Case Name: Monroe E. Smith et al. v. George S. Bowen
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1897-04-21
Citations: 51 Neb. 245
Docket Number: No. 7042
Parties: Monroe E. Smith et al. v. George S. Bowen.
Judges: 
Reporter: Nebraska Reports
Volume: 51
Pages: 245–247

Head Matter:
Monroe E. Smith et al. v. George S. Bowen.
Filed April 21, 1897.
No. 7042.
1. Insolvency: Preferring Creditors. An insolvent debtor may lawfully secure a portion of his creditors to the exclusion of the others, if in so doing he acts in good faith and without a fraudulent intent.
2. Attachment: Dissolution: Review. An order dissolving an attachment made on conflicting evidence will not be disturbed.
3. Chattel Mortgages: Excessive Security. The disproportion between the value of chattels mortgaged and the amount of the debt . secured is not a basis for presumption of fraud.
Error from the district court of Greeley county. Tried below before Thompson, J.
Affirmed.
Charles B. Keller, T. J. Doyle, and J. R. Hanna, for plaintiffs in error.
M. B. Gearon, J. R. Swain, and Heald & Leavens, contra.

Opinion:
Norval, J.
Plaintiffs brought an action against the defendant upon an account for merchandise, an attachment was obtained, and certain property was seized thereunder as belonging to the defendant. A motion to vacate and discharge the attachment was filed, which motion was supported by affidávits and other testimony denying the grounds set up in the affidavit upon which the same was issued, and resisted by testimony submitted by plaintiffs in the form of affidavits, depositions, and oral proofs. Upon the hearing the motion was sustained, and the order dissolving the attachment has been brought to this court for review by appropriate proceedings.
While the affidavit for attachment alleged several grounds for granting the writ, but one of them is relied upon in this court, namely: "That the defendant sold, conveyed, or otherwise disposed of his property with the fraudulent intent to cheat or defraud his creditors, or to hinder or delay them in the collection of their debts." The following facts are undisputed: On the 7th and 8th days of August, 1893, the defendant was and for some time prior thereto had been engaged in the mercantile business and also in the practice of medicine in Greeley Center. D. R. Pomroy managed the store for him, the defendant devoting his time and attention to the practice of his profession. On said dates he executed chattel mortgages upon his stock of goods and store fixtures aggregating $5,443.50, as follows: C. J. McGuire, $1,000; E. F. Cashman, $500; M. H. Nugent, $1,500; D. R. Pomroy, $1,500; J. H. Bowen, $500; Yoorheis & Miller, $540; C. B. Rouse, $472; M. Anderson & Co., $131.50. The last mortgage was likewise secured by defendant's book accounts. The approximate cash value of the property mortgaged equaled; if it did not exceed, the aggregate amount of the mortgages. It is conceded that some of the mortgages are bona fide. The defendant, under oath, denied each averment of fraud contained in the affidavit on which the attachment issued, and unequivocally stated that each mortgage was given to secure an actual preexisting indebtedness, except the McGuire mortgage, which was given to secure a present loan of $600 and a debt then past due. The defendant, as to some of the mortgages, especially those executed to Cashman and Pomroy, is corroborated by the testimony of the mortgagees. If Bowen's testimony is true, he acted in good faith and without any intent to defraud his creditors in executing the mortgages. He had a right to secure a part of his creditors to the exclusion of the others, if he acted in good faith and without any fraudulent purpose. (First Nat. Bank v. Lowrey, 36 Neb., 290; Costello v. Chamberlain, 36 Neb., 45; Kilpatrick-Koch Dry Goods Co. v. McPheely, 37 Neb., 800; Meyer v. Union Bag & Paper Co., 41 Neb., 67.) The question of fraud is one of fact. The evidence adduced by plaintiff was sufficient to have justified the attachment, but the trial court thought otherwise, and its decision being based upon conflicting evidence, it will not be molested.
It is argued tliat tlie mortgage of Bowen to McGuire is fraudulent and void, because it was tbe first mortgage executed, and covered property largely exceeding in value tbe debt thereby secured. This was tbe only mortgage given on August 7, 1893, all the others being given on tbe succeeding day. Tbe disproportion between tbe value of tbe mortgaged chattels and tbe amount of debt secured does not raise'a conclusive presumption of fraud, but is mere evidence tending to prove fraud, to be considered in tbe light of surrounding circumstances. (Kilpatrick-Koch Dry Goods Co. v. Strauss, 45 Neb., 793; Grand Island Banking Co. v. Costello, 45 Neb., 119; Dayton Spice-Mills Co. v. Sloan, 49 Neb., 622.) It cannot be determined as a matter of law that tbe McGuire mortgage was fraudulent and void. Tbe order dissolving tbe attachment is
Affirmed.