Limbocker v. Higinbotham

The opinion of the court was delivered by JOHNSTON, J.: An assignment for the benefit of creditors having been made, which is still open, can a. creditor who has presented and had allowed in full a claim against the estate which has not been paid maintain an action upon the original claim against' the assignor? No provision of the statute relating to assignments which would preclude or suspend the right of a creditor to recover a personal judgment against the assignor has been brought to our attention, and we find nothing in the nature and effect of such proceedings which would sustain such a claim. The act of assignment [701] does not pay the debts nor discharge the assignor from liability for their payment. The assignment proceeding is in the nature of a proceeding m rem, and all who desire to share in the assigned assets must conform to the procedure prescribed by the statute. The adjudication of the assignee is binding upon the interests of every person whomsoever in the res or property brought within his jurisdiction, but this adjudication is not personally binding on the assignor, like a judgment in 'personam, and is not enforceable by general process. Our statute, unlike those of some other states, does not provide that the assignment of property and the distribution of the proceeds among the creditors shall operate as a discharge of the assignor from further liability. The debts are only discharged to the extent that the funds derived from the estate are distributed pro rata among the creditors. If he subsequently acquires other property, or if he possesses property which has not been assigned, no good reason is seen why a creditor may not pursue the, ordinary remedies in obtaining satisfaction from such property for the unpaid debts. Under our statutes, a debtor may even make a partial assignment of property, provided all creditors may unconditionally participate in that which is assigned, and that the property not assigned is open and available to the remedies of all creditors. (McFarland v. Bate, 45 Kas. 1.) Can it be that the proving of a claim against such an estate will preclude the creditor from pursuing the ordinary remedies and from obtaining a judgment in personam, which may be a lien upon or may be enforced on general process against property not assigned ? The case of The State v. Insurance Co., 32 Kas. 655, is strongly relied upon to sustain the contention that the allowance by the assignee was a judgment in which was merged the original claim. The decision, however, will not sustain that contention. There, the insurance company had made a general assignment for the benefit of creditors. A creditor presented his claim, but it was disallowed by the assignee. A judgment was obtained upon the original claim in another state, and, subsequently, the creditor attempted to have that [702] judgment paid out of the trust estate, which had then passed into the bands of a receiver. It was held that the adjudication by the assignee, from which no appeal had been taken, was final, and that the creditor was not entitled to share in the distribution of the assets of the estate. Such an adjudication is final so far as the assignment proceedings are concerned, and concludes all as to the distribution of the estate. The effort of the creditor to receive his pro rata share of an estate, assigned for the benefit of all, should not preclude him from converting his claim into a judgment against the assignor, which might at once become a lien against the unassigned estate or enforceable by execution against it. The allowance by the assignee cannot be so used, and is of no avail to him outside of the assignment proceedings. Section 21 of the assignment act provides for adjusting and allowing demands against the estate, and the only penalty prescribed for failing to present the claim of a debtor to the assignee is, that he shall be precluded from any benefit of the estate. (Gen. Stat. of 1889, ¶ 362.) There is no attempt to bar the plaintiff from maintaining an action for the recovery of a personal judgment against the debtor upon the original claim, nor from pursuing the ordinary remedies afforded by the law. The supreme court of Indiana, in a similar case, held that an assignment of all the property of the debtor for the benefit of all his creditors did not suspend the right of the debtor to have and maintain his action in the proper court for the recovery of a judgment against the assignor, either pending the settlement of the trust, or for any period of time. (Lawrence v. McVeagh, 106 Ind. 210.) As sustaining the view herein taken, we cite, also, Cackley v. Smith, 47 Kas. 642; Barker v. Haskell, 9 Cush. 218; Sanborn v. Norton, 59 Tex. 308; Coburn v. Mfg. Co., 76 Mass. 243; Johnson v. Bleaching Co., 15 Gray, 216; Newark v. Stout, 52 N. J. Law, 35; Worsted Co. v. Holiston Mills, 149 Mass. 359; Hammond v. Pinkham, 149 id. 356; Durandt v. Abendroth, 97 N. Y. 132; Nelson v. Couch, 15 C. B. (N. S.) 99; Toby v. Brown, 11 Ark. 308; 2 Black, Judg., § 674. [703] We conclude that the plaintiff was entitled to recover a, personal judgment against the defendant upon the original claim, for any amount that might be due thereon, regardless of the assignment proceedings. If payments have been made upon the allowance of the assignee, they should be deducted from the amount of recovery; but the record shows that no dividends had been declared or paid when the action was brought. The judgment of the court below will be reversed, and the cause remanded, with instructions to enter judgment in favor of the plaintiff for the unpaid portion of his claim. All the Justices concurring.