Case Name: Hunt v. Bode, Assignee, et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1902-05-13
Citations: 66 Ohio St. 255
Docket Number: 
Parties: Hunt v. Bode, Assignee, et al.
Judges: Williams, C. J., Btjrket, Spear, Davis and Shauck, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 66
Pages: 255–275

Head Matter:
Hunt v. Bode, Assignee, et al.
Transfer of warehouse receipt or chose in action — Valid without actual delivery — As collateral security for loan — Pledgor requests first pledgee to transfer security to second creditor— Assignment of pledgor within ninety days after transfer of security — Not fraudulent — Application of Sec. 6348, Rev. Stat.
1. A written pledge or transfer of an interest in warehouse receipts, or choses in action to secure a debt, is valid, without actual or manual delivery, where such receipts or choses in action are being held by another creditor on pledge as collateral security for a loan of money made by him to the same pledgor, or transferer, the second pledge or transfer being equivalent to actual delivery of the property pledged or transferred; and a request by the pledgor or transferer to his first pledgee, that when his debt is paid he deliver the collateral to his other creditor, constitutes sufficient possession of the collateral by such other creditor.
2. If the pledgor or transferer file a deed of assignment within ninety days after making such pledge or transfer to secure the second creditor, the same will not be deemed and held to be fraudulent and void as to the assignee under the provisions of Sec. 6343, unless the pledge or transfer was in contemplation of insolvency; or, with a design to prefer one or more creditors to the exclusion in whole or in part of others; or, with intent to hinder, delay or defraud creditors.
(Decided May 13, 1902.)
Error to the Circuit Court of Hamilton county.
The controversy between these parties was first litigated in the court of insolvency of Hamilton county, and from its judgment and orders an appeal was taken to the court of common pleas, where the case was tried by that court on an agreed statement of facts, from which statement it appears, that H. F. Stothfang, prior to April 16, 1898, had for several years been indebted to one Dibowski, for borrowed money, in the sum of one thousand dollars for which he held the promissory note of said H. F. Stothfang. On April 16, 1898, Stothfang paid to Dibowski the interest due, and gave a new note for the principal sum, due in one year, signed by -himself, F. H. Stothfang and Louisa Stothfang, and before delivery it was endorsed by defendant in error, Henry Dieckmann. This note was not paid when it matured, and after being protested for non-payment, Dibowski threatened to bring suit against the makers and endorser, and to prevent suit against him, and to take up the note on which he was liable as endorser, by a mutual arrangement between all the parties, defendant in error Henry Dieckmann, in satisfaction of the former note, gave his individual note to Dibowski for the one thousand dollars due one year after date with six per cent, interest per annum, and secured its payment by mortgage on real estate. This note and the mortgage are dated May 12, 1899. As a consideration for the giving of said note and mortgage by Dieckmann to Dibowski, H. F. and F. H. Stothfang executed and delivered to Dieckmann the following instrument:
“$1,000.00. Cincinnati, May 12th, 1899. One year after date we promise to pay to Henry Dieckmann or order, one thousand dollars, for value received, payable at the Atlas National Bank, with interest at six per cent, per annum, having deposited or pledged as collateral security for the payment of this note the same warehouse receipts for whiskey now in the pos session of the Atlas National Bank and pledged with «aid bank as collateral security for loans or their renewals of said loans, and after the payment of said loans or their renewals to the Atlg,s National Bank, then the balance of,said warehouse receipts are to be held by the said Henry Dieckmann as collateral secure ity to his note. And we hereby give to the holder hereof full power to sell- or collect at his expense all or any portion thereof, at any place, either in Cincinnati or elsewhere, at public or private sale, at holder’s option, on the non-performance of the above promise, and at any time thereafter, and without advertising the same or otherwise giving to him any notice. In case of public sale the holder may purchase without being liable to account for more than the net proceeds of said sale. (Signed) H. F. Stothfang, F, H. Stotjp fang.”
