54-9-5. Assignment invalid against creditor of assignor not assenting thereto.

An assignment for the benefit of creditors is void against any creditor of the assignor not assenting thereto, in the following cases:

(1)    If it provides preference or priority to any creditor over any other creditor except as provided in this chapter;

(2)    If it provides for the payment of any claim known to the assignor to be false or fraudulent; or for the payment of more upon any claim than is known to be justly due from the assignor;

(3)    If it reserves any interest in the assigned property, or in any part thereof, to the assignor or for his benefit, before all his existing debts are paid, other than property exempt by law from execution;

(4)    If it confers upon the assignee any power which, if exercised, might prevent or delay the immediate conversion of the assigned property to the purposes of the trust;

(5)    If it exempts him from liability for neglect of duty or misconduct.

Source: CivC 1877, § 2030; CL 1887, § 4663; RCivC 1903, § 2375; RC 1919, § 2048; SDC 1939 & Supp 1960, § 37.5103; SL 1969, ch 162, § 1.

54-9-6. Property exempt from execution--Life insurance--Effect of assignment.

Property exempt from execution, and insurance upon the life of the assignor, to the extent of five thousand dollars, do not pass to the assignee by a general assignment for the benefit of creditors, unless the instrument specially mentions them, and declares an intention that they should pass thereby.

Source: CivC 1877, § 2043; CL 1887, § 4677; RCivC 1903, § 2389; RC 1919, § 2062; SDC 1939 & Supp 1960, § 37.5111.

54-9-7. Inventory required of assignor--Contents--Verification.

Within twenty days after an assignment is made for the benefit of creditors, the assignor must make and file in the manner prescribed by § 54-9-8, a full and true inventory, showing:

(1)    All the creditors of the assignor;

(2)    The place of residence of each creditor, if known to the assignor, or if not known, that fact must be stated;

(3)    The sum owing to each creditor, and the nature of each debt or liability, whether arising on written security, account, or otherwise;

(4)    The true consideration of the liability in each case, and the place where it arose;

(5)    Every existing judgment, mortgage, or other security for the payment of any debt or liability of the assignor;

(6)    All property of the assignor at the date of the assignment which is exempt by law from execution;

(7)    All the assignor's property at the date of the assignment, both real and personal, of every kind not so exempt, and the encumbrances existing thereon, and all vouchers and securities relating thereto, and the value of such property according to the best knowledge of the assignor.

An affidavit must be made by every person executing an assignment for the benefit of creditors, to be annexed to and filed with the inventory, to the effect that the same is in all respects just and true, according to the best of such assignor's knowledge and belief.

Source: CivC 1877, §§ 2034, 2035; CL 1887, §§ 4667, 4668; RCivC 1903, §§ 2379, 2380; RC 1919, §§ 2052, 2053; Supreme Court Rule 618, 1939; SDC 1939 & Supp 1960, § 37.5106.

54-9-8. Recording assignment and filing inventory.

The assignment must be recorded and the inventory filed with the register of deeds of the county in which the assignor resided at the date of the assignment or of the county to which such county is attached for judicial purposes; or, if he did not then reside in this state, with the like officer of the county in which his principal place of business was then situated; or, if he had not then a residence or place of business in this state, with the like officer of the county in which the principal part of the assigned property was then situated. If the assignment is executed by more than one assignor, it must be recorded and a copy of the inventory must be filed with the register of deeds of every county in which any of the assignors resided at its date, or in which any of them, not then residing in this state, had then a place of business.

Source: CivC 1877, §§ 2036, 2037; CL 1887, §§ 4669, 4670; RCivC 1903, §§ 2381, 2382; RC 1919, §§ 2054, 2055; SDC 1939 & Supp 1960, § 37.5107.

54-9-9. Effect of omitting to record--Assignment of real property.

An assignment for the benefit of creditors is void against creditors of the assignor, and against purchasers and encumbrancers in good faith and for value, if the assignment is not recorded and the inventory filed within twenty days after the date of the assignment. Where it embraces real property it is subject to the provisions of law on recording transfers, as well as those of this chapter.

Source: CivC 1877, §§ 2038, 2039; CL 1887, §§ 4671, 4672; RCivC 1903, §§ 2383, 2384; RC 1919, §§ 2056, 2057; SDC 1939 & Supp 1960, § 37.5107.

54-9-10. Assent of creditors necessary to modification of assignment.

