Wheaton v. Spooner , 52 Minn. 417 ( 1893 )

Dickinson, J.

The matters here in controversy were presented to the district court upon an agreed statement of facts, upon which judgment was rendered determining the rights of the respective parties. This is am appeal from that judgment.

In July, 1889, in an action by the defendant Spooner against a corporation, — the Bay St. Louis Syndicate, — judgment was awarded in his favor for the recovery of a specified sum of money. Thereafter he, as such judgment creditor, prosecuted an action, in his own behalf as well as for the benefit of other creditors, against the corporation and its stockholders, under 1878 G. S. ch. 76. In the course of that action, and in February, 1890, Weed Munro was appointed receiver of the property of the corporation, with power to collect and convert the same into money, and to pay the judgment of Spooner, as well as the judgment of other creditors -who might intervene. As such receiver, Munro has collected under said judgment the sum of $700, and the controversy is whether these respondents or the appellants are entitled to be preferred in the distribution of that money.

The respondents are judgment creditors of the appellant Spooner. In June, 1891, an execution was issued to the sheriff of Hennepin county to enforce that judgment, which was attempted, by the sheriff, to be levied upon the judgment in favor of Spooner against the Bay St. Louis Syndicate, by serving a certified copy thereof upon the receiver and upon the judgment debtor, with a notice to the effect that lie (said, sheriff) had levied upon all the right-, title, and interest of H. A. Spooner in and to the judgment, which was fully described in such notice. That levy, if effectual, is still in force. At the time it was made, the respondents had no knowledge or notice of the orders or assignments made by Spooner to which we are about to refer, and. by reason of which, the interveners claim to have acquired rights superior to any which may have been acquired by the respondents through such levy.

Prior to the issuing of that execution, Spooner had given to the several intervenors, McReeve, Janney, Temple & Co., Johnson & Hurd, and W. K. Morrison & Co., respectively, written instruments (the orders above referred to) directed to his (Spooner’s) attorney, F. B. Dodge, who acted as attorney for the receiver as well as for Spooner in the proceedings against the “syndicate,” in which he directed Dodge to pay to said interveners, respectively, the money which he should collect from the Bay St. Louis Syndicate. These instruments further expressed the intention of Spooner thereby to assign to the persons in whose favor they were made, respectively, so much of his claim and judgment against the syndicate as was necessary to satisfy such orders. These orders were given to the persons named on account of debts which Spooner then owed to them. Dodge formally accepted these orders. None of them were ever filed in the office of the clerk of the court, nor did the court grant any order or permission to levy upon or proceed against such judgment.

The court held the levy of the execution upon the judgment in favor of Spooner to be effectual, so that the plaintiffs became entitled to receive the money in preference to the interveners, claiming the same under the orders above referred to. The interveners rest their case on appeal upon three propositions: First, that the attempted levy on the Spooner judgment was ineffectual, the proceedings being insufficient; second, that the judgment was not subject to such a levy, because of the appointment of the receiver of the property of the judgment debtor, which was thus taken in custodia legis, and with the effect, also, to suspend and prima facie satisfy the judgment; and, third, the orders operated as an equitable assignment of the judgment pro tanto, and had legal priority over the subsequent levy of the execution. We will consider these points in the order above stated.

1. The statute prescribing the manner in which levies are made upon certain classes of property, which would include judgments, (1878 G. S. ch. 66, § 305,) does not require the service upon the clerk of the court of a copy of the execution and a notice of the levy upon a judgment. The clerk of the court in whose office the judgment is recorded and docketed is not “a person holding the * * * property” within the meaning of that law. Such language has no application where the property levied upon is a judgment or debt.

2. The appointment of the receiver of the property of the syndicate had not the effect to prevent a judgment creditor of Spooner .levying upon and selling under execution the judgment of the latter against the syndicate. We do not here encounter the question whether that judgment could be enforced by a levy upon the property of the syndicate. It is probably true, and may be conceded, that, the property of the syndicate being thus in custodia legis, the Spooner judgment could not be enforced against it in any such manner as to interfere with the possession of the receiver or the discharge of his duties as such. But the argument of the appellants justifies the statement of the truism that the judgment of Spooner against the syndicate was not the property of the syndicate, and, was not placed in custodia legis by the appointment of a receiver of the property of that corporation. It was the property of Spooner, and subject to his control; and levying upon it by execution in no way interfered with the duties of the receiver. Spooner was at liberty to sell and assign his judgment, and thus place it beyond the reach of the respondents, his judgment creditors. They had the right by proper legal process to secure the appropriation of that property of their judgment debtor to the satisfaction of their own judgment; and the levy upon it by execution was a proper mode of procedure for that purpose.

It is contended by the appellants that the receivership operated as a prima facie satisfaction of the Spooner judgment, or, perhaps more accurately, to suspend the right to enforce it against the judgment, debtor whose property had thus been taken into the custody of the law for the purpose of satisfying this with other debts. But, although that be true, it is also true that Spooner, or any one who should succeed to his rights under his judgment, was entitled to receive, in due course of the proceedings under the receivership, his proper share of the proceeds of the property taken by the receiver for the purpose (as. must be admitted if the plaintiffs’ contention is true) of satisfying such debts and judgment. If the enforcement of the judgment against the corporation in the ordinary way was suspended, it was only to enable satisfaction of this with other demands to be made, in their proper order, through the receivership. The judgment was neither satisfied nor suspended in any such sense as to debar the holder of it from receiving from the receiver a proper share of the proceeds of the property of the judgment debtor in his hands. The respondents had the right by any proper legal process to secure the benefits of the judgment which otherwise Spooner, or any one to whom he might make assignment, would be entitled to receive.

3. Conceding, as the appellants claim, that the orders above referred to, expressing, also, an intention to assign so much of the judgment as was necessary to satisfy them, were in effect assignments of the judgment pro tanto, we are of the opinion that they were, by force of the statute, inoperative as against the respondents, whose execution was levied on the judgment, they having no notice of such assignments, (assuming that the fact as to notice is material.) The statute (1878 G. S. ch. 66, §§ 282, 283) provides for making a record of assignments of judgments, and declares that, “until so filed, any such assignments shall be void as against creditors levying upon or attaching the same, and as against subsequent purchasers in good faith for value.” There is no reason for restricting the operation of this statute to assignments of entire judgments, leaving assignments of judgments in part, only, unaffected thereby. The reason for the law is applicable in the latter case as well as in the former, and there is nothing in the language of the statute which would justify a distinction.

Judgment affirmed.

(Opinion publi shed 54 N. W. Rep. 372.)