Rappleye v. Racine Seeder Co.

Granger, J. 1. Assignment creditors*^ of unexecuted wmfmutual obligations. I. The point receiving the principal attention in argument is as to the effect on the contract of t]bLe insolvency of Young • Bros., and assignment for the benefit of their creditors. Perhaps it may be better stated as a query, thus: Was the insolvency and assignment a justification for the defendant company in rescinding the contract? The answer to this question is a practical determination of the case, as to the plaintiff’s cause of action. Its consideration has led counsel for appellant to consider at some length the law as to the assignment of contracts, and it is urged that the assignment in question is within its contemplation. A salient feature of the case is the manner or method of payment by Young Bros, for the seeders. The contract was for nine hundred seeders, to be delivered on the orders of Young Bros., for which the firm was to give its notes. Young Bros, were to deliver the seeder^ to purchasers from them, and settle for the same either by receiving cash or notes. If cash, it was to be turned over to defendant, to apply on the notes of Young Bros. If notes, they were to be turned over to defendant as collateral security for the notes already given by Young Bros. It is said in argument that the district court held the rescission valid because, after the assignment, Young Bros, were not in a position to give their notes in pursuance of the terms of the contract; from which we infer this view of the court: That the defendant was entitled, under the contract, to the notes of Young Bros., aided collaterally by the notes taken by them in the sales of the seeders. As between defendant and Young Bros., nothing less could be regarded as a compliance with the contract. It could hardly be claimed that Young Bros., in a settlement for the machines, could substitute in lieu of their note that of another person or firm, regardless of the question of solvency or value, even though aided by the collateral notes as agreed upon, for the sole and conclusive reason — 226 — that their engagements are for notes signed by them. .Such a rule needs no elaboration. The argument, then, leads us to the query, without reference to the statutory assignment for the benefit of creditors, could Young Bros, have so assigned the contract, without the consent of defendant, as to substitute another in their stead for performance, and whose noté must be accepted in lieu of theirs by the defendant? This leads us to consider the authorities cited. Counsel for appellant quotes from Code, section 2084, as follows: “Instruments in'writing, by which the maker promises * * * to pay or deliver any property or labor, or acknowledges any money or labor or property to be. due, are assignable by indorsement thereon, or by other writing; and the assignee shall have a right of action in his own name.” Counsel then say: “Under the very broad language of this provision, this court has held that all contracts are assignable, even in cases where, by the terms of the instrument, its assignment is prohibited.” And reference is made to Moorman v. Collier, 32 Iowa, 138, and First Nat. Bk. of Dubuque v. Carpenter, 41 Iowa, 518. Section 2084 is a part of the chapter on “ notes and bills ; ” and the section deals only with instruments in writing, and tells how they may be transferred, and who may sue thereon. In both of the cases to which reference is made the court had-under consideration the validity of the transfer of an instrument in writing for the payment of money ; and the language used in each case is not too broad, if properly limited by the subject of its application. In Moorman v. Collier, the language relied on is that “all instruments, under our statute, are assignable;” and the statement takes as authority Revision, section 1796, which corresponds with section 2084 of the Code, and the language of the case is only as to “instruments.” It does not say, “all contracts.” The case evidently means all instruments for the payment or delivery of money,- property or labor, as specified in the section and chapter. The case of Bank v. Carpenter was an action on a written guaranty, which was — 227 — held assignable ; and in its discussion this language is used: “Generally, by the common law, a guaranty is not negotiable, or in any manner transferable, so as to enable the assignee to maintain an action thereon. * * * But under our statutes this and every other kind of contract is assignable.” It cites for support Code, sections 2082-2087, inclusive; and it is said in the opinion that “even in a case where, by the terms of the instrument, its assignment is prohibited, it may be assigned.” The sections referred to are the first six sections in the chapter on “notes and bills,” which chapter, of course, has reference to other instruments than notes and bills, and the provisions, in brief, as to assignments are that a party entitled to recover on an instrument or an open account may transfer his right of recovery to another; but there is nothing in the language of the chapter to indicate a legislative intent