Case ID: wis_68/html/0196-01.html
Source: Caselaw Access Project
Author: {"author": "'ORToh, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Baum and others, Respondents, vs. Bosworth and others, Garnishees, etc., Appellants.
    
      January 14
    
    
      February 1, 1887.
    
    
      flj Debtor and creditor: Fraudulent conveyance: Chattel mortgage. (%) Evidence of value: Reversal of judgment.
    
    1. The evidence in this case shows, among other things, that a wholesale mercantile firm, to secure a debt due from an insolvent retail dealer, took a mortgage of his entire stock in trade and fixtures (being everything he had not exempt from execution) worth nearly three times the amount of the debt; that nominally the mortgagees took possession and placed the debtor’s brother in charge of the goods, but in fact the debtor attended to the business much as before, making sales as usual and taking goods from the stock for his . own consumption, the mortgagees furnishing more goods to keep up the stock; that the mortgagees never asked or received an accounting of the goods sold from the mortgaged stock; that after about three months, the other creditors becoming pressing, the mortgagees had the property sold at auction on one day’s notice, bidding it in themselves, and again placed the debtor in charge of the business; that the goods mortgaged were never inventoried; that since the auction sale a large part of the debt to the mortgagees has been paid, but there has never been a full settlement showing what goods have been sold or what the balance due is. Held, that the mortgage was void, as having been given with intent to hinder and delay other creditors.
    
      2, A witness was allowed to testify to his opinion of the value of a stock of goods, after he had stated that he made no particular examination of them. He was fully cross-examined and gave the reasons for his opinion. The goods had never been invoiced, and ..none of the other witnesses on either side knew much, if anything, more about the goods. Held, that the testimony could not have misled the jury or prejudiced the appellants.
    APPEAL from the Circuit Court for Door County.
    The facts are sufficiently stated in the opinion.
    The cause was submitted for the appellants on briefs by Winfield Smith, and for the respondents on the brief of Turner dc Timlin.
    
    To the point that the transaction in question was fraudulent and the chattel mortgage void, counsel for the respondents cited Anderson v. Patterson, 04 Wis. 557; Smith v. Welch, 10 id. 91; Grant v. Lewis, 14 id. 487; Wait on Eraud. Conv. 198, 257.
   'ORToh, J.

There was an execution for $408.78, in favor of the respondents and against one William Yoight, in the hands of the sheriff unsatisfied, and appellants were summoned as garnishees, and answered that they had no money or other property in their hands belonging to said execution defendant, and that they were not indebted to him in any sum whatever. The respondents formed an issue on said answer, and the case was tried by a jury, and a verdict was rendered for the respondents, against said appellants as such garnishees, for the sum of $429, and judgment entered thereon, from which this appeal is taken.

The only exception taken to the ruling of the court was to allowing the witness Scott, the sheriff having said execution in his hands, to testify to his opinion of the value of the stock of goods, after he had stated that'he made no particular examination of them. He was very fully cross-examined as to his knowledge, and gave the reasons for his opinion, and the stock was never invoiced, and all the other witnesses on both sides had very little, if any, more knowledge of the particulars of the stock than he had, and such was the only evidence of its value in the case. We do not think that the jury could have been misled, or the appellants prejudiced, by his evidence.

The main ground of attack upon the judgment is that the verdict was contrary to the evidence. The defendant William Yoight was a merchant at Sister Bay, in Door county, and had purchased goods of the appellants, as the firm of Bosworth dh Sons, of the city of Milwaukee, to the amount of $862.60. On the 6th day of August, 1884, this indebtedness was put in the form of three notes, of $200, $300, and $362.60, payable in sixty days and in three months, at nine per cent, interest, and a mortgage was executed by the said Yoight to the, appellants on his said stock of goods at Sister Bay to secure the same, and about the 30th day of October said stock was taken by the said appellants on said mortgage and sold at public auction, to themselves, for $600. The respondents predicated their claim against the appellants on the ground that said mortgage was void as to creditors because made and taken to hinder, delay, or defraud the creditors of said William Yoight, and this was the issue tried by the jury, upon which the verdict was found against the appellants.

