National Bank of the Republic v. Herman

BardeeN, J. Sec. 1699, S. & B. Ann. Stats., provides that, .at the expiration of three months from the first publication of notice to creditors, the assignee shall file with the clerk of the ■circuit court proof of the publication of such notice, a list •of creditors to whom such notice was mailed, and a list of •creditors from whom affidavits of claims have been received. At any time within thirty days after such list is filed, the .assignee or any creditor may file written objections to the whole or any part of any debt claimed by any creditor, and .serve the same upon the creditor in the manner therein pointed out. The claimant herein filed its claim within the time required. Later, upon correspondence with the assignee, its claim was amended, and for six years and two months the ■claim stood without objection. Shortly after the expiration of the three months after the publication of the notice to creditors, the assignee filed a list of creditors from whom affidavits of claims had been received, which included the claimant’s claim among many others. The attorneys for the assignee have raised some questions as to the regularity of filing this list. They are so unimportant that we decline to discuss them. At the very latest, the time for filing objections to this claim expired thirty days after its amendment. When that time expired, it stood as an admitted claim. No action, either by the assignee or by the court, for its allowance, was required or is contemplated by [586] tbe statute. Tbe deed of assignment requires tbe assignee to gather up tbe assets of tbe assignor and distribute the proceeds to tbe bona, fide creditors in accordance with tbe provisions of tbe statute. Tbe statute requires each creditor to exhibit and file bis claim. It then becomes the duty of tbe assignee to examine and inspect such claims, and make such objections thereto as be may be advised. Any creditor may also file objections, but each must proceed within tbe time limited by tbe statute. At tire expiration of that time, no objections being filed, tbe claim stands admitted without any action either by tbe court or tbe assignee. It stands allowed by operation of law. It cannot be thereafter attacked except, by permission of tbe court, upon good cause shown. No line of practice has been prescribed by tbe statute, or laid down by tbe court, in cases where it is desired to obtain relief from default or failure to file objections as required. Tbe statute gives tbe court plenary power and full supervision over all proceedings in voluntary assignments. See. 1693. We have no doubt as to its power to supervise, revise, review, and reverse any action taken by tbe assignee up to the-very day of bis final discharge. It may, at any time before-final settlement, relieve tbe assignee from any default; may investigate, correct, adjust, or disallow claims, or reduce or increase tbe same according to the rights of the parties. This power of supervision was given tbe corat in pursuance of tbe policy of tbe la.w to work out equal and exact justice between tbe estate of tbe assignor and tbe creditors. The power to investigate a claim at any stage of tbe proceedings, and make any correction that equity and justice demands, results from tbe general grant of power of supervision. Courts of bankruptcy exercised it freely under tbe federal statutes. Black, Bankr. p. 179, § 57. Questions of amendment or relief from defaults are such as address themselves to the equitable consideration of tbe court, and great discretion should be exercised in disposing of them. Tbe discretion to be invoked [587] must have a reasonable basis to rest upon. Although, as suggested, no definite rule of practice has been adopted, we' see no reason why the ordinary rules in legal proceedings should not govern, so far as applicable. Such rules should be applied, in view of the policy and purpose of the assignment law, to work out justice to all concerned in the assigned estate. In the proceeding before us, the claimant filed its1 claim within the time limited. By correspondence between the-assignee and the claimant it was amended to show the full nature of the claim and the true amount due. It stood as an admitted claim for more than six years. In the meantime the assignee paid no less than five dividends^ aggregating fifty-five per cent, of the face of the claim. When the present assignee came into power his attorneys seem to have regarded the action of the former assignee with great suspicion. When the claim of the National Banlc of the Republic was reached, they concluded that it was invalid. Thereupon the assignee-made an ex parte application to the court for leave to file objections. The petition set out that no order had been made determining who were creditors and' entitled to participate-in dividends, and “no list of claims allowed by William Plan-kinton, the former assignee, has been filed, . . . and that the persons who have filed claims against said estate, as-creditors thereof, can only be ascertained by going through the several proofs of claim filed with the clerk.” An order was made allowing objections to be filed. Thereafter, the attorneys of the claimant moved to vacate such order on various grounds, among others that such order had been improvidently made. Such motion was granted, and we think properly. In the first place, the assignee’s application was ex-parte. The bank’s claim had stood admitted for more than six years. Eepeated dividends had been paid upon it. The assignee and all creditors were in default. The bank had a right to depend upon this situation. If it was to be changed,. [588] it was entitled to notice. Not one word appears in tlie petition to excuse the default. Tbe fact that one assignee resigned, and a new one is appointed, does not reopen the proceedings. The successor takes the situation as he finds it. If he desires to’ change it, it must be upon notice and good cause shown. The presumption is that the former assignee did his duty. No fact is mentioned in the objections that was not fully apparent to the former assignee. The present assignee made no claim that he had made any investigations or had obtained any information not possessed by his predecessor. The substance of his objections was that the bank’s claim was not a loan as set forth in the proof of claim filed, but was a rediscount of the notes mentioned. Non constat, the former assignee may have made full investigation of this fact, and readied the conclusion that this objection was baseless. Certainly, the estate should not be involved in useless litigation, or the claimant put to expense, after so long a default, without some showing that the former assignee had neglected to make investigation, or that the present assignee had become possessed of some information sufficient to warrant taking action. The assignee’s petition also informed the court that no list of claims had been filed by the former as-signee. The record before us shows that such a list, substantially in compliance with the statute, was filed by the assignee on November 23, 1893. It does not lie in the mouth of the present assignee to dispute or repudiate the acts of his predecessor, done in this regard, in attempting to comply with statutory requirements. Our conclusion from the record is that the list filed by Mr. Plankinton was in substantial compliance with the statute, and that the petition in that respect was untrue. That there may be no mistake as to our conclusions, we will summarize them briefly as follows: When an assignee or any creditor desires to file objections or to attack any claim on file, after the time limited by sec. 1699, he may do so upon [589] application to the court, upon notice to the creditor, a prima fado showing of merits, and some reasonable excuse of the default; in which case the court will exercise a reasonable discretion in furtherance of justice. The order allowing the assignee to file objections was improvidently made, because without notice, without any attempt to excuse the default, and because the petition was untrue in the particular before mentioned. These facts justify the order appealed from, and render a discussion of many questions raised by the assignee’s attorneys unnecessary. By the Court. — The order is affirmed.