Court Opinion

ID: 6605756
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:12:02.134153+00
Date Added: 2024-06-11T15:58:10.688823
License: Public Domain

Lyon, J.
The appellants intervened in the attachment suit of the respondents Landauer and Michelbacher alohe, for the purpose of obtaining the money made by the sheriff *439upon their execution. No relief is demanded against the other attaching creditors, and they are strangers to this proceeding. For this reason certain averments in the petition, affecting them alone, have been omitted from the foregoing statement of facts.
The petition is prolific in general charges of fraud and collusion, but when fairly analyzed it amounts to nothing more than a charge that the debtors, Abraham and Rukeyser, instigated and caused to be commenced the four attachment suits of November 1, 1886, and that, being insolvent, they did so for the purpose of preferring the attaching creditors at the expense of their other creditors; and that, by mutual consent, an action was soon after instituted by one partner against the other for a dissolution of the copartnership, and the appointment of a receiver therein. There is no charge in the petition that the claims of the attaching creditors were not honest claims against the debtors, or that there was any secret trust created in favor of the debtors. The general charges of fraud and collusion in the petition have no significance, unless supported by the facts stated therein. As was said by this court in Sup’rs Kewaunee Co. v. Decker, 30 Wis. 634 (quoted and approved in Riley v. Riley, 34 id. 372): “A general charge that a party acted fraudulently, falsely, or wrongfully, or that he made fraudulent representations or statements, amounts to nothing; there must be a specification of facts to justify it. It is at most but a mere inferential statement, too vague and uncertain to apprise the opposite party of what is meant to be proved, in order to give him an opportunity to answer or traverse it, or to inform the court, whose duty it is to declare the law arising upon the facts.”
It is not necessarily fraudulent or unlawful for an insolvent debtor, or one in failing circumstances, to prefer one or more of his creditors to the exclusion of others, unless it be done in a voluntary assignment for the benefit of creditors, *440or within sixty days before the malting of such an assignment. In Lord v. Devendorf, 54 Wis. 491, this court had under consideration a voluntary assignment by an insolvent for the benefit of creditors, in which a portion of the creditors of the assignor were preferred. This was before the enactment of ch. 349, Laws of 1883, prohibiting such preferences. In the opinion by Mr. Justice Cassoday in that case it is said: “ In the absence of any statute to the contrary, there can be no question but that an insolvent debtor may pay one creditor in money or property in preference to another. Spring v. S. C. Ins. Co. 8 Wheat. 268. This right of the debtor to prefer results from the absolute ownership of property. Brashear v. West, 7 Pet. 608. This absolute ownership implies the absolute right of disposition. In the absence of the bankrupt law, or any statute to the contrary, there can be no doubt but that an insolvent debtor, when assigning his property for the benefit of his creditors, may, in good faith, prefer one or more to others.”
If the demands of the preferred creditors are honest, and there is no reservation or trust in favor of the debtor, the preferences are not fraudulent, notwithstanding the attachment suits may have been instigated or commenced by the debtors, if they were afterwards adopted or ratified by the creditors named in the writs. Bayley v. Bryant, 24 Pick. 198. In this case, however, although the debtors may have advised and instigated the suits, they were actually commenced by the attaching creditors. Hence, in the present case, the attachment of the respondents is valid, and they are entitled to the money awarded them by the order of the court from which this appeal is taken, unless the acts of the debtors charged in the petition, as before stated, amount to a voluntary assignment for the benefit of their creditors.
Manifestly, the petition was drawn with a view of making a case within the rule of Winner v. Hoyt, 66 Wis. 239. In that *441case “ chattel mortgages and assignments of accounts, transferring the entire property of insolvent debtors to certain of their creditors, with the intent that one of such creditors, for himself, and as agent and trustee for the others, should take immediate possession, and convert such property into money,- and divide the same pro rata among such favored creditors, are held to have been, in effect, a general assignment with preferences, and void as to the other creditors.” That case, and many others in this court and elsewhere, establish the right of a debtor in failing circumstances to prefer certain of his creditors by sale of property by chattel mortgage, by confession of judgment, or in any other manner, except by voluntary assignment for the benefit of creditors, or within sixty days before such an assignment. In Winner v. Hoyt, Mr. Justice Taylor dissented from the judgment, holding that the transactions in that case did not amount to a voluntary assignment for the benefit of creditors, and hence that the preferences created by the debtors were valid. On all other questions the members of the court were agreed.
In the present case, the debtors did not dispose of all their property by consenting to the attachment suits; neither was it all seized by virtue of such attachments, or sold upon the executions issued upon the judgments thereafter obtained. The record in the action for a dissolution of the partnership shows that there still remained a large amount of outstanding obligations due the debtors, not disposed of by them, and not interfered with by the attaching creditors, but which remained subject to be applied by the court as required by law. Neither was any trustee for the parties provided for or appointed. In these material particulars the case differs from that of Winner v. Hoyt, and they take it out of the rule of that case.
"We conclude, therefore, that, upon the allegations of the petition, the preferences created in favor of the attaching *442creditors were without fraud, and did not amount to a voluntary assignment for the benefit of creditors, and hence that the same were valid. It is scarcely necessary to add that the appellants had no right to traverse the affidavits for attachments in the other suits. That is a privilege given by statute to the attachment debtors alone. Howitt v. Blodgett, 61 Wis. 376; Rice v. Wolff, 65 id. 1; Keith v. Armstrong, id. 225.
The petition herein is in the nature of a pleading, and, because it fails to state or suggest facts showing that the petitioners have a paramount right to the money in controversy, we think the court did not err in denying the prayer of the petition, and awarding such money to the respondents.
By the Court.— The order appealed from is affirmed.