' From an examination of the evidence, we are satisfied that there was sufficient evidence to warrant the jury in finding that said mortgage was made at least to hmder or delay other creditors of Yoight, of their lawful actions, damages, forfeitures, debts, or demands, and that was sufficient to avoid it as to the respondents. We certainly cannot find any clear preponderance of the evidence against the verdict. ’ One Qotlieb Yoight, the brother of William, owned the store, and had purchased quite a large quantity of goods from the appellants, and settled up his accounts with them previous to March, 1883, and turned over to William at that time the stock that was left and the business, and the appellants commenced selling William goods on credit, and changed the heading of their books by writing “ W.” in the place of “ Gf.” William had very little, if any, ready means, and he continued to make purchases of them and of other merchants on credit, and to make sales, and did a very fair business for a country merchant, until said mortgage was placed upon his entire stock in trade and the fixtures of his store, in August, 1884 He had no other property not exempt from execution, and he had become indebted in large sums to other creditors, which he was unable to pay, many of which went into judgments soon after said mortgage was given, and executions thereon were returned unsatisfied and no property found. He was grossly insolvent when said mortgage was given. Can it be possible that none of the appellants made any inquiry into his circumstances, and did not know that he was greatly in debt and insolvent? They did not all testify in the case, and we cannot but think that, as good business men as they undoubtedly were, they had sufficient knowledge of William’s circumstances to make them anxious, at least, to obtain security for their claim. They took a mort-’ gage upon everything he had liable to execution, and all the other creditors were held off. The value of the property mortgaged was nearly three times the amount of their 'debt. When the mortgage was given they, sent an agent to Sister Bay, and he, ex industria, went through the form of taking possession of the stock and store, and ostensibly placed Gotlieb Voight, who lived- at Hedge-hog Harbor, about ten miles distant, and engaged in other business there, in possession of the same for the purpose of continuing the business, and before the 30th day of October, when said goods were sold at auction, or the balance of them, sales were continued to be made out of the stock in the same way as formerly, and the appellants furnished the concern more goods to keep up the stock, and none of said sales for nearly three months were ever accounted for in any way, and the appellants received only sufficient during this time to pay for the new goods so furnished, and they have never asked for an accounting for the sales so made out of the mortgaged stock,,and they do not yet know the amount thereof. Gotlieb did not personally attend to the business, and only occasionally visited the store. It seems, according to the testimony of William, that Gotlieb appointed a little girl, their niece, who lived with and worked for William in a room adjacent to and connected with said store, as his agent to sell goods and to take general charge of the business, and she did so when William was absent, but when he was present he made sales and attended-to the business as usual. lie lived with this little girl and kept house in the same building as the store, and was a single man, and he took tea, coffee, sugar, and tobacco and other goods from the stock to live on in the mean time.'

In this way the business was so conducted, and to those who visited the store William appeared to be doing business as usual, until executions began to press upon him and other creditors became clamorous for their pay, when, about the 30th day of October, the same agent of the appellants appeared again at Sister Bay, and again took possession of the remnant of the stock, and on one day’s notice had it sold, and bid it off for the appellants for $600, there being no other bidder present. There never was, from first to last, any inventory made to determine what was mortgaged or sold. As soon as sold, William was again placed in possession of the store and stock, and continued to do business and sell therefrom as before, but ostensibly as the agent of the appellants, and there has been paid, in cord-wood received for goods since that time, about $100 on the notes given, and William has considerable cord-wood yet on hand, and, so far as appears from tbe case, tbe business at tbe store bas continued very much as formerly, only it is supposed tbe stock mortgaged bas all been sold out. There bas never been a full and final settlement between tbe appellants and William, in order to ascertain wbat real balance of tbe debt remained unpaid t>r what goods bad been sold and for wbat. Tbe agent testified that “he did not know wbat goods-were left with William, and he would have to trust bis bpnesty for that.” When, by tbe evidence for tbe plaintiff, it appeared that tbe stock mortgaged was worth at least $2,000, William Voigbt testified on behalf of the defendant that bis brother Gotlieb owned at least half of it, when he had already testified that be owned the stock and mortgaged tbe whole of it. His testimony was not very clear or reliable, on account of its frequent contradictions. Tbe mortgage was upon tbe whole stock in bulk, without specification, and so tbe sale was made of what there was left of it.

Ho not these facts show an intent on tbe part of tbe appellants to so take tbe mortgage and proceed under it as to enable William Yoight to continue'on in bis business as a merchant and to live on its profits, and bold off other creditors, and finally trust to William’s integrity in managing it to some time get their debt discharged ? This mortgage and tbe proceedings under its protection have certainly bad tbe effect to enable William to continue bis business for tbe sole benefit of himself and tbe appellants, and to hinder and delay tbe other creditors. If such be tbe legitimate effect, it must be presumed that such was tbe design. Who knows or can know that tbe sales during tbe three months between tbe giving of the mortgage and tbe public sale were not sufficient to have paid the appellants’ claim? There was no account of these sales ever kept or rendered or asked for, and all tbe time tbe appellants were ostensibly conducting tbe business through their agent, Gotlieb Yoight. Was this fair, or a fraud on creditors? It would seem that the appellants bad unreasonably, unnecessarily, and indulgently delayed, through this pretext or contrivance, the collection of their own claim, for the purpose of hindering and delaying other creditors. Mr. Justice LyoN said in Anderson v. Patterson, 64 Wis. 557: “ The conclusive inference from these facts is that there was an implied agreement or understanding between the parties, when the mortgage was executed, that the mortgagor might deal with the propert}^ as he did. Were such not the understanding, it is incredible that the mortgagee would have stood quietly by, and witnessed the misaispropriation of the property and the consequent destruction of his security, without remonstrance or objection.” The appellants not only did all this, but furnished the mortgagor, from time to time, more goods to continue the business with. If this transaction can be supported, then there can scarcely occur a case where the parties designed and intended to hinder or delay other creditors, for the circumstances leading to such a conclusion are most unusually strong and conclusive. See cases cited in respondents’ brief.

By the Court.— The judgment of the circuit court is affirmed.