Court Opinion

ID: 8187207
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:09:49.808462+00
Date Added: 2024-06-11T16:40:27.788367
License: Public Domain

The following opinion was filed December 17, 1901:
Oassoday, O. J.
Several objections are made to the judgment. Some of them are questions of fact disposed of by *188the findings supported by evidence. Others are questions of law, or mixed questions of law and fact, requiring consideration.
1. Counsel for the defendants properly contend that, in the absence of a statute giving the right, the assignee, in case of a voluntary assignment for the benefit of creditors, takes no right of action as against previous grantees or mortgagees, other than the assignor himself would have had. Hawks v. Pritzlaff, 51 Wis. 160; Charles Baumbach Co. v. Miller, 67 Wis. 453. But the statute in force at the time this action was commenced declared that:
“In all cases of voluntary assignment for the benefit of creditors made under the provisions of chapter 80 of the re^ vised statutes, the assignee or assignees shall be considered as representing the rights and interests of the creditors of the debtor or debtors making the assignment, as against all transfers and conveyances of property which would be held to be fraudulent or void as to creditors; and shall have all the rights which such creditors would have to bring and maintain an action to avoid such fraudulent conveyances and transfers.” See. 1702a, S. & B. Ann. Stats, (ch. 170, Laws of 1882).
This is conceded, but counsel contends that the section was dropped out of the Statutes of 1898. Those statutes did not go into effect until several months after this action was commenced; and they expressly declare, in effect, that the repeal of a statute should not defeat or impair a right 'of action which had accrued under such statute before the repeal thereof, but that all such rights of action created by or founded on such statute should “be preserved and remain in force notwithstanding such repeal, unless specially and expressly remitted, abrogated or done away with by the repealing statute.” Sec. 4974, Stats. 1898. The same statutes expressly 'declare that:
“The repeal of said acts shall not affect any act done or right accrued or established, or any proceeding, suit or prose*189cution Rad or commenced in any civil case previous to the time when such repeal shall take effect; hut every such act, right or proceeding shall remain as valid and effectual as if the provision so repealed had remained in force; hut the subsequent proceedings in actions or proceedings shall conform to the provisions of these revised statutes when applicable.” Sec. 4980.
The last clause of this section, which required “subsequent proceedings in actions” to conform to the provisions of the new statutes, when applicable, cannot be construed as taking, away the right of action expressly given to such assignee by ch. 170, Laws of 1882 (sec. 1702a, S. & B. Ann. Stats.). We must hold that the plaintiff, as assignee for the benefit of creditors, had the same right to maintain this action that the creditors would have had.
2. It is contended that none of the' indebtedness proved up against ihe estate of George Huntzicker existed at the time of the first alleged fraudulent conveyance. It is conceded that in 1891 or 1892 the Neillsville Manufacturing Company was indebted to the Clark County Bank in a large amount; that at that time Bred Klopf, John G-. Klopf, B. Dangers, C. 0. Sniteman, George Huntzicker, Matthias Ko-pellan, and J. H. Reddon were directors of the manufacturing company, and as such entered into an agreement among themselves to the effect that they should all share alike in the losses of the company, if any occurred; that they should all indorse the notes of the company as they became due, and that, if any of such notes were renewed, each of them would indorse the same, and they also agreed among themselves that they would pay in $1,000 a month toward retiring or paying the notes signed by the company to the Clark County Bank, and by it rediscounted; and that such agreement was made in 1891 or 1892. The court found that the greater portion of the $25,000 proved up against the estate of George Huntzicker was based upon liabilities which *190existed prior to September 9, 1893. That several of the notes so existing in 1891 and 1892 were from time to time renewed, there can be no serious doubt. Thus the note of $5,400, dated March 16, 1895, proved up against the estate by John Gr. Klopf, was the renewal of a loan made by John G-. Klopf to the company, and indorsed by the directors, including George Huntzicker, some three or four years prior to the date of the note, with one year’s interest at eight per cent, added. So it appears that the judgment rendered August 16, 1897, in favor of the Eirst National Bank of Winona, for $7,941.11, was based upon notes which were renewals of prior notes given in 1892 by the manufacturing company to the Clark County Bank, and by it indorsed to the Eirst National Bank of Winona. Such renewals were in no sense a payment of the debt.