The Atlas National Bank, on the 15th day of May, 1899, was served with a copy of the above instrument as shown by the following writing:
“Cincinnati, Ohio, May 15th, 1899. The Atlas National Bank, City. Dear Sirs: I attach hereto a copy of a promissory note given on May 12th, 1899, to Henry Dieckmann and signed by myself and brother. The note explains itself. You are to keep possession of the warehouse receipts and the insur¿nce policies for the swhiskey which you have as collateral security for loan to me and after these loans are fully paid up to you, the balance of the warehouse receipts are to be turned over to Henry Dieckmann or to' O. J. Renner, his attorney, to be held by .them as collateral security for the note hereto-attached. Tim insurance policies on this whiskey are also to be turned over when your claim i,s fully paid.Yours very truly, H. F. Stothfang;”.....:■•■■■■
H. F. Stothfang for a year or more, prior to the transaction, was in partnership with his brother, F. H. Stothfang, and they did business under the firm name of H. F. Stothfang & Brother, but said partnership was dissolved and H. F. continued the business, assuming its liabilities and taking its assets.
At the time of the execution of the note signed by Dieckmann and prior thereto H. F. Stothfang was insolvent, and so continued insolvent, but Dieckmann had no knowledge of said insolvency.
On the the 7th of August, 1899, H. F. Stothfang made a general assignment under the laws of the state of Ohio for the benefit of creditors, to August H. Bode, and the deed of such assignment was filed in the court of insolvency of Hamilton county on the same day, and the assignee accepted the trust and duly qualified.
The warehouse receipts representing said whiskey, being then in the possession of the Atlas National Bank, were sold by the assignee and realized about $2,300, leaving in the hands of the assignee at the time, a balance of $1,300, after having paid the Atlas National Bank in full under order of the insolvency court.
A further fact agreed upon is:
“That at the time the assignee sold the whisky under the order of the insolvency court, the bank having the warehouse receipts in its possession declined to turn them over to the assignee until the bank had its claim paid. The bank further declined to turn them over to the assignee until Dieckmann or his counsel consented to it, the bank having accepted the notice sent by Dieckmann’s counsel. Dieckmann’s counsel declined to consent to the turning over of the warehouse receipts at that time, and immediately went to the insolvency court, and that court made an entry before the warehouse receipts were turned over to the assignee and purchaser, reserving all the rights of Dieckmann.*’
Whatever right Dieckmann had or has were preserved by an entry made by the court of insolvency, a copy of which is as follows:
“It appearing to the court that upon a lot of 165 barrels of whiskey sold by the assignee herein, the Atlas National Bank, Henry Dieckmann and C. Roden - berg claim liens for $1,063, $1,025 and $248, respectively, and it further appearing that the warehouse receipts to said whiskey are in the possession of said Atlas National Bank and that it becomes necessary to deliver said warehouse receipts to said assignee to complete said sales made by him under the order of this court, it is hereby adjudged that said delivery shall in no wise prejudice and interfere with the rights that said Dieckmann and Rodenberg had previous to said sale and delivery in said goods or warehouse receipts, or to the right to the possession thereof, and that all their rights are fully preserved.”
Dieckmann claims to be entitled to payment in full of his note with interest out of the proceeds of the sale of said warehouse receipts in the hands of the assignee, which claim to be so paid is denied by the creditors of H. F. Stothfang, claiming that Dieckmann is entitled to share in the proceeds only as a general creditor, and that the above arrangement between him and the assignor is void under section 6343, Revised Statutes.
On these facts the court of common pleas found for Dieckmann, and made an order for his payment accordingly. A new trial was refused and error was prosecuted in the circuit court, where the judgment of the common pleas was affirmed, and August Hunt, a creditor of the assignor prosecutes error in this court, to obtain a reversal of the judgments of the lower,courts.
Mr. Charles F. Williams; Mr. Henry Woost and Mr. C. A. Croom, for plaintiff in error.
