Anderson v. Risdon-Cahn Co. , 13 Wash. 494 ( 1896 )

The opinion of the court was delivered by

Hoyt, C. J.

In the fall of 1890, J. P. Hayden made a voluntary assignment for the benefit of his creditors. Among them was the respondent, Risdon-Cahn Company, which at the time had an action pending in the superior court against said Hayden and wife, who had been sued as co-partners. Appellant duly qualified as assignee of the estate of said J. P. Hayden, and thereafter the said respondent filed with him a claim for the same debt sought to be recovered in the suit against the partnership. Thereafter the suit against said Hayden and wife was tried and judgment had for the plaintiff. The wife appealed from the judgment and it was reversed and the action dismissed as to her. After such judgment was rendered and before the appeal of the wife had been perfected, a writ of attachment was issued and property in the hands of the assignee seized as the property of the copartnership. The assignee then informed the court of the action taken and asked an order directed to said respondent and the sheriff, commanding them to return the property. An order was made, vacating the attachment and directing the property to be turned over to the appellant. The respondent took an appeal, pending which it caused an execution to be issued upon the judgment against the partnership, and thereunder the attached property was sold and the proceeds paid to the respondent. Thereafter the appellant brought suit against said respondent and obtained judgment for $2,000, which is in full force and unpaid. Webb & Co.,the other respondent, succeeded to the assets of Risdon-Cahn Co., and thus became the real party in interest.

Without paying the judgment for $2,000, the respondents filed an affidavit setting out the facts above stated and asked that the appellant be required to make a report as to the condition of the insolvent estate, and to distribute its assets, for the purposes of which he was to treat such judgment as a cash asset in his hands and allow respondents’ share of the estate as a payment thereon. In such affidavit it was stated that, upon this being done, they were ready and willing to pay to the assignee the balance remaining unpaid upon said judgment. The court made an order substantially as prayed for, and restrained >the appellant from proceeding in the collection of the judgment until it had been complied with.

It is contended by the respondents that from such order an appeal will not lie; but in our opinion, it so determined the rights of the parties that it was a final order affecting a substantial right within the meaning of our statute as to appeals. It purported to absolutely determine the right of the respondents to share in the proceeds of the insolvent estate, and prevented the appellant from collecting the judgment against the respondents.

It is urged by the appellant that the court committed error in making the order for two reasons, (1) that under the facts disclosed by the record the respondents were not entitled to share in the proceeds of the estate; and (2) that if they were, the appellant could only have been rightfully required to apportion such proceeds among the creditors after they had been reduced to possession; that it was not proper for the court to direct him to consider the judgment against the respondents as an asset of the insolvent estate for the purposes of distribution, until the money due thereon had been collected.

• The ground of the first contention is that the respondents had claimed and attempted to assert rights so adverse to those of the appellant that they must be presumed to have elected to waive any claim against the insolvent estate. If a creditor attempts to assert rights clearly adverse to those of the assignee of an insolvent estate he will be held to have waived any right to a distributive share thereof. Such has been the uniform holding of the courts, and it is not contended by the respondents but that such would be the effect of such action. But it is claimed by them that during the entire litigation the rights which the respondent, Bisdon-Gahn Company, was asserting were not supposed to be adverse to those of the assignee. Such litigation proceeded upon the theory that the claim was against a co-partnership composed of J. P. Hayden and wife, and that the property belonged to such co-partnership, and did not pass to the assignee of J. P. Hayden. By adjudications subsequent to the time of the assertion of such rights against the property, it was determined that it was not that of a co-partnership, but was that of the individual partner who had made the assignment. But it nowhere appears from the record that after this fact had been finally adjudicated any rights adverse to the assignee had been asserted by the respondents. Nor was it made to appear that their attempt to assert a claim against the property as that of the co-partnership had been in bad faith. On the contrary it appeared that there was sufficient foundation for such claim to induce the superior court to decide in accordance therewith, and it was only upon an appeal to this court that the contrary was determined. For these reasons it must be assumed that, at the time the attempt was made by the respondent, Risdon-Cahn Company, to assert rights under its judgment, it believed that they were not adverse to those of the appellant.

This being so, the rule as to election does not apply. The general rule is that an election to be binding must be made with a full knowledge of the facts, and there is no good reason why such general rule should not apply in the case at bar. On the contrary, there seems to be special reasons why it should. A mistake of law will not usually relieve a party from the results of an election. But even such a mistake has been held sufficient to relieve from the effect of the assertion of rights adverse to an assignee of an insolvent estate. In the case of Eppright v. Kauffman, 90 Mo. 25 (1 S. W. 736), a creditor attempted to enforce his claim against property which belonged to the assignnee of an insolvent estate, and it was claimed that by such action he had forfeited his right to a share of said estate. But, it having been made to appear that by reason of a mistake of law, lie believed that the property would not pass to the assignee, it was held that he had not forfeited his right to share in the estate. If a mistake of law would relieve from the consequences of acts, much more would a mistake of fact. Under the circumstances the respondents did not act so adversely to the rights of the appellant that they were debarred from sharing in the proceeds of the insolvent estate.

The other question presented must be decided in favor of the appellant. An assignee of an insolvent estate could not be required to treat as cash assets for the purposes of distribution an uncollected claim against one of the creditors, or any other person. That the judgment in the case at bar was not in itself equivalent to cash was admitted by the action of the respondents in tendering a bond to the effect that they would pay any balance after their share of the insolvent estate had been deducted from the judgment. But the bond was no more equivalent to the cash than was the judgment. In fact, so far as the actual reduction to possession was concerned, it was one step further removed. No money could be realized thereon without an independent action commenced and prosecuted to judgment. The prosecution of such an action would require the expenditure of time and money by the assignee, and if distribution had been made upon the assumption that the judgment was cash, the assignee, or some one of the other creditors, would have to stand this expense. The assignee was entitled to enforce the judgment against the respondents without regard to any claim which they might have as creditors of the estate.

The order will be reversed and the cause remanded with instructions to deny the application.

Dunbar and Anders, JJ., concur.