“It has been uniformly held in this state that the taking of a promissory note of a debtor does not extinguish the original debt, nor operate as a payment, unless so agreed between the parties.” Matteson v. Ellsworth, 33 Wis. 488; Aultman & Co. v. Jett, 42 Wis. 488; Willow River L. Co. v. Luger F. Co. 102 Wis. 636.
“The mere renewal of a note does not, as between the original parties, affect the essential nature of the transaction represented by it.” King v. Doane, 139 U. S. 166, 172.
3. True, September 9, 1893, George Huntzicker was only liable on such outstanding obligations as indorser or guarantor. But there can be no doubt but that the several holders of such notes and obligations were creditors, within the meaning of the statute which declares, in effect, that every conveyance or assignment of any estate or interest in lands or goods or things in action, or of any rents or profits issuing therefrom, and every charge upon property, made with the intent to hinder, delay, or defraud creditors or other persons of their lawful actions, debts, or demands, shall be void as against the persons so hindered, delayed, or defrauded. Sec. *1912320, Stats. 1898. Thus it was said by tbe supreme court of tbe United States that:
“It is objected that tbe debt bere, at tbe time of tbe conveyances, was not absolute, as it should be in order to predicate fraud concerning it. But a contingent debt, likely to become absolute, and wbicb afterwards does become absolute, is, both on principle and precedent, enough to furnish a motive to make a fraudulent conveyance to binder or avoid its eventual payment. And this may be presumed to have been done here', provided circumstances exist indicative of fraud.” McLaughlin v. Bank, 7 How. 229.
So in New York it was held at an early day that:'
“A party bound by a contract, in virtue whereof be may become liable to tbe payment of money, although bis liability be contingent, is a debtor, within tbe meaning of tbe statute avoiding all gifts, etc., made to delay, binder, or defraud creditors.” Van Wyck v. Seward, 18 Wend. 315.
To tbe same effect, Citizens' Nat. Bank v. Fonda, 41 N. Y. Supp. 112; Moosbrugger v. Walsh, 89 Hun 564; Pennington v. Seal, 49 Miss. 518; Post v. Stiger, 29 N. J. Eq. 554. This court has gone so far as to bold that a conveyance made with intent to defraud subsequent creditors comes within tbe section of tbe statute last cited. Zimmerman v. Bannon, 101 Wis. 412.
4. It is contended on tbe part of the defendants that inv tbe ease at bar there was a failure to exhaust tbe legal remedies against tbe Neillsville Manufacturing Company and tbe cosureties,’ and hence that this action cannot be maintained. Gilbert v. Stockman, 81 Wis. 602; Krouskop v. Krouskop, 95 Wis. 296; French L. Co. v. Thierault, 107 Wis. 627. Tbe claim is that tbe evidence fails to show that collection could not have been made from tbe company. It is undisputed that between December, 1890, and March 1898, thirty-three several judgments were rendered against tbe company. It is stated that tbe company gave tbe Clark County Bank a mortgage on its plant for $35,000 December 7, 1896, to *192secure tbe payment of notes then beld by tbe bank; and that December 11, 1896, Ered KLopf gave tbe bank a mortgage for tbe same amount and to secure tbe same notes. But it appears that there was a prior mortgage on tbe company’s plant, known as tbe “Jessup Mortgage,” wbicb was fore*closed and judgment taken therein, and that tbe factory was finally sold for less than tbe prior liens and tbe mortgage thereon, and tbe mortgage to tbe bank was thereupon released. As to tbe mortgage given by’Ered KLopf, tbe same was subject to a prior mortgage known as tbe “Huntzicker Mortgage,” wbicb was foreclosed, and tbe land covered by that mortgage was sold thereon at sheriff’s sale for $5,541. Tbe only answer to this last statement is that tbe evidence fails to show that such sheriff’s sale was confirmed by tbe court, and that until confirmed it was subject to redemption by tbe bolder of tbe second mortgage, and that tbe mortgage beld by the bank covered some land that the Huntzicker mortgage did not cover. Tbe facts mentioned indicate the financial condition of tbe company for some time prior to tbe commencement of this action. But tbe view we have taken of tbe case renders it unnecessary to discuss tbe mass of evidence in tbe record on tbe subject. It is undisputed that tbe judgment in favor of tbe Eirst National Bank