Two points are raised for decision in this cause, via.: When the liability of a surety attaches, and the construction of section 6343, Revised Statutes.
It is of the essence of a pledge that there shall be an actual delivery of the thing pledged to the pledgee. Collins v. Buck, 63 Me., 459; Beeman v. Lawton, 37 Me., 543; Casey v. Cavaroc, 96 U. S., 467.
The securities claimed, to have been pledged to the Credit Mobilier remained in the possession and control of the bank until the time of its failure. Up to that time they were not in such condition as the law requires for a pledge. The placing them in such a condition afterwards, by Cavaroc’s removing them from the bank at the time of its failure, was, in fact, an attempt to create a pledge then, by assuming the possession requisite thereto. Casey v. Bank, 96 U. S., 492; Bank v. Stubbs, 6 Mass., 422; Jones on Pledges, Sections 23 and 26.
The delivery must be such as would be requisite to transfer the property in the same chattels in case of a sale of them. Jones on Pledges, Sec. 23; Pinkerton v. Railroad, 42 N. H., 424; Corbett v. Underwood, 83 Ill., 324.
If for any reason the article sold is not quite identic fled, or something more remains to be done for the purpose of completing, separating, or identifying, etc., then the sale is not quite complete and title does not pass, because there is no equivalent to delivery in contemplation of law. Ormsbee v. Machir, 20 Ohio St., 295; Woods v. McGee, 7 Ohio (pt. 2), 127; Oil Co. v. Hughey, 56 Pa. St., 322; Phelps v. Willard, 16 Pick., 29; Golder v. Ogden, 15 Pa. St., 528.
An agreement to pledge is not good against the pledgor’s assignee, in insolvency. Nisbit v. Bank, 12 Fed. Rep., 686; Seymour v. Hendree & Smalley, 54 Fed. Rep., 563; Christian v. Railroad, 133 U. S., 233; Insurance Co. v. Olmsted, 33 Conn., 476.
An agreement for a pledge raises no privilege. Casey v. Schuchardt, 96 U. S., 494.
“The surety is an original promisor and debtor of his principal from the beginning.” Brandt on Suretyship, sections 1 and 207; Bump on Fraudulent Conveyances, section 503; Jones v. Leeds, 10 Dec., 173; 7 N. P., 480; McCann v. Hill, 85 Ky., 574; Corn v. Sims, 3 Metc., 391; Thompson v. Heffner, 11 Bush, 353.
A stranger endorsing his name in blank on the back of a negotiable promissory note, before, or at the time it takes effect, is presumed to be a surety for its payment and is held accordingly. Bright v. Carpenter, 9 Ohio, 139; Seymour & Co. v. Mickey, 15 Ohio St., 515; Ewan v. Brooks-Waterfield Co., 55 Ohio St., 596.
A party bound by a contract whereof he may. become liable to the payment of money, although his liability may be contingent, is a debtor within the meaning of the statute avoiding all grants made to hinder or delay creditors. Young v. Heermans, 66 N. Y., 374; Van Wyck v. Seward, 18 Wend. (N. Y.), 375; Shontz v. Brown, 27 Pa. St., 123; Cook v. Johnson, 12 N. Y. Eq., 52; Bibb v. Freeman, 59 Ala., 612; Jenkins v. Lockhard, 66 Ala., 381.
It follows logically from the foregoing that the person to whom such debtor is bound is a creditor.
A surety, though his liability is only contingent, is a creditor of his principal. Atkinson v. Tomlinson, 1 Ohio St., 237; Harkrader v. Leiby, 4 Ohio St., 602.