An assignment for the benefit of creditors, which has been executed and recorded so as to transfer the property to the assignee, cannot afterward be canceled or modified by the parties thereto, without the consent of every creditor affected thereby.

Source: CivC 1877, § 2046; CL 1887, § 4680; RCivC 1903, § 2392; RC 1919, § 2065; SDC 1939 & Supp 1960, § 37.5109.

54-9-11. Bond of assignee--Amount--Approval of sureties by circuit court--Terms and conditions.

Within thirty days after the date of an assignment for the benefit of creditors, the assignee must enter into a bond to this state, in double the amount of the value of the property assigned, with sufficient sureties, to be approved by the judge of the circuit court for the county in which the original inventory is filed, and conditioned for the faithful discharge of the trust, and due accounting for all moneys received by the assignee, which bond must be filed in the same office with the original inventory.

Source: CivC 1877, § 2040; CL 1887, § 4673; RCivC 1903, § 2385; RC 1919, § 2058; SDC 1939 & Supp 1960, § 37.5108.

54-9-12. Disposal or conversion of estate--Authority of assignee.

Until the inventory and affidavit have been made, and the assignment has been duly recorded and the inventory filed, and the assignee has given a bond, an assignee for the benefit of creditors has no authority to dispose of the estate or convert it for the purposes of the trust.

Source: CivC 1877, § 2041; CL 1887, § 4674; RCivC 1903, § 2386; RC 1919, § 2059; SDC 1939 & Supp 1960, § 37.5108.

54-9-13. Assignee takes subject to rights of third parties--Nonliability for acts done in good faith under void assignment.

An assignee for the benefit of creditors is not to be regarded as a purchaser for value, and has no greater right than his assignor had, in respect to things in action transferred by the assignment. He is not to be held liable for his acts done in good faith in the execution of the trust, merely for the reason that the assignment is afterward adjudged void.

Source: CivC 1877, §§ 2033, 2045; CL 1887, §§ 4666, 4679; RCivC 1903, §§ 2378, 2391; RC 1919, §§ 2051, 2064; SDC 1939 & Supp 1960, § 37.5105.

54-9-13.1. Action by assignee against person receiving property of debtor in fraud of creditors.

In addition to those otherwise provided in this chapter, the court shall have power to authorize an assignee to bring an action or special proceeding, which he is hereby empowered to maintain, against any person who has received, taken or in any manner interfered with the estate, property or effects of the debtor in fraud of his creditors and which might have been avoided by a creditor of the assignor and the assignee may recover the property so transferred or its value.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 3.

54-9-13.2. Action by assignee against creditor receiving voluntary transfer from insolvent assignor.

In addition to those otherwise provided in this chapter, the court may authorize an assignee to bring an action, which he is hereby empowered to maintain, against any person, who with reasonable cause to believe the assignor was insolvent as defined in § 54-8A-2, has within four months of the assignment received a voluntary transfer from the assignor of money or property for or on account of an antecedent debt, the effect of which transfer is to enable the creditor to obtain a greater percentage of his debt than some other creditor of the same class, and the assignee may recover the property so transferred or its value. For the purpose of this section a transfer shall be deemed to have been made when it is so far perfected that no creditor having a judgment on a simple contract without special priority (whether or not such a creditor exists) could have obtained an interest superior to that of the transferee therein. A transfer not so perfected prior to the assignment shall be deemed to have been made immediately before the assignment.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 3; SL 1990, ch 30, § 16.

54-9-13.3. Duties of assignee.

It shall be the duty of the assignee to collect and reduce to money the property of the estate, under the direction of the court; to report promptly to the court any claims presented to him which are not provable, or are incorrect or false and shall also report promptly for allowance all claims presented to him which are not disputed; close up the estate as expeditiously as possible; furnish such information concerning the estate as may be requested by parties in interest; keep regular accounts; pay dividends as often as is compatible with the best interest of the estate; make appraisals or in his discretion employ an appraiser or appraisers; and designate and employ auctioneers.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 4.

54-9-13.4. Notice to creditors to present verified claims--Publication.

The judge may, upon the petition of the assignee, authorize him to advertise for creditors not named in the inventory to present to him their claims, with the vouchers therefor, duly verified, on or before a day to be specified in such advertisement, not less than four months from the recordation of the assignment, which advertisement or notice shall be published in at least one legal newspaper, to be designated by the judge, as most likely to give notice to the persons to be served, at least once and such additional times as the judge may direct; the last publication shall be at least one week prior to the date specified.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 5.

