Case ID: wis_156/html/0012-01.html
Source: Caselaw Access Project
Author: {"author": "WiNsnow, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Lauerman Brothers Company, Appellant, vs. Riehl, Garnishee, Respondent.
    
      January 15
    
    February 3, 1914.
    
    
      Fraudulent conveyances: Conditional sales! Chattel mortgages: Stock in trade: Filing statements: Assignment of hook accounts.
    
    1. So far as the rights of creditors are concerned, an agreement by which a stock of merchandise is transferred upon deferred payments, with the provision that the business shall be continued, the stock kept up by new purchases, and the vendor have the title of the entire stock, including the additions, as security for the purchase price, is in legal effect a chattel mortgage and is governed hy the provisions of sec. 23166, Stats., notwithstanding the parties have called it an agreement of eqnditional sale.
    2. Words merely indicating an intention to make a transfer of book accounts at some future time, unaccompanied hy deliv- ■ ery of the hooks or the accounts or hy any other act indicating an intention to relinquish control over the accounts or pass the title to the alleged assignee, did not constitute a valid assignment as against creditors of the assignor.
    Appeal from a judgment of the municipal court of Outa-gamie county: HeNey Kbeiss,, County Judge and Acting Municipal J udge.
    
      Reversed.
    
    Tbe plaintiff sued Komp, a general merchant at Black Creek, Wisconsin, and garnished Riehl. Judgment was rendered against Komp on the main action for $416.73 and costs. The garnishee action was tried hy the court, and the following facts appeared: Riehl originally owned the business afterwards conducted by Komp and transferred the same t'o Komp in December, 1911, under a conditional or executory contract of some nature, which is not in evidence and which provided for payment of the consideration in the future. This contract was never filed, but Komp took possession of the stock and conducted the business until July 9, 1912, when the parties entered into a new arrangement which took the place of the former, and which is claimed by the plaintiff to be a chattel mortgage, and by the garnishee to be an agreement of conditional sale.
    This agreement, after stating the property transferred, the amount of the consideration, and the manner in which payment was to be made in the future, proceeded as follows:
    “Second party agrees to furnish first party a true written statement every three months from the date hereof, of the amount of stock sold and amount purchased and added to the stock and also the amount of outstanding indebtedness against added stock for purchase price.
    “Party of the second part agrees to keep the stock up in proper shape by purchases of new'stock so that the stock shall be at' all times merchantable stock, pay for the same, and keep party of the first part secure.
    “Party of the second part agrees to keep the stock insured in a good insurance company to be named by party of the first' part in the sum of $4,500 and pay the premium with loss, if any, payable to party of the first part, and in the event of second party failing to insure, party of the first part may insure and charge the amount' against the purchase price.
    “Party of the first part agrees not to engage in the shoe or gent’s furnishing business in Black Creek or vicinity during the term of this contract.
    “It is mutually agreed and understood that this is and shall be considered a conditional sale, that the title to this property and all additions thereto during the life of this agreement, and until the full purchase price has been paid, is and shall remain in party of the first part, and upon the failure of the party of the second part to fully carry out any of the agreements and conditions herein, or -at any time party of the second part' deems himself insecure, he may take unquestioned possession of the stock in any manner he may choose.”
    This contract was duly filed in the office of the village clerk, but no statements of sales were ever filed. Komp conducted the business until November 11, 1912, when he absconded and the respondent, Riehl, took possession of the stock and the accounts. Prior to the trial of the garnishment action Riehl had collected $280 on the accounts, and had uncollected accounts still in his possession, but which were collectible, amounting to $150 in value. The garnishee does not claim that Komp at any time delivered to him the accounts or the books of account with words of present assignment or transfer, but simply that Komp said t'o him at one time when he (Riehl) told him (Komp) that he was selling more than he was buying, “I don’t want to beat you in any way; I want to deal fair and square and honest', and I will turn over the book account, which you can holdand at another time, “It is certain we have to carry people here on account; the amount tbe stock is down will be on tbe book account, and I want yon to have tbat for security.” Komp’s sales from July until December, 1912, averaged about $650 per month. Tbe.amount of bis purchases does not appear, but it is certain tbat there were during tbat time considerable quantities of new goods purchased and added to tbe stock, for tbe total amount of stock was not greatly reduced during tbat time. Among such goods were tbe goods of tbe plaintiff,, for which the main action was brought.
    Tbe trial court found tbat tbe conditional sales agreement was valid, tbat tbe accounts were duly assigned to Biehl for value, tbat Biehl was not liable as garnishee, and dismissed tbe garnishment proceedings. Erom this judgment tbe plaintiff appeals.
    Eor tbe appellant there was a brief by Cady, Btrehlow <& Joseph, and oral argument by L. D. Joseph.
    
    
      Francis 8. Bradford, for tbe respondent.
   WiNsnow, C. J.

In this case it is held:

1. So far as tbe rights of creditors are concerned, au agreement by which a stock of merchandise is transferred upon deferred payments, with tbe provision tbat tbe business shall be continued, tbe stock kept up by new purchases, and tbe vendor have tbe title of tbe entire stock, including tbe additions, as security for tbe purchase price, must be held to be in legal effect a chattel mortgage, notwithstanding tbe parties have called it an agreement of -conditional sale; otherwise tbe provisions of sec. 23165, Stats. 1911, might be nullified by tbe parties to every such transaction by simply calling tbe instrument an agreement of conditional sale.

2. No statement' of tbe amount of sales made from tbe stock, tbe amount paid on tbe mortgage debt, and tbe valuation of tbe stock added, having ever been filed by tbe mortgagor in tbis case, as is required, by sec. 2316b, Stats. 1911, to be done every sixty days from tbe date of tbe instrument, tbe lien of tbe mortgagee ceased as to creditors before tbe commencement of tbis action.

3. There was no valid assignment of tbe accounts in tbis case because tbe words relied upon were not words of present transfer, but' merely words indicating an intention to make a transfer at some future time, and were unaccompanied by tbe delivery of tbe books or tbe accounts, or any other act indicating an intention to relinquish the control over tbe accounts or pass tbe title to tbe garnishee. Chapman v. Plummer, 36 Wis. 262.

By the Court. — Judgment reversed, and action remanded with directions to enter -judgment against tbe garnishee in accordance with tbis opinion.