“It has been determined that the statute (act of March 14, 1838 — Swan’s Statutes, section 717) does not affect a mortgage, given by an insolvent debtor to secure the debt of one of his creditors, or to indemnify Mm against a liability, by endorsement or otherwise, assumed for the benefit of the debtor; although it may have the effect to prefer such creditor, and deprive others of the ability to obtain satisfaction of their claims.” Pendery v. Allen, 50 Ohio St., 121; Sargent v. Salmond, 27 Me., 539; Choteau v. Jones, 11 Ill., 300, approved in Hatfield v. Merod, 82 Ill., 113; Howe v. Ward, 4 Greenl. (Me.), 195; Carlisle v. Rich, 8 N. H., 44; Rice v. Southgate, 16 Gray, 142.
A surety is a creditor of his principal from the time the obligation is entered into. Sargent v. Salmond, 27 Me., 539; Thompson v. Thompson, 19 Me., 244; Sexton v. Wheaton, 1 American Leading Cases (Hare & Wallace’s 5th ed.), 42; Williams v. Banks, 11 Md., 242; Pennington v. Seal, 49 Miss., 525.
The date when the agreement or obligation comes into existence governs. Van Wyck v. Seward, 18 Wend., 375; Woodbridge v. Gage, 68 Ill., 157.
A transfer of money or property by an insolvent principal to his surety is an attempt to prefer. Elliott v. Harris, 9 Bush (Ky.), 237.
Firm property appropriated to the individual debts of the members of the firm, with the consent of all the partners, and in the absence of fraud, becomes the individual property of the partner or partners. Sigler v. Bank, 8 Ohio St., 511; Miller v. Estill, 5 Ohio St., 508; Saunders v. Reilly, 105 N. Y., 12.
If a creditor goes beyond collecting or securing his own debt and attempts to secure any other or becomes bound to account to, or is trustee for any other creditor, the statute enlarges the trust so as to destroy his preference, and causes the fund or property inure to the benefit of all creditors equally. Bloom v. Noggle, 4 Ohio St., 45; Dickson v. Rawson, 5 Ohio St., 218.
There was no valid pledge of the receipts to Henry Dieckmann, and consequently he can not claim a preference.
The delivery must be sufficient to transfer the property in case of a sale of the same chattels. Jones on Pledges, Sec. 23; Pinkerton v. Railroad, 42 N. H., 424.
Where part of an undivided lot of goods is sold, and an order is given for its delivery, there must be some act of selection under the order before the delivery is complete and the title passes. Ormsbee v. Machir, 20 Ohio St., 295; Rochester Oil Co. v. Hughey, 56 Pa. St., 322; Phelps v. Williard, 16 Pick. (Mass.), 29; Golder v. Ogden, 15 Pa. St., 528.
A contract for the sale of an unascertained balance would never in law pass title to goods, consequently by applying the rule stated above there was here no sufficient delivery to perfect a pledge. Therefore, since Henry Dieckmann did not have the receipts by virtue of a valid pledge, he can not claim a lien on them, and can not hold them as against the general Creditors of Henry P. Stothfang.
Having neglected to take a mortgage and have it filed for record within the prescribed time, the defendant in error, Henry Dieckmann, can not claim a lien, since those who seek a privilege under' the statute must fully comply with its provisions. Cross v. Carstens, 49 Ohio St., 548.
Again the debt was not created simultaneously with the giving of the security.
A third person who signs his name in blank on the back of a promissory note, before the same is delivered to the payee, becomes a surety of the maker for the payment of the note. Ewan v. Brooks-Waterfield Co., 55 Ohio St., 596, and a surety, though his liability is only contingent, is a creditor of his principal; Atkinson v. Tomlinson, 1 Ohio St., 237; Sargent v. Salmond, 27 Me., 539; Hatfield v. Merod, 82 Ill., 113; Rice v. Southgate, 16 Gray (Mass.), 152. And he becomes a creditor of his principal at the time the obligation is entered into. Thompson v. Thompson, 19 Me., 244; Woodbridge v. Gage, 68 Ill., 157.
A surety taking security for his indemnity subsequent to his becoming bound as such, is not protected by the exception in the statute in favor of a creditor whose debt is created simultaneously with the execution of (the mortgage. McCann v. Hill, 85 Ky., 574.
