McClure v. Campbell

Lyon, J.

Ch. 148, of the General Laws of Minnesota for 1881, under which the assignment in question was made, is entitled “ An act to prevent debtors from giving preference to creditors, and to secure the equal distribution of the property of debtors among their creditors, and for the release of debts against debtors.” The act provides that whenever the property of any debtor shall be attached or levied upon by any writ or process from a court of record of that state in favor of any creditor, or garnishment made against any debtor, such debtor may, within ten days after such levy or garnishment, “ make an assignment of all his property and estate, not exempt by law, for the equal benefit of all his creditors, in proportion to their respective valid claims, who shall file releases of their debts and claims against such debtors as hereinafter provided.” The act then provides that, upon such assignment being made, the attachments, *355 levy, or garnishments shall be dissolved, and the officer shall deliver the property to the assignee, unless the latter elect to retain the process for the benefit of all such creditors. Sec. 1. It is further provided in sec. 10 that “ no creditor of any insolvent debtor shall receive any benefit under the provisions of this act, or any payment of any share of the proceeds of the debtor’s estate, unless he shall first have filed with the clerk of the district court, in consideration of the benefits of the provisions of this act, a release to the debtor of all claims other than such as may be paid under the provisions of this act for the benefit of such debtor; and thereupon the court or judge may direct that judgment be entered discharging such debtor from all claims or debts held by creditors who shall have filed such releases.”

Within ten days before the assignment to the plaintiff was executed, the property of Gillespie & Harper in Minnesota was seized by virtue of a writ of attachment issued out of a court of record of that state.

Another statute of Minnesota (ch. 41, Gen. Stats.) gives the procedure for making general assignments for the benefit of creditors. Its provisions are not unlike ch. 80 of our Eevised Statutes, entitled “ Of voluntary assignments.”

The contention on behalf of the plaintiff is that the instrument under which the plaintiff claims to recover the proceeds of the property in question is essentially a voluntary assignment by Gillespie & Harper for the benefit of their creditors; and that it is a valid conveyance to the assignee of all the personal property of the assignors, wherever the same may be situated. In other words, their position is that, in respect to personal property, the lex loci contractus governs, and an assignment valid under the laws of the state in which it was executed is valid everywhere.

The contention on behalf of the defendant (who represents the creditor Johnson) is that the instrument is not a voluntary assignment for the benefit of creditors, within *356 the meaning of that- term as used in tjie common law, or in ch-. 41 of the Minnesota statute, or ch. 80 of our [Revised Statutes, but is part of a statutory proceeding in insolvency, looking to a full discharge of the debts of the insolvent without full payment thereof,— a result which cannot follow a voluntary assignment for the benefit of creditors; and, further, such being the nature of the proceeding, the assignment has no effect beyond the territorial limits of the state in which it is made and in which the assignor1 resides. It is also denied that it has any such extra-territorial effect, even though it be a voluntary assignment for the benefit of creditors.

The question as- to the character of the instrument under which the plaintiff claims has been determined by the supreme court of Minnesota in Jenks v. Ludden, 34 Minn. 482 , and other cases therein cited. In Jenks v. Ludden the court says: “ Our act of 1881 is, as we have repeatedly held, a bankrupt act; the assignee being, in effect, an officer óf the court, and the assigned property being in custodia legis and administered by the court or under its direction. Wendell v. Lebon, 30 Minn. 234 ; In re Mann, 32 Minn. 60 ; Lord v. Meachem, 32 Minn. 66 ; Bennett v. Denny, 33 Minn. 530 ; Simon v. Mann, 33 Minn. 412 .” Thus it will be seen that although an assignment under ch. 148 of the Statutes of Minnesota for 1881, in a certain sense is voluntary, in that the debtor is not compelled to make it,— a feature common to many, perhaps most, insolvent -laws, including those of this state (R. S. ch. 179),— still that court holds it to be, in substance and legal efféct, an assignment by operation of the statute thus held to be a bankrupt law, executed as a part of the procedure in the administration of that law. We regard the above adjudications of the supreme court of Minnesota, giving construction to their act of 1881, as binding upon this court, and hence shall not examine or discuss the argument of counsel for the plaintiff against the accu *357 racy of such construction. We will only say that our consideration of the subject has inclined us to think that the court construed the act correctly.

Our conclusion as to the character of the instrument in question renders it quite unnecessary to determine whether a voluntary assignment for the benefit of creditors executed in Minnesota by a resident of that state, pursuant to ch. 41, passes to the assignee title to personal property named in such assignment having a situs in this state. This question was very fully argued by the respective counsel, and their citations of authorities (to which we add Mowry v. Crocker, 6 Wis. 326 ) will be preserved in the official report of the case.

The only remaining question .(and it is the controlling question in the case) is, Has an assignment of property, made pursuant to a bankrupt act, the assignee being in effect an officer of the court, and the assigned property being in custodia legis and administered by or under the direction of the court, any extra-territorial effect? That is to say, should the courts of this state recognize such an assignment as a valid transfer to the assignee of personal, property in this state, and thus defeat an attachment levied upon it pursuant to the laws of this state by a creditor of the assignor? We think the question is nob affected by the fact that the property, when seized, was in the possession of the assignee, or that the attaching creditor is a resident of the state in which the insolvency or bankruptcy proceedings were had.

The cases on this subject are very numerous. No review of them will here be attempted. While some of them may, under special circumstances, extend the rule of comity to such a case, and thus give an extra-territorial effect to somewhat similar assignments, we are satisfied that the great weight of authority is the other way. The rule in this country is, we think, that assignments by operation of law *358 in bankruptcy or insolvency proceedings, under which debts may be compulsorily discharged without full payment thereof, can have no legal operation out of the state in which such proceedings were had. This rule is laid down in Burrill, Assignm. (5th ed.) p. 458, sec. 303, and numerous cases are cited in the note to- that section in support of it.

See note to this case in 37 N. W. Rep. 343 .— Rep.

An application of the above rule to this case negatives the plaintiff’s right to recover in the action.

By the Court.— The judgment pf the circuit court is affirmed.