the clerk of the county court a true and full list of all claims, and section 6 provides, that at the first term of the county court after the expiration of the three months, should no exceptions be made to the claim of any creditor, or if exceptions have been made and the same have been adjudicated and settled by the court, the court shall order the assignee to make, from time to time, fair and equal divisions among the creditors, of the assets in his hands, and as soon as may be, within one year thereafter, to render a final account of the trust. Under these provisions of the statute it is manifest that the court had no power whatever to make an order for the distribution of the estate before the expiration of the three months provided in the act, and as the order of October 12 was, in effect, an order providing for a distribution of the assets of the insolvent among a part of the creditors before the expira-' tion of three months, it was a nullity. An order of this character is not unlike an order of a probate court for a final settlement of an estate of a deceased person before the estate has been administered according to law, which this court has held to be a nullity. Blanchard v. Williamson, 70 Ill. 650; Diversey v. Johnson, 93 id. 547. The order being a nullity, had the county court a right to change or modify it ? Doane held a claim of his own against the insolvent estate, and he purchased other claims, which, with his own, amounted to the sum of $97,344.41. Claims to the amount of $74,091.21 had been purchased before the order was made, and to that amount he occupied the position of a creditor at the time the order was entered. After the order other claims were secured, making him finally a creditor to the amount of $97,344.41. In exchange for the claims thus held by him he received the entire assets of the insolvent estate. Thus the property passed into the-hands of the appellee, Doane, a creditor, under an order made by the court which was a nullity. The order being a nullity, the court might properly change or set it aside at any time before a final closing up of the insolvent estate was ordered. There was an order-entered before the time allowed by law for filing claims had expired, under which all the creditors were paid in full, except one, and nothing was left in the hands of the assignee to pay that creditor any portion of its claim. When the court discovered the error that had been committed, we perceive no reason why it might not, upon a proper showing, require the creditors who had been paid in full to return so much of the amount they had received as might be required to place the other creditor upon an equal footing with them. . This the last order of the court did, and nothing more. The assets had been received by Doane, who was a creditor, and, as such, a party to the proceedings, and had been disposed of by him, and when the court had modified the order, we think it plain that the court had the power to require him to return the value of that portion of the assets which justly belonged to appellant, another creditor. The law is well settled that a party to an erroneous judgment or decree is chargeable with notice of all errors in the record, and a reversal restores the parties to their original rights, and the' title acquired under such judgment is divested unless the purchaser is a stranger. (Powell v. Rogers, 105 Ill. 318.) While the order here involved was not reversed on appeal or writ of error, yet having been changed and modified by the same court in which it was rendered, the principle which would control in the former one ought to be applied here. We think the judgment of the county court was correct. The judgment of the Appellate Court will be reversed, and that of the county court affirmed. Judgment reversed.