to authorize a party to a contract by assignment to transfer his obligations to perform to a third party, and thus effect his release, without the consent of his obligee. Let us suppose that A. contracts in writing to render service, as a traveling salesman, to B., for a specified compensation. Under the law, if B. shall be indebted to A. on the contract, A. may assign his claim. But suppose A. should assign his contract to C., whereby G. was to receive the pay and render the service. -Must B. accept that? B. has contracted for the services of A. He is entitled to that; and, before B. can be required to pay either to A. or his assigns, he must have what he contracted for. The law will permit a person to assign what is his, either in possession or by right of action, but not his obligations to another; and such is the substance of the provisions of the statutes on the subject of assignments referred to. Thus we think that Young Bros, could not, without reference to the assignment for the benefit of creditors,. have so assigned the contract in question, without the consent of the defendant, as to have required defendant to have accepted in lieu of theirs the notes of their assignee. — 228 — We may then inquire if there is anything in the statutory assignment for the benefit of creditors to change the rule 2 It is urged that the statutory provisions as to assignments for the benefit of • creditors is broad enough to enable the assignee to execute any contract that might come into his hands. The difficulties of the case are not with the provisions of the statute as to the authority of the assignee. They are more with his incapacity or indisposition to execute the contract. We should not lose sight of the real question under consideration by a contemplation of what the assignee could have done if defendant, after insolvency, had been willing to deliver the seeders. It may be conceded that the contract could thus have been executed by the assignee on behalf of Young Bros. But the query is, had the defendant the right to refuse delivery of the seeders after insolvency and assignment 2 In other words, had it the right to terminate the contract 2 If it were a case of insolvency without the assignment, we think it would be conceded on authority that the obligation to deliver could only be on a tender of a cash payment in lieu of notes agreed upon. Pardee v. Kanady, 100 N. Y. 121. Does the fact of the assignment affect the rights of the defendant 2 The reason of the rule in cases of insolvency is too manifest to need explanation. A person who contracts to deliver property on credit, in anticipation of a solvent purchaser, ought not to be required to deliver it after insolvency, which is a practical confession by the purchaser of his inability to comply with the terms of the contract. If to the fact of insolvency is added that of an assignment for the benefit of creditors, why should the rule be changed 2 If the delivery is excused in case of insolvency because the property will not be paid for, the same reasons exist for excusing the delivery after assignment. If the insolvent did not possess a right to enforce the contract except by cash payment, he could • convey no greater right to his assignee. The argument deals with the question of the right of appellant to a delivery of the seeders upon cash payment therefor. To our minds, the record does not — 229 — present the question for consideration. The contract was not to pay cash, but to settle by note. After insolvency defendant was not required to anticipate a readiness for cash payment; and, if either Young Bros, or plaintiff desired to make such payment, a tender to that effect should have been made. Soon after the assignment, defendant, as it should, gave notice that because of the insolvency and dissolution of the partnership the contract was rescinded. This notice was to Young Bros. If the assignee then desired to pay in cash, and have the seeders delivered, the proposition or tender should have been made. But neither the pleadings in the case, nor the findings of the court, deal with this question. The case in the district court seems to have been tried upon an issue as to the right of the assignee to carry out the contract by giving his note in lieu of that of Young Bros. The pleadings and findings have to do with a willingness on the part of the assignee to carry out the contract; but it appears only to have been a carrying out of the contract as Young Bros, were authorized to do, and not by payments in cash. A reference to the eleventh finding shows that the assignee has never in any manner indicated to defendant a purpose or desire to secure or perform the contract. Insolvency, in such cases, implies an inability to perform, on which the defendant might rely until otherwise assured.,- Appellant contends, with much zeal, that the mere fact ,of insolvency does not put an end to the contract of gale; and several authorities are cited in support of the rule. It is not necessary for us to state an opinion on] a state of facts so broad. The case In re Steel Co., 4 Ch. Div. 108, cited by appellant, bears upon the