Case ID: wis_89/html/0066-01.html
Source: Caselaw Access Project
Author: {"author": "NewMAN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Sommermeyer, Respondent, vs. Schwartz, Intervener, Appellant.
    
      November 14
    
    December 11, 1894.
    
    (1) Judgment: Record silent as to service: Presumption. (2, S) Debtor- and creditor: Fraudulent conveyance: Husband and wife: AttacN ment.
    
    
      1. In attachment proceedings the judgment roll in the principal action is competent evidence of the plaintiff’s claim, although it fails to show service of a summons. The record being silent, the presumption is in favor of the judgment that lawful process was duly served.
    2. A settlement upon a wife of substantially all the husband’s property, made soon after he had entered into a copartnership for a new enterprise, and intended as a provision against the contingency of ill success in such enterprise, is void as against subsequent creditors of the firm.
    3. A conveyance of property of large value by a husband to his wife to whom he owed a small amount being fraudulent as to creditor» of the husband’s firm, an attachment of the firm property to satisfy a claim of the wife for moneys loaned to the firm out of the proceeds of the property so conveyed to her will not be sustained, as against other firm creditors, even for the amount of the husband’s original debt to her.
    Appeal from a judgment of the circuit court for Eau Claire county: W. F. Bailey, Circuit Judge.
    
      Reversed.
    
    The defendants, Charles W. E. Sommermeyer, Lena Brimi, and Anna Huebner, were copartners, doing business under the firm name and style “ Boston One Price Clothing House.” The plaintiff was the wife of the defendant Sommermeyer. The appellant, Ca/roline Schwartz, was an intervening attaching creditor. The defendant firm became insolvent and failed, owing many and considerable debts, amounting to a large sum over and above the value of their assets. The plaintiff’s action is founded upon an account for moneys loaned to the firm, amounting to $7,611.80. The entire stock of goods of the firm was attached in her action. The defendant ScIvwaHz subsequently attached the same goods for a debt due her from the firm. She afterwards petitioned the court for leave to intervene and defend against the plaintiff’s attachment, and to have it set aside as founded upon a fictitious and collusive claim and a fraud upon her rights. Other subsequently attaching creditors intervened. The court awarded issues for trial: (1) Hid the plaintiff have a valid claim against the defendants, and, if so, for how much? (2) Was the plaintiff’s action fraudulent or void as to creditors? (3) Who is entitled to the proceeds of the sale of the attached property ? '
    There was a trial by the court without a jury, and a finding, in substance, that (1) the plaintiff’s claim was valid and due at the time of the attachment; (2) that the action was not fraudulent or void as to creditors; (3) that the plaintiff was entitled to the fund realized from the sale of the attached goods, except as against the claim of Louis Shakman for $7,095.95; (4) that none of the allegations of fraud or collusion were true; (5) that the conveyances made by the defendant Sommermeyer to his wife, the plaintiff, were made in good faith, when he Avas not insolvent, and not in contemplation of insolvency nor to defraud his creditors. The attached property Avas sold for $8,280, Avhich Avas paid into court to be applied under its order. There are íavo •other attachments Avhich are prior in time to the appellant’s. These are Louis Shakman’s for $7,095.95, and the plaintiff’s, for $7,611.80. The appellant’s claim is for $953. The issues raised by all intervening creditors are embraced in one trial. All the intervening petitions were dismissed upon the merits. The appellant tiled exceptions to the findings, and appealed.
    The plaintiff, to establish her claim, introduced in evidence the judgment roll in her action. The roll contained no proof of the service of a summons. The court ruled that the burden of proof on the question of the validity and amount of the plaintiff’s claim Avas on the defendant, and the case Avas tried in accordance Avith that ruling. It appeared by the evidence that, at the time when Sommer-meyer entered into the copartnership, he undertook to furnish the principal part of the capital of the firm — “from $10,000 to $20,000.” He had not the money, but he OAvned real estate of considerable value, situated in Wisconsin, Minnesota, and Dakota. So, instead of putting in money, he provided a line of credit for the firm with one wholesale dealer, by giving a mortgage on his real estate for $10,000. This was to secure Louis Shakman for such goods as he should sell to the firm. This mortgage was made June 10, 1890. On June 16, 1890, Sommermeyer conveyed all his real estate, subject to this mortgage to Shakman, to one Rathjen, for a nominal consideration, and for the purpose of haying Rathjen convey it to his AArife. October 23, 1890, Rathjen conveyed to the Avife Avithout consideration. This seems to have been substantially all the property Sommer-meyer then owned. Sommermeyer claims that this transfer of tb.e title to tbe lands to his wife was to repay ber for moneys which she had loaned to him, and to provide for her and the family against adverse results of his speculations. The loans from his wife are not very clearly shown or traced. But it appears that she received a small sum (she says $400) from her father’s estate in 1818; that she gave or loaned this to her husband to use in his business; that she kept no account of it; that everything was trusted to her husband, who says that he kept an account of his dealings with her, which does not seem to have been produced. He owed no other debts at the time of the conveyance to her. Some of the lands conveyed to her were sold, and Sommerme;yer applied the proceeds of such sales to the business of the firm, and to the payment of its debts. These moneys constitute her claim against the firm. His wife says he managed all her business and rendered no account to her. The other partners did not understand that they were indebted to Mrs. Sommermeyer for these moneys paid in by Sommermeyer, but supposed that they were a part of the capital which he had agreed to furnish. They did not understand that it created a debt against the firm. And the money so paid in, in all about $1,000, was all of the $10,000 to $20,000 of capital which he ever paid iff. Sommermeyer is insolvent. •
    The appellant proved her claim against the defendant firm by a judgment against them. Her claim was later in its origin than the date of the conveyance of Sommermeyer to his wife. It does not appear that she had knowledge of such conveyance.
    Eor the appellant there was a brief by Wiclchcom <& Farr, and oral argument by James Wickham.
    