Messrs. Renner, Gordon & Renner, for defendant in error.
First — Was there a valid pledge?
The warehouse receipts having been pledged to the Atlas National Bank to secure the payment of its claim, and secondly, to Henry Dieckmann to secure the payment of his claim for the purpose of protecting Dieckmann, Dieckmann had constructive possession of the warehouse receipts, and the bank, having accepted the written notice of the pledging of said ware^ house receipts to said Dieckmann, acted simply as the agent of Dieckmann.
Jones on Pledges, Sec. 34.
Second — Do sections 6343 and 6344, Rev. Stat. apply?
We contend that the relation of debtor and creditor between Stothfang and Dieckmann did not arise until Dieckmann, at Stothfang’s request, executed and delivered to Dibowski his note and mortgage in part payment of the note on which Dieckmann had been surety, and that the pledging of the warehouse receipts to Dieckmann was simultaneous with the arising of said relation of debtor and creditor, and that therefore said sections do not apply.
A surety does not become a creditor of his principal until he pays the note endorsed by him. Lumber Co. v. Guy, 40 Conn., 163.
The quotation in brief for plaintiff in error, cited from Brandt on Suretyship, Sec. 1, “The surety is an original promisor and debtor of the principal from the beginning,” should read, “He is an original promisor and debtor from the beginning,” leaving out the words “of his principal,” which are not in said section, can not be put there by implication, and their slipping into said citation in the brief of plaintiff in error can only be explained by^his counsel.
The quotation defines the relation between the surety and creditor and has no reference to the relation between the surety and principal. '
So a conveyance made by the principal to the surety in consideration of an agreement by the surety to pay the debt, is valid as against the creditors of the principal. Brandt on Suretyship, Sec. 247; Kendall v. Baltis, 26 Mo. App., 411.
And in the case last cited it was held that such conveyance was good even though the principal may have intended to hinder and delay creditors, provided the surety did not participate in his principal’s intent.
When does the liability of a surety arise?
It is, in all cases, essential, before the surety can be called upon to fulfill his engagements, that the principal debtor shall have made default. Thus, if the alleged default were owing to the creditor’s misconduct, the surety will not be held liable. Again, if the principal debtor has not made default at all, the surety is not liable. DeColyar’s Law of Guarantees, and Principal and Surety (2 Eng. ed.), p. 146.
It is admitted that the security was taken by Dieckmann in good faith, without knowledge of the insolvency of his principal at the same time that he took up the note upon which he was surety. There was no contemplation of insolvency, or design to prefer a creditor, with intent to hinder, delay or defraud creditors as contemplated by said sections.
These two sections contained substantially the same provisions against sales and transfers by insolvent debtors as those contained in the sections as amended, and the courts have uniformly held that a creditor may secure himself when, in doing so, he deals with an eye single to his own interest. Pendery v. Allen, 50 Ohio St., 121; Cross v. Carstens, 49 Ohio St., 548; Stothfang, In re, 11 Circ. Dec., 103; 20 C. C. R., 275.
The case of Jones v. Leeds, 10 Dec. 173; 7 N. P., 480, cited by counsel for plaintiff in error, sustains our contention, for in that case the court gave the grantee a lien on the property conveyed to her, for the amount paid by her on account of her grantor’s liabil-' ity, and held the conveyance fraudulent- only as to the amount in excess, the consideration for the conveyance being held inadequate.

Opinion:
Price, J.
There are two questions presented in the record for our determination, which are:
1. The Atlas National Bank, having in its possession certain warehouse receipts for a stock of whiskey given it by H. F. Stothfang in pledge as collateral for a loan of money made to him by the bank, could the pledgor make another valid pledge or a transfer to Dieckmann of an interest in the same receipts, without any change of possession, as collateral security for a débt due him from the pledgor?
