Walton v. Eby

The opinion, of the court was delivered by JOHNSTON, J.: On December 19, 1889, E. N. Eby made a general assignment of all his property for the benefit of his creditors, and designated R. C. Coble as assignee. The deed of assignment was delivered to the assignee on the evening of the day it was executed, and was filed for record on the morning of the following day. On January 17, 1890, E. S. Walton was duly chosen as permanent assignee of the estate, and, after qualifying as the law requires, he brought two actions to vacate conveyances of the real property of the assignor alleged to have been made in fraud of his creditors. It was alleged that, at the time of making the deed of assignment, the assignor was the owner of certain real estate, and, being about to make an assignment, and knowing that he was insolvent, executed the conveyance of the same to his wife, for the purpose of defrauding his creditors, and reserving the real estate from the assignment and for his own use and benefit. A portion of the real estate owned by him was in like manner and for the same purpose conveyed to his son, E. N. Eby. It is further averred that the real estate so conveyed, together with that described in the deed of assignment, was all the property owned by the assignor not exempt by law at the time of making the assignment, and that the property other than that so fraudulently conveyed when sold at a fair and reasonable price will not pay more than one-fourth of the debts of the assignor. Demurrers were filed to the petitions, which were sustained by the court, and upon these the only question raised is whether the assiguee is the representative of the creditors, and as such may maintain actions to set aside fraudulent conveyances made by the assignor. This question has been practically decided in the affirmative in Chapin v. Jenkins, 50 Kas. 385. In that case, the difference between common-law and statutory assignments [261] was recognized. Under the former, the relations of the parties were controlled by contract, and the assignee had no power except such as was conferred upon him by contract. As he stood in the shoes of the assignor, he could assert no claim to property fraudulently conveyed which the assignor could not himself have asserted. As has been decided in the cited case, our statute changes the effect of an assignment, and also the powers of the assignee, as well as his relations to the creditors. While the assignment, in the first instance, is the act of the assignor, thereafter the control and disposition of the property, and also the powers and duties of the assignee, are regulated by statute, and no direction or limitation of the assignor is of any effect. Under our statute, the assignee is made the representative of all the creditors, and it is his duty to protect the estate and defend the property assigned against adverse and unjust claims. The deed of assignment made by Eby purports to convey to the assignee all the real estate owned by the assignor or in which he had an interest. A conveyance of property in fraud of creditors is void, so far as the creditors are concerned, and being still the property of the assignor, it necessarily passed to the assignee by the assignment. If the assignee is the representative of the creditors, he may, as their representative, invoke the aid of the court to protect the entire estate assigned, as well as to defend it against any adverse and unjust claims. In Chapin v. Jenkins, supra, it was held that the assignee might defend any interest of the creditors against a mortgage made in fraud of the creditors, aud upon the same principle it must be held that he may attack a fraudulent conveyance of the assignor in order to obtain dominion over the property assigned, with a view of making an equitable distribution of the same among the creditors of the assignor. This can be effected to better advantage by the assignee acting as the representative of all the creditors than by the creditors themselves acting adversely to and independently of each other. It is within the spirit and purpose of our statute relating to assignments, and appears to be justified by the authorities. [262] In addition to the authorities cited in Chapin v. Jenkins, supra, see Seibert v. Milligan, 10 N. E. Rep. 929; Cooper v. Perdue, 16 id. 141; Grant v. Crowell, 9 Atl. Rep. 201. The judgment in each of the cases sustaining the demurrer to the petition will be overruled, and the causes remanded to the district court for further proceedings. All the Justices concurring.