Littlejohn v. Turner

Taylob, J. The learned counsel for the appellants claim, first, that the assignment is void because one of the sureties to the bond of the assignee was a practicing attorney in the courts of this state. ¥e think the undisputed evidence in the case shows that the appellants are not in a position to contest the validity of the assignment in this action. It seems to us very clear that Elijah Gove, in his life-time, presented bis claim against the assignee, in the assignment proceedings, in the manner required to entitle himself to any dividends which might arise from the assets in the hands of the assignee; and by doing so he admits the regularity of the assignment and the right of the assignee to the assets of the assignor. This, we think, is well settled by the authorities cited below. In determining this question against the claim of the counsel for the appellants, we do not intend to decide that, by presenting and proving his claim, without referring to or reserving, in such presentation and proofs, his alleged lien upon the assigned property or any part thereof, he thereby waives such lien. All we decide is that, having come in under the assignment proceeding in such a way as to entitle himself to share in the dividends arising from the assets in the hands of the assignee, he waives all objection to the title of the assignee to such assets. Ansonia B. & C. Co. v. Babbitt, [122] 74 N. Y. 395; Cavanagh v. Morrow, 67 How. Pr. 242; May v. Wannemacher, 111 Mass. 202; Pierce v. O'Brien, 129 Mass. 314; Jones v. Tilton, 139 Mass. 418; Burrill on Assignm. (5th ed.), 438, 465, 466. In the case at bar there is no claim that the assignment is void on 'account of fraud in fact, but simply that it is void because a sufficient bond was not given as required by the statute. The objection to the proceedings is a technical one, and has little real merit. The objection could have been as easily ascertained by the defendant before he filed his claim as it could afterwards; and there is no evidence given in the action, or any allegation, that the defect which is now claimed to invalidate the bond and consequently the assignment, was not known to the creditor, Elijah Gove, when he filed his claim in the assignment proceedings. He must be held, therefore, to have filed his proofs of claim, with knowledge of the fact upon which his representatives now seek to invalidate the assignment, and so, by all the authorities, waives the irregularity. Some of the authorities above cited, and many others not cited, seem to hold that, by filing proofs of his claim without making any reference to his lien upon the assigned property or in any way claiming to reserve to himself his rights by virtue thereof, the creditor also waives his lien; but, as we think the judgment in this case is right and should be affirmed,— even if it be admitted that the appellants had a valid lien upon the real estate in question when the order made by the circuit court upon the petition of the assignee, authorizing him to sell the property discharged of such lien to the respondent, was made,— we do not determine that question. The real question in this case is, in our estimation, whether the circuit court has jurisdiction to entertain the petition of the assignee and to decide upon the same. If the court had jurisdiction to act upon the petition, under the law, [123] then the decision of the circuit court binds all parties to the proceedings; and, whether the order was rightly or wrongly made, it binds all parties until the same is reversed or otherwise set aside. Its validity cannot be questioned in a collateral action. Upon this question, we understand the learned counsel for the appellants contend, in the first place, that the circuit court had no jurisdiction over the subject matter of the petition; and, second, if the court had jurisdiction, the appellants are not bound by the order of the court, because the deceased creditor, whom they represent, was not a party to the proceeding and had no notice thereof. The question of notice was found against the appellants by the court, and, as we have said above, upon sufficient evidence! There are, therefore, but two questions to consider: (1) Had the court jurisdiction of the subject matter of the petition? and (2) Was the creditor, whom the appellants represent, a party to such proceeding? Upon the question of jurisdiction, sec. 1693, R. S., reads as follows: “The- circuit court, or the judge thereof in vacation, shall have supervision of the proceedings in all voluntary assignments made under the provisions of this chapter, and may make all necessary orders for the execution of the same.” This section is the first section of ch. SO of the Eevised Statutes, and that chapter regulates the ■ '■oceedings in cases of voluntary assignments. It is not •' -med but that the assignment in question was made under : :o provisions of said chapter. Under the provisions of the section above quoted it is clear that the circuit court of the county in which the assignment proceedings are taken has some power over such proceedings, and may make all necessary orders for their execution. It may be urged that there is no necessity for the court to make any o’rder in regard to the sale of the property in the hands of the assignee, because he has the power to sell [124] conferred upon him by the assignment, and it is his duty, under the assignment, to make sale of all the assigned property within a reasonable time and for the best price he can obtain for the same; and, as he only acquires, by the assignment, the rights of the assignor, he has no power to-sell the property, except subject to such liens as the assignor has created or suffered to be placed thereon. This argument is plausible, and, as a general rule, it is a correct statement of the law. We think, however, courts of equity have the power, under certain circumstances which seem to render it necessary, to change the rule, and give the power to the trustee to sell the property free of the incumbrances, and transfer the lien of the incumbrances to the proceeds of the sale instead of to the property itself. This power has been recognized in sales upon foreclosure of mortgages, and also in sales made by receivers. In re Bennett, 12 N. B. R. 257; Hackensack Water Co. v. De Kay, 36 N. J. Eq. 548, 553; Walling v. Miller, 108 N. Y. 173, 177; Wiswall v. Sampson, 14 How. 52, 65-67; Albany City Bank v. Schermerhorn, 10 Paige, 263; Noe v. Gibson, 7 Paige, 513. Such sales are also recognized, by the statutes of this state, in the settlement of the estates of deceased persons. And in the state of Pennsylvania, where the statute does not confer upon the courts any other special or general powers o,ver the proceedings in voluntary assignment, there is a statute giving the power to certain courts to order the sale of incumbered property, held by the assignee, freed from the incumbrances. See 1 Brightly, Purd. Dig. 119, and Pub. Laws 1876. We think the petition to the circuit court, by the assignee, presented facts which called upon the court to determine the question whether a sale should be made of the property in question freed from the incum-brances. Had the purchase price been as large or larger than the incumbrances thereon, there can be no doubt but that the sale would have been rightly ordered. In that [125] case, the incumbrancers having been paid off out of the proceeds, they could not have complained; and, if the sale was a judicious one and for the full value of the property, the general creditors could not complain. Upon the face of the proceedings in this case, it does not appear that any one objected to the order made by the court. All the other incumbrancers acquiesced in the sale; and, for anything appearing to the contrary in the record, the defendants in this case also acquiesced. The creditor whom they represent had notice of the application for the order and, it seems, failed to appear and object to the order; or, if he did appear and object, he has failed to take any steps to have the order set aside or reversed. In such case, the court having jurisdiction to act upon the application, the order made thereon cannot be impeached in a collateral action, except for fraud. If irregular or erroneous merely, the proceedings to set it aside must be taken in the case in which it was made. There is no claim made in the case at bar that the action of the assignee in obtaining the order of sale was fraudulent in fact; it must, therefore, stand until set aside or reversed upon appeal or otherwise. High on Receivers (2d ed.), 159, sec. 196; Libby v. Rosekrans, 55 Barb. 219; Hackley v. Draper, 60 N. Y. 88. We think that under the statute the circuit court had jurisdiction to act upon the petition of the assignee, and that the order made by said court is final and conclusive upon all the parties to said proceedings; and, the respondent having purchased the property in good faith, he is entitled to hold the same freed from the lien of the judgment of the said appellants; and that the judgment in this case, perpetually enjoining the sale of said property on said judgment, should be affirmed. By the Court. — The judgment of the circuit court is affirmed.