2. If the pledgor filed a deed of general assignment for the benefit of creditors within ninety days after the making of the second pledge or transfer, is such pledge or transfer void' under the provisions of section 6343, Revised Statutes?
The facts agreed upon show that H. F. Stothfang, for several years prior to the transaction involved, had been indebted to one Dibowski in the sum of one thousand dollars and accruing interest, and that on the last note for this debt, Dieckmann had become liable as surety or endorser, and when it matured Stothfang neglected payment. To avoid threatened suit Dieckmann satisfied the note of Dibowski by giving his individual note secured by a mortgage on his real estate. At the same time Dieckmann took the note of H. F. Stothfang, which contains a provision, that after the debt which he owed the Atlas National Bank was paid out of certain warehouse receipts for whiskey, which it held in pledge as security for the debt, the balance of said receipts were to be held by said Dieckmann as collateral security to his note, and in this provision, power of public or private sale was conferred upon him. This instrument was executed and delivered on the 12th day of May, 1899, and on the 15th day of May, a copy of the above note and provision was served on the bank, with a notice that it should keep possession of the warehouse receipts pledged with it as collateral security for its claim against the pledgor (Stothfang), and that after it was fully paid, the balance of the warehouse receipts were to be turned over to Henry Dieckmann, who is one of the defendants in error. This notice and copy of the note given him were received, accepted and acted upon by the bank, and it was holding those receipts when Stothfang assigned on the 7th of August, 1899. It seems no question was raised by the assignee or any creditor as to the right or lien of the Atlas National Bank, but it is insisted that the attempted transfer or pledge to Dieckmann is invalid, because he never was in possession of the receipts, or the whiskey represented by them.
On this branch of the case it may be remarked, that delivery of the property pledged is generally essential to a valid pledge, and it is equally true that to make a valid sale or transfer of any species or article of personal property, a delivery of the property sold or transferred is necessary, and to this extent the authorities cited by counsel for plaintiff in error may be approved. But it does not follow that actual or physical delivery should always accompany the sale or transfer, and this is also true as to the pledging of choses in action or other kinds of personal property. The delivery in some cases may be symbolical, such as the handing over the writing which constitutes the title to the property, just as was done in this case, to secure the Atlas Na tional Bank for the money it had loaned to Stothfang. He delivered to the bank, not the one hundred and sixty-five barrels of whiskey, but the warehouse receipts for the same, which were its muniment of title and control of the property they represented. And when the pledgor desired to secure the payment of the note held against him by Dieckman, he executed and delivered to him the transfer of all interest in the receipts which would remain, after the bank's claim should be satisfied. This transfer was not strictly a pledge, but an assignment and transfer of the stated interest in the warehouse receipts; but if it is desired that we call it a pledge, as has been done by counsel, we still observe, that constructive possession in the second pledgee would be sufficient, if the intent to deliver such possession is clearly apparent. It is the application of the familiar rule, that the transfer is complete and delivery made, when the owner has done all that he can do in the premises, and has given such possession to the pledgee or transferee as the nature of the property and its situation will permit. In this case Stothfang owned a valuable equity' in the warehouse receipts held by the bank, as their sale afterwards made manifest, and it was such interest in them that could be made the subject of sale and transfer, and even pledge, and certainly Stothfang gave to Dieckmann possession of all interest in and' title to the receipts which would remain after the debt due the bank was satisfied. This was all the delivery that could then be made, and it was at least a constructive delivery, and this we think meets the demands of the law. In section 297 of Story on Bailments, the author, on the subject of pledges, says:' "It is of the essence of the contract, that there should be an actual delivery of the thing to the pledgee. Until the delivery of the thing; the whole rests in an executory contract, however strong may be the engagement to deliver it, and the pledgee acquires no property in the thing. What will amount to a delivery of the thing is, in many cases, a matter of law. There need not be an actual manual delivery of the thing. It is sufficient if there are any of those acts or circumstances, which, in construction of laio, are deemed sufficient to pass the possession of the property. Thus, goods at sea may be passed in pledge by a transfer of the muniments of title; as by a transfer of the bill of lading, or by a written assignment thereof. So goods in a loarehouse may be transferred by a symbolical delivery of the keys thereof
In the case of Wilson v. Little, 2 Comst., 443, the court of appeals of New York held: "Possession of the property is essential to the existence of a pledge, but the possession may be according to the nature of the subject. Where the property is not capable of manual delivery and possession (shares of stock in an incorporated company), a pledge may be created by a written transfer thereof
And on page 447, that court says: "There seems to be no reason why any legal or equitable interest whatever in personal property may not be pledged, pro-Added the interest can be put, by actual delivery or written transfer, into the hands or within the power of the pledgee, so as to be made available to him for the satisfaction of the debt. Goods at sea may be passed in pledge by a transfer of the muniments of title, as by written assignment of the bill of lading. This is equivalent to actual possession, because it is a, delivery of the means of obtaining possession."
