Kyes v. Merrill Furniture Co.

Newmait, J. It may be, probably is, the law that an as-signee for the benefit of creditors may maintain an action in equity to set aside a settlement with or conveyance to a creditor which has been induced by fraud or by a mistake of fact. In such a transaction the assignee represents the assignor and not the creditor, and is in law the owner of the estate which has been impaired by the fraud or mistake. Probably, in such a case, the circuit court could require the assignee, in the interest of creditors, to bring such an action; for the circuit court is endowed with great power over the administration of estates in the hands of assignees for the benefit of creditors. But in such a case it should, doubtless, be made to appear by the complaint, that the settlement or conveyance was induced by a mistake of fact, as distinguished from a mistake of law; for equity does not relieve against mistakes merely of law. Every party must act upon his own opinion of the law, at his peril. The complaint in fact avers that “ such conveyance was made upon the mistaken belief on the part of this plaintiff [the assignee] that said notes and mortgages were valid securities.” Whether they were valid securities is a question of law, arising, indeed, upon the facts, but still a question of law. There is no averment that the assignee was ignorant or mistaken as to the facts upon which this question arose. So the complaint fails to state a cause of action in favor of the assignee. Indeed, no such cause was intended, but rather a cause of action in favor of creditors was intended. It may be, probably is, the law that a judgment creditor of the assignor may maintain an action in a proper case in a court of equity, on his own behalf and on behalf of all [35] otters in like situation, to avoid or set aside a settlement or conveyance made by the assignee in fraud of the rights of creditors, or under a mistake of fact, to their injury. But this complaint alleges no fraud or mistake of fact, so does not state a cause of action under this head. But this action was brought on a theory entirely different from those mentioned. It is that the assignee has the same right to maintain an action to set aside his own conveyance, made in administering the estate, as is given him by statute to maintain actions to set aside conveyances by his assignor, made in fraud of creditors, before the assignment was made. Before the statute, the assignee represented the assignor only. Hawks v. Pritzlaff, 51 Wis. 160. He could maintain no action to set aside the assignor’s convéyances in fraud of creditors. The statute makes him “ the representative of creditors in respect to all fraudulent transfers of property by the assignor, and gives him the right to maintain actions to avoid the same.” S. & B. Ann. Stats, sec. 1702a; Vernon v. Upson, 60 Wis. 418; Charles Baumbach Co. v. Miller, 67 Wis. 449. But his capacity to represent creditors is limited to the maintenance of actions to set aside the conveyances of his assignor, by the terms of the statute itself. He can bring no action which the statute does not, in terms or by necessary implication, authorize. The statute provides (S. & B. Ann. Stats, sec. 16935) that in certain cases, where the assignee fails to bring an action to set aside some fraudulent conveyance of the assignor, a creditor may bring the action in the name of the assignee, and it is the theory of the plaintiff that this action is within the provision of this section. But this provision plainly relates only to such actions as the assignee is authorized to bring in the right of creditors. The statute itself limits this right of the assignee to bring actions to set aside conveyances to such transfers as have been made by the assignor and before assignment. This is true, also, of the actions [36] authorized by S. & B. Ann. Stats, séc. 1693a. It does not authorize an action to be brought by a creditor, in the name of the assignee, to set aside a conveyance made by the as-signee himself. . Valley L. Co. v. Hogan, 85 Wis. 366, is in no respect at variance with what is said above. That was an action to set aside a transfer made by the assignor before the assignment, and is within the very words of the provision of S. & B. Ann. Stats, sec. 1102a. In no view which seems tenable can the complaint be said to state a cause of action. By the Court. — The order of the circuit courtis affirmed.