Backhaus v. Sleeper

• Decision Date: 06 April 1886
• Parties: BACKHAUS v. SLEEPER, GARNISHEE, ETC.
• Court: Wisconsin Supreme Court

66 Wis. 68

27 N.W. 409

BACKHAUS

v.SLEEPER, GARNISHEE, ETC.

Supreme Court of Wisconsin.

Filed April 6, 1886.

Appeal from circuit court, Jefferson county.

Joseph Bursinger owned a brewery and other property in Watertown. October 6, 1883, he gave to the Wisconsin National Bank, of that place, a chattel mortgage on personal property described, to secure three notes: one being a note payable to Magdalena Drechael or order, for $1,000, dated June 9, 1881, due June 12, 1883, with interest at 8 per cent., with warrant of attorney to enter judgment at date of mortgage; one note being payable to Watertown Elevator Company, (Sleeper Bros.,) or order, for $3,000, dated August 21, 1883, due three months after date, with interest at 8 per cent.; the other note being a judgment note, payable to said bank or order, for $3,384.20, dated October 6, 1883, due one day after date, with interest at 8 per cent.; making the principal sum thereby secured $7,384.20,--but which mortgage was not filed until October 29, 1883. Judgment was entered on said note of $1,000, and said note of $3,384.20, October 31, 1883. October 15, 1883, Joseph Bursinger and wife conveyed three lots to his son-in-law, Fred. C. Werner, for $400. October 16, 1883, Joseph Bursinger and wife gave a mortgage on real estate described to his son-in-law, Fred. C. Werner, to secure the payment of three notes of even date, amounting to the sum of $12,012.23. October 29, 1883, Joseph Bursinger gave to his son-in-law, Fred. C. Werner, and his book-keeper, Fred. Hoeper, a chattel mortgage on property described, to secure the payment of two notes executed by him on that day, and each with interest at 7 per cent., and due January 29, 1884, one for $3,486, to said Werner, and one for $6,240, to said Hoeper, making the amount thereby secured $9,726. November 5, 1883, Joseph Bursinger gave to said Hoeper a judgment note for $6,240, due on demand, and upon which judgment was entered on the same day for $6,245, upon which execution was issued and levied on the brewery on that day; also a judgment note to said Werner for $3,486, due on demand, upon which judgment was entered on the same day for $3,491, upon which execution was issued and levied on the brewery on that day. November 5, 1883, Joseph Bursinger gave to Otto Auers a judgment note for $1,507.50, due one day after date, upon which judgment was entered on that day for $1,523. November 5, 1883, Joseph Bursinger made a general assignment to the defendant, Jonas H. Sleeper, and his successors in trust, in effect, of all and singular his property and effects of every kind and description, real, personal, and mixed, (except such as was exempt,) the same being more fully and particularly enumerated and described in an inventory under the oath of said “assignor, to be filed by” him, “in the office of the clerk of the circuit court of” Jefferson county, “within ten days after the execution of said assignment.”

The assignment was executed on the day named, with two witnesses, of which F. Hoeper was one; and on the same day the assignee accepted the same, and gave a bond, with two sureties, in the penal sum of $26,000, with that amount verified by said assignor and Hoeper as “the whole amount of the nominal value of the assets,” and which bond was at the same time approved by the commissioner. November 14, 1883, there was filed with said clerk an inventory of the property and assets of said Joseph Bursinger, and a list of his creditors, verified and certified to be correct by said assignor and assignee, from which it appeared that his total indebtedness was $112,047.82. This included $2,900 to his son, Ferdinand; $13,486 to his son-in-law, Werner; $7,700 to his book-keeper, Hoeper; also an inventory of personal property claimed to be exempt; also an inventory of personal property valued at $9,455.30, incumbered by the chattel mortgage executed October 6, 1883, to the bank, for $7,385.20, with interest, which in the recapitulation was deducted from the property covered by the mortgage, leaving, as there said, “assignor's interest, $2,010.20;” also an inventory of personal property, valued at $12,000, incumbered by chattel mortgage executed October 29, 1883, to Werner and Hoeper, for $9,755, with interest, which in the recapitulation was deducted from the property covered by the mortgage, leaving, as there said, “assignor's interest, $2,246.40;” also an inventory of real property not exempt, valued at $40,000, incumbered by mortgages, one to Stricknor for $14,000, and one to Ahrenberg for $3,000, amounting to $17,630, which in the recapitulation was deducted from the value of the property covered by the two last-named mortgages, leaving in said real estate, as there said, “assignor's interest, $22,370;” also inventory of real estate not exempt, valued at $1,350, incumbered by mortgage to Fuchs for $1,200, with interest, which in the recapitulation was deducted from the value of the property covered by that mortgage, leaving therein, as there said, “assignor's interest, $108;” also an inventory of book-account, amounting to the nominal sum of $3,541.28, making the assignor's interest in the property not exempt, after deducting from its value the amount of the several mortgages as aforesaid, and as there said: “Total net valuation of assets, $30,275.80.” The above facts appear in the record, and are undisputed. Other facts appear which are noticed in the opinion of the court.

The trial court found, among other things, in effect, that the assignment was filed in the clerk's office November 6, 1883, and that on the same day the “assignee took possession of the property so assigned,” under and by virtue of the assