Can Creditors Seize Property Held by an Assignee?
A local court ruling limits the ability of mortgagees to foreclose while a property is under the control of an assigned administrator.
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A decision on an interesting point was delivered by Judge Langley yesterday in Daniel Kelleher's suit against Rivers Bros. and Sheriff Woolery. The facts of the case are that B. W. Kilber, who kept a picture store on the corner of Columbia and Third streets, became involved and assigned for the benefit of his creditors. Rivers Bros. were creditors, and their claim was secured by a mortgage upon the property. Upon Kilber's assignment, Rivers Bros. took no steps to foreclose the mortgage until after Kelleher's appointment as assignee. They then attempted to foreclose by notice of sale and put the sheriff in possession. The assignee then moved for a restraining order, and the motion came up before Judge Langley yesterday afternoon, who held that the assignee was an officer of the court, and that his possession could not be disturbed by a foreclosure by notice of sale on the part of a secured creditor whose mortgage was prior to the assignment.
“The assignee was an officer of the court, and his possession could not be disturbed by a foreclosure by notice of sale.”
This ruling highlights the complex legal protections surrounding insolvency and bankruptcy. Even today, the rights of creditors to seize assets during bankruptcy proceedings remain a critical and often litigated aspect of Seattle's business and real estate law.
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