The ease of Tuxworth v. Moore, 9 Pick., 347, is also in point. See also Whitaker v. Sumner, 20 Pick., 399. These are but a few of the* many decided cases to the same effect. Another view of the facts in this case may be justified. When the bank received the notice appearing in the record, it acted upon it, and in so doing became the agent of Dieckmann for the purposes specified, and its possession might be regarded as the possession of Dieckmann, and thus satisfy the legal requirement as to delivery.
Was the pledge or transfer void because of the provisions of section 6343, Revised Statutes, as amended in 1898? As a construction of that section is involved, it is well that it appear in this opinion. It reads:
"Every sale, conveyance, transfer, mortgage or assignment, whether made in trust or otherwise, by a debtor or debtors, and every judgment suffered by him or them, and act or device done or resorted to by him or them in contemplation of insolvency, or with a design to prefer one or more creditors to the exclusion in whole or in part of others, and every sale, conveyance, transfer, mortgage or assignment made or judgment suffered by a debtor or debtors, or procured by him or them to be made, in any mannerj with intent to hinder, delay or defraud creditors, shall be declared void as to creditors of such debtor or debtors, at the suit of any creditor or creditors, as hereinafter provided, and shall operate as an assignment and transfer of all the property and effects of such debtor or debtors, and shall inure to the equal benefit of all creditors of such debtor or debtors in proportion to the amount of their respective demands, including those which are unmatured.
"And every such sale, conveyance, transfer, mortgage or assignment made, and every such judgment suffered, and every such act or device done or re sorted to, by any debtor or debtors, in tbe event of a deed of assignment being filed within ninety (90) days after the giving or doing of such thing- or- act, shall be conclusively deemed and held to be fraudulent and shall be held to be void as to the assignee of such debtor or debtors, where upon proof shown, such debtor or debtors was or were actually insolvent at the time of the giving or doing of such act or thing, Whether he or they had knowledge of such insolvency or not.
"Provided, that nothing in this section contained shall-vitiate or affect any mortgage made in good faith to secure any debt or liability created simultaneously with such mortgage, if the same be filed for record in the county wherein the property is situated, or as otherwise provided by law, within three (3) days after its execution, and where upon foreclosure or taking possession of such property the mortgagee fully accounts for the proceeds of such property."
The pledge or transfer to Dieckmann was made on the 12th day of May, 1899, by H. F. Stothfang, and he filed a deed of assignment on the 7th of August oí the same year which was within ninety days after the making of the pledge or transfer. Notwithstanding this fact, and the language of section 6343, Revised Statutes, the transactions of the 12th of May are not necessarily void. There still may be valid sales, conveyances and transfers of property made, and which will not be affected although the seller or transferrer may file a deed of assignment within ninety- days thereafter. The clause of this section, and which is an important part of the amendment of the original section, provides that, "every such sale, conveyance, transfer made by any debtor, or debtors, in the event of a deed of assignment being filed within ninety days after the giving or doing of such thing or. act, shall be conclusively deemed and held to be fraudulent, and shall be held to be void as to the assignee of such debtor or debtors, where upon proof shown, such debtor or debtors was or were actually insolvent at the time of the giving or doing of such act or thing, whether he or they (the debtor or debtors) had knowledge of such'insolvency or not."
It will be seen that the word "such" among the first words of the addition to the. original section, fills an important and determinative office in the construction of what follows it. It relates back to the preceding paragraph of the section wherein is provided what sales, transfers shall be declared void as to creditors of such debtor or debtors, at the suit of any creditor or creditors; and the sales and transfers which may be so declared void at the suit of the creditors, are such as were made in contemplation of insolvency, or with a design to prefer one or more creditors to the exclusion in whole or in part of others; and every sale, conveyance, transfer with intent to hinder, delay or- defraud creditors. "Such" sales, conveyances, transfers, etc., as are thus enumerated, shall be declared void at the suit of a creditor. And it is "such" sales, conveyances, transfers, etc., as above enumerated that shall be conclusively deemed fraudulent and void as to the assignee, if the assignment is made within ninety days after such sale, conveyance, transfer, etc. In order to warrant any other construction, we must eliminate and wholly disregard the word "such," which seems to have been purposely used by the legislature and not through accident or mistake. That word brings the class of acts and things done as set out in the original, and which is yet the principal provision on the subject, down to the new declaration made by the amendment concerning them, and says: "every such sale, conveyance, transfer in the event of a deed of assignment being filed within ninety days shall be conclusively deemed and held to be fraudulent," etc.
We have no right or authority to despise or disregard this significant word, but must construe the section with it performing its legitimate function; and if such construction tends to render the amendment of 1898, somewhat unproductive of intended or desired results, it is not the fault of the court, as it is not the law-making power.
Therefore, if the sale or conveyance or transfer was not in contemplation of insolvency; if it was not made Avith intent to hinder, delay or defraud creditors, or with a design to prefer one or more creditors to the exclusion in whole or in part of others, the transaction will stand in a suit brought by a creditor; and such sale, conveyance or transfer will also stand, although made within ninety days next preceding the filing of a deed of assignment, by the maker of the sale, conveyance or transfer. This conclusion rests upon the ground that the transactions were in good faith, and without the dishonest or fraudulent motive and intent which are the basis of an action to avoid them. The legislature in this part of the law regulating the acts of insolvent debtors and providing a mode of administering their estates, did not intend by the amendment to the section under consideration, to enact a system of bankruptcy, but rather attempted to provide a rule of proof in such cases, as is shown by the entire amendment, because the sales, conveyances and transfers that are "conclusively deemed and held to be fraudulent," where an assignment follows within ninety days thereafter, are only such sales, conveyances and transfers, etc:, as are condemned in the main provision of the section, but proof must appear to show that "the debtor or debtors was or were actually insolvent at the time of the act done," whether he or they (the debtor or debtors) had knowledge of such insolvency or not.
It seems clear, therefore, that the transfer or pledge by Stothfang to Dieckmann is not void because it was made within ninety days preceding Stothfang's assignment, but that proof was necessary to show that such transfer was made in contemplation of insolvency; or with a design to prefer one or more creditors to the exclusion in whole or in part of others; or with intent to hinder, delay or defraud creditors, inasmuch as it is such sales, conveyances, transfers, that fall within the ninety day clause.
The record in this case shows none of the foregoing facts requisite to avoid the pledge or transfer. It is true Stothfang was insolvent when he made the pledge to Dieckmann, but of this, the latter had no knowledge. There is no finding or fact in the record which brings the case within the section as we construe it, and as no fraud, or intent to prefer, hinder or delay, is shown, we will not presume either.
On both questions we approve of the judgment of the circuit court and it is affirmed.
Affirmed.
Williams, C. J., Btjrket, Spear, Davis and Shauck, JJ., concur.