of Winona against tbe Neills-ville Manufacturing Company, George Huntzicher, and tbe other co-sureties, for $7,941.11, was rendered in tbe circuit court for Clark county and docketed therein August 16, 1897. It appears that two payments were made upon that judgment, — one payment of $1,134.44 by tbe defendant therein, C. C. Sniteman, and tbe other payment of $1,134.44 by the defendant therein, B. Dangers, — leaving due and unpaid upon that judgment $5,672.23. It is also undisputed that an execution was issued on that judgment to tbe sheriff of that county September 17, 1897, and that tbe same was returned wholly unsatisfied November 14, 1897. Tbe statute requiring tbe issuance and return of an execution unsatisfied *193in whole or in part as a condition precedent to maintaining a creditors’ bill bas been fully complied with. Sec. 3029, Stats. 1898. That being so, the same statute expressly authorized the judgment creditor to “commence an action against such judgment debtor and any other person to compel the discovery of any property or thing in action belonging to such judgment debtor and of any property, money or thing in action due or held in trust for him, and to prevent, the transfer of any such property, money or other thing in action, or the payment or delivery thereof to such judgment debtor.” In contemplation of the statute, the judgment creditor did exhaust its legal remedies against each and all of the defendants therein, including not only George Huntzicker, but the Neillsville Manufacturing Company and the other co-sureties. There is no attempt to impeach the sheriff’s return on the execution, and it must be regarded as a verity. The mere fact that the Clark County Bank finally paid the amount of the balance of the judgment to' the Eirst National Bank of Winona, to which it was holden therefor, in no way relieved any of the defendants in the judgment from paying the same. As indicated, the plaintiff, as such assignee, represents the creditors, and has the same right to maintain this action that they have or would have had.
5. The findings of the court to' the effect that such conveyances and transfers were made with the intent to hinder, delay, and defraud such creditors, and that the several grantees mentioned participated in such fraudulent intent, is fully sustained by the evidence.
6. So the court was justified in finding that the conveyance of the farm, and the transfer of the personal property thereon, was made in trust for the use of George Huntzicker, to the extent found by the court, and hence contrary to the statute and void. Sec. 2306, Stats. 1898; Grant v. Lewis, 14 Wis. 487; Faber v. Matz, 86 Wis. 370; Stapleton v. Brannan, 102 Wis. 26; Young v. Heermans, 66 N. Y. 374.
*1947. The contention that the vendee, Mary E. Broohs, paid an adequate consideration for the farm and personal property so transferred to her, is without foundation. The value was found to be $12,750. There is evidence that she only gave her father therefor $2,000, and the Superior lots, said to be of little value. It appears from the evidence that George Euntzicher paid $1,500 of the amount so received by him to certain of his creditors at or about the time of the conveyance. He had the legal right at that time, though insolvent, to pay some creditors in preference to others. To the extent that he intended to use and did use the money so received by him to pay creditors, there was no intent to defraud creditors. To do equity between the parties, therefore, we have concluded that the $1,500 should be deducted from the $5,000 which Mary E. and Walter G. Brooks received on account of the mortgage given, by them to Scott, Tiffany & Paul, and which they were adjudged to pay, leaving the true amount to be adjudged against them by reason of that mortgage $3,500, and interest as found. On the same theory, the assignee must convey by quitclaim deed to Mary E. Broohs the lots described in the inventory, as being in East Superior and Nemadji Park’ addition to Superior. '
By the Court. — The judgment of the circuit court is modified to the extent of allowing to Mary E. and Walter G. Broohs the $1,500 as mentioned, and to have conveyed or transferred to her the Superior lots, as stated, and the judgment so modified is affirmed. Costs are to be taxed in favor of the appellants, but only 200 pages of printing the case and briefs are to be allowed.
A motion by the appellant for a rehearing was denied February 18, 1902.