    To the point that, the plaintiff’s claim being largely fictitious and intended to defeat just claims of other creditors, her attachment is void m toto, they cited Freiberg v. Freiberg, 14 Tes. 122; Fair-field v. Baldwin, 12 Pick. 391; Page v. Jeioett, 46 N. II. 445; Male v. Cfhcmdler, 3 Mich. 540; Bams v. Eppimger, 18 Cal. 379; Gibbons v. JBressler, 61 Ill. 110; Johnson v. Jleideov-heimer, 65 Tex. 263; Drake, Attachm. §§ 273-289; Wade, Attachm. § 221; Butts v. Beacoch, 23 Wls. 359.
    For the respondent there was a brief by Miller, JVoyes <& Miller, and oral argument by B. K. Miller, Jr.
    
   NewMAN, J.

The judgment roll Ayas competent eAddence of the plaintiff’s claim against the firm, notwithstanding it failed to show service of a summons. It must be presumed that a summons was duly ser\Ted. Where the record of a superior domestic court is silent upon the subject of the service of the process by which the court acquires jurisdiction of the defendant, it is presumed, in faAmr of the judgment, that laAAfful process was duly served. Ely v. Tallman, 14 Wis. 28; Freem. Judgm. (3d ed.), §§ 12A-132, and cases cited.

The plaintiff’s attachment was prior to the attachment by the appellant. Whether her lien upon the attached property shall be postponed to the lien of the appellant’s attachment depends upon the determination of the question Avhether her claim is to be deemed bona fide, or whether it is fraudulent as against the appellant’s claim. Not only is the appellant’s attachment subsequent to the plaintiff’s attachment, but her claim against the defendant is subsequent to Sommermeyer’s conveyance of his lands to his wife. So the question of priority betAveen these two claimants must depend upon the bona fides of the conveyance by Sommer-meyer to his wife. It is evident that the property conveyed Avas greatly disproportioned to the afieged indebtedness to his Avife. The sum alleged to have been loaned was small. The value of the property conveyed Avas relatively large. Only a part of it was sold, out of which the alleged loans Avere made Avhich are the foundation of the plaintiff’s claim. And these did not comprise all the proceeds of those sales, for the plaintiff had and used a part of such proceeds. So tbe conveyance was intended to be not only a repayment of moneys loaned, but in large part a settlement upon tbe wife. It was of substantially all tbe husband’s property. It was .soon after be bad formed a copartnership for a new enterprise. .It was, in part at least, to provide against tbe contingency of ill success in tbe new enterprise. It was intended .as a provision against just what did happen; for Sommer-meyer testifies, in substance, that bis wife bad lost confidence in bis business ability and judgment, by reason of tbe failure of bis enterprises, and that she wanted him at that time to provide for her and for tbe children. This was to ■secure tbe benefit of tbe property to himself and to bis family. No doubt such a conveyance, made for such a purpose, is void, even as against subsequent creditors. E. S. rsec. 2320. It is well settled that a husband may make a voluntary settlement upon bis wife, not unreasonable in ■amount in vie^ of bis property and circumstances at tbe time, where there is no fraudulent intention in fact, which cannot be impeached by subsequent creditors. Pike v. Mills, 23 Wis. 164. In that case tbe settlement was of tbe homestead and a small tract of land outside, leaving tbe husband worth at least $75,000 above bis debts. Tbe settlement was upheld. But if tbe settlement is unreasonable in amount in view of tbe property and circumstances of tbe husband, or if there is an intention in fact to defraud existing creditors, or creditors whose rights are expected to shortly supervene, or creditors whose rights may and do so supervene, tbe settler purposing to throw tbe hazards of business in which he is about to enga,ge upon others, instead of honestly holding his means subject to the chances of those adverse results to which all business enterprises are liable, the settlement is impeachable by a subsequent creditor. Case v. Phelps, 39 N. Y. 164; Smith v. Vodges, 92 U. S. 183; Fisher v. Lewis, 69 Mo. 631; Black v. Nease, 37 Pa. St. 438.

The evidence very clearly shows that the plaintiff’s claim to tbe fund in court is fraudulent as against tbe appellant’s claim. .As against tbe appellant’s claim, sbe is not entitled to tbe fund. Besides, in a contest between tbe husband’s creditors and tbe wife, transactions between ber and ber husband are to be. closely scrutinized. Breslauer v. Geilfuss, 65 Wis. 377. Nor can tbe plaintiff’s attachment be sustained in part, for so much as involves her husband’s original debt to ber. Sbe has involved that with a clabn which is fraudulent. Tbe good and bad cannot be separated. The fraud corrupts and destroys tbe whole. Fairfield v. Baldwin, 12 Pick. 388.

By the Court.— Tbe judgment of tbe circuit court is reversed, and tbe cause remanded with directions to enter judgment in accordance with this opinion.