54-9-13.5. Contents of creditor's claim--Claim founded upon instrument.

The verified claim of a creditor as provided in § 54-9-13.4 shall set forth whether any, and if so, what securities are held for such claim, and whether any, and, if so, what payments have been made thereon.

Whenever a claim is founded upon an instrument in writing, such instrument, unless lost or destroyed, shall be filed with the claim. After the claim is allowed or disallowed, such instrument may be withdrawn by permission of the court. If such instrument is lost or destroyed, a statement of such fact and of the circumstances of such loss or destruction shall be filed under oath with the claim.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 5.

54-9-13.6. Time limitation on filing creditor's claim.

All claims whether the same be due, not due, or contingent, must be filed within the time limited in the notice as provided in § 54-9-13.4, and any claim not so filed is barred from any further claim against the property assigned. When it is made to appear by the affidavit of the claimant to the satisfaction of the court that he had no notice by reason of being out of the state, it may be filed at any time, before a decree of distribution is entered.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 5.

54-9-13.7. Wages and commissions as preferred claims--Limitation on amount--"Traveling or city salesmen" defined.

In all distributions of assets under all assignments made in pursuance of this chapter, the wages and commissions, not to exceed six hundred dollars to each claimant, which have been earned within three months before the date of the commencement of the proceedings, due to workmen, servants, clerks, or traveling or city salesmen on salary or commission basis, whole or part time, whether or not selling exclusively for the assignor; and for the purposes of this claim, the term "traveling or city salesmen" shall include all salesmen, whether or not they are independent contractors selling the products or service of the assignor on a commission basis, with or without a drawing account or formal contract, shall be preferred before any other debt, except debts due to the United States having a priority under federal law; and should the assets of the assignor or assignors not be sufficient to pay in full all the claims preferred, pursuant to this section, they shall be applied to the payment of the same pro rata to the amount of each such claim.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 8.

54-9-13.8. Sale or compromise of claims or property of estate--Liability of assignee.

The judge may, upon the application of the assignee and for good and sufficient cause shown, and upon such terms as he may direct, authorize the assignee to sell, compromise or compound any claim or debt belonging to the estate of the debtor. But such authority shall not prevent any party interested in the trust estate from showing upon the final accounting of such assignee that such debt or claim was fraudulently or negligently sold, compounded or compromised. The sale of any debt or claim heretofore made in good faith by any assignee shall be valid, subject, however, to the approval of the judge, and the assignee shall be charged with and be liable for, as part of the trust fund, any sum which might or ought to have been collected by him.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 6.

54-9-13.9. Sales at public auction--Procedure for private sales and sales of perishable property.

All sales as provided in § 54-9-13.8 shall be had at public auction unless otherwise ordered by the judge. Upon application to the judge, and for good cause shown, the assignee may be authorized to sell any portion of the estate at private sale; in which case he shall keep an accurate record of each article sold, and the price received therefor, and to whom sold; which account he shall file at once. Upon application by the assignee or a creditor setting forth that a part or the whole of the estate is perishable, the nature and location of such perishable property, and that there will be loss if the same is not sold immediately, the judge, if satisfied of the facts stated and that the sale is required in the interest of the estate, may order the same to be sold with or without notice to creditors.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 6.

54-9-14. Compensation of assignee.

In the absence of any provision in the assignment to the contrary, an assignee for the benefit of creditors is entitled to the same commissions as are allowed by law to personal representatives; but the assignment cannot grant more, and may restrict the commissions to a less amount, or deny them altogether.

Source: CivC 1877, § 2044; CL 1887, § 4678; RCivC 1903, § 2390; RC 1919, § 2063; SDC 1939 & Supp 1960, § 37.5112.

54-9-15. Proceeding subject to order and supervision of circuit court--Rendition of accounts and filing of reports by assignee--Distribution of trust estate.

All proceedings under this chapter shall be subject to the order and supervision of the judge of the circuit court for the county in which such assignment was made. The judge may from time to time, in his discretion, upon his own motion or on the petition of one or more of the creditors, by order, citation, attachment, or otherwise, require any assignee or assignees to render accounts and file reports of his or their proceedings and of the conditions of such trust estate, and may order or decree distribution thereof.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110; SL 1969, ch 162, § 2.

54-9-15.1. Power of court to take and state accounts.