question of when the facts will justify a seller on credit in •'refusing to deliver because of the subsequent insolvency of the purchaser. The facts in that case are that the ' Carnforth Iron Company, in October, 1874, contracted to supply iron to be delivered monthly, and to be paid for in installments, but on credit. The installments were delivered till in February, 1875, when the purchasing — 230 — company called a meeting of its creditors, and said it was carrying on business at a loss, and was short of capital, and asked for an extension of time, which the creditors refused. The selling company then refused to deliver the iron except upon cash payments, and the purchasing company then rescinded the contract. The selling company then asked for damage, which the court held could not be recovered; holding that there was no such declaration of insolvency as to justify the. selling company in refusing to deliver. The syllabus of the case, which appears to be supported by the opinion, deduces a rule as follows: “In order to justify the vendors, in such a case, in exercising their right of refusal to deliver, there must be such proof or admission of the insolvency of the purchasers at the time as amounts to a declaration of intention not to pay for the goods.” The case does not appear to be an authority against the right of refusal to deliver where the fact of insolvency exists, and is so evidenced as to amount to a declared purpose not to' pay. It is the fact of the insolvency that seems to be the turning point in the case, and that would surely seem to be the reasonable rule. The case of Morgan v. Bain, L. R. 10 C. P. 15, also cited by appellants, was one for the delivery of iron on credit; and the purchasers became insolvent. Lord Coleridge, C. J., in his opinion, said: “It is not disputed that upon the occurrence of insolvency the vendor would not be bound to deliver to the insolvent purchaser an installment of the iron becoming due, without a tender of the price.” Brett, J., in the same case, said, without committing himself to the theory that the mere fact of insolvency would per se put an end to the contract, that such fact, with that of notice to the seller: of the insolvency, would justify an assumption by the seller that the purchaser intended to abandon the. contract. The notice upon which he relied, and gave his adherence to the holding in that case, was the com-' mencement of insolvent proceedings under the bankrupt act. In this case the fact of the insolvency is unquestioned, and a like notice is given by an insolvent — 231 — proceeding lor the benefit of creditors. Hence it seems the defendant, in this case, is within any of the rules cited. Other authorities cited by appellant are not more favorable to his position. II. Defendant presented a counter-claim, based on an open account, alleging a balance due of $27.98, as to which the court established a claim against the estate of Young Bros, for twenty-seven dollars, based on the following finding of facts : ’•'■Twelfth. On defendant’s counter-claim, the court finds that defendant received orders from Young Bros, for the goods mentioned in the account under dates .September 5, 6, 8, 15 and 17, 1884; that these orders were treated in the usual way, the usual directions given for shipping, and the goods charged on the books to Young Bros.; that both of Young Bros, were on the witness stand, and neither of them denied having received the goods; that, the balance of defendant’s counter-claim not being denied, the defendant should recover the sum of three hundred and twenty-seven and ninety-eight one-hundredths dollars, less the sum of three hundred dollars due the plaintiff for commission earned by Young Bros, under the contract of 1883, declared on in plaintiff’s petition.” It is urged that the proofs are not sufficient to sustain the finding. The argument concedes a practical dispute in the testimony, and the finding has the force of a verdict by the jury. The evidence is such that we, cannot interfere. , 2. -: peisonal judgment wS^not III. It is next said that it was error to enter a personal judgment against the assignee. The assignment is in these words: “The court erred in , rendering a personal judgment against the herein for the balance due upon defendant’s counter-claim, for the reason that such judgment is contrary to law and the evidence. Said defendant was entitled only to the establishment of his claim as a creditor of said estate.” The assignment is not sustained by the record. The judgment of the court is merely the establishment of a claim against the estate. It is not a personal judgment. It would — 232 — only be subject to pro rata payment, like other claims. The wording of the judgment is “that such be and is hereby established as a claim against the estate of Young Bros., and against the said Rappleye as their assignee.” These words have no other meaning than the establishment of the claim. It would appear that appellant has based this assignment rather upon statements in the abstract with reference to the judgment than upon record of the judgment as copied in the abstract. Affirmed.