In addition to those otherwise provided in this chapter, the court shall have power to take and state accounts hereunder or to appoint referees to take and state accounts.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 3.

54-9-15.2. Accountants and attorneys appointed by court--Compensation of attorneys.

In addition to those otherwise provided in this chapter, the court shall have power to appoint accountants and attorneys, including attorneys to represent creditors therein and to fix their compensation. Reasonable compensation may be allowed by the court for counsel fees in preparation of the instrument of assignment.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 3.

54-9-16. Accounting of assignee.

After the lapse of six months from the date of filing his bond, the assignee, on motion of any one of the creditors, with ten days' notice, accompanied by an affidavit of the creditor, his agent, or attorney, setting forth his claim and the amount thereof, and that no account has been filed within six months, may be ordered by the circuit court or by the judge thereof, at any place in his judicial circuit, to render an account of his proceedings, within a given time to be fixed by the court or the judge thereof, not to exceed fifteen days.

Source: CivC 1877, § 2042; SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-16.1. Deposit of funds in court for distribution subsequent to discharge of assignee.

If, in his final accounting, the assignee shall set forth that for any cause distribution cannot be made to any creditor or creditors, the court may order the funds due them deposited with the clerk of the court for future distribution upon further order of the court subsequent to the discharge of the assignee.

Source: SDC Supp 1960, ch 37.51 as added by SL 1969, ch 162, § 7.

54-9-17. Removal of assignee by circuit court--Appointment and delivery of property to successor.

The judge of the circuit court may, in his discretion, for cause shown, remove any assignee or assignees and appoint another or others instead, who shall give such bonds as the judge, in view of the conditions and value of the estate, may direct; and such order of removal and appointment shall in terms transfer to such new assignee or assignees all the trust estate, real, personal, and mixed, and may be recorded in the deed records in the office of register of deeds of any county wherein any real estate affected by the assignment may be situated. Such judge may by order, which may be enforced as upon proceedings for contempt, compel the assignee or assignees so removed to deliver all property, money, choses in action, book accounts, and vouchers, to the assignee or assignees so appointed, and to make, execute, and deliver to such new assignee or assignees such deeds, assignments, and transfers as such judge may deem proper, and to render a full account and report of all matters connected with such trust estate.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-18. Removal of assignee by circuit court--Discharge on full accounting and surrender of property to new assignee.

Whenever any assignee so removed shall have fully accounted for and turned over to the assignee or assignees appointed by the judge all the trust estate and made a full report of all his doings, and complied with all orders of the judge touching such estate, he may by order of the judge be fully discharged from all further duties, liabilities, and responsibilities connected with the trust.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-19. Discharge of assignee upon full compliance with trust.

Whenever an assignee has fully complied with his trust, he may by order of the judge be fully discharged from all further duties, liabilities, and responsibilities connected with the trust.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-20. Application of assignee for discharge--Notice by publication.

In either of the cases mentioned in §§ 54-9-18 and 54-9-19 the assignee shall give notice by publication in some newspaper of the county, if there be one printed and published therein, if not, in a newspaper published at the capital of the state, once in each week, for at least three weeks, that he will apply to the judge of the circuit court for such discharge, at a time and place to be stated in such notice, which time shall not be more than three weeks after the last publication of the notice.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-21. Hearing upon application of assignee for discharge--Order requiring the performance of acts not completed--Order of discharge, granting, effect.

If, upon the hearing, the judge shall be satisfied that the assignee is entitled to be discharged, he shall make an order accordingly; or if, in the opinion of the judge, anything remains to be done by such assignee, he may require the performance thereof before making such order. Such order shall have the effect of discharging the assignee and his sureties from all further responsibility in respect to the trust, and such order shall not be refused on account of any failure on the part of the assignee to comply with any formal provision of law, where no loss or damage to anyone shall have occurred through such failure.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.

54-9-22. Federal bankruptcy proceedings, possession of estate taken from assignee--Discharge of assignee on full accounting to trustee in bankruptcy.

Whenever the trust estate shall have been taken out of the hands of the assignee by proceedings in bankruptcy in the federal court, the assignee may in like manner be discharged, upon showing that he has fully accounted to the trustee in bankruptcy, and turned over to him the whole of the trust estate.

Source: SL 1887, ch 8, § 1; SL 1887, ch 9, § 1; CL 1887, § 4675; RCivC 1903, § 2387; RC 1919, § 2060; SDC 1939 & Supp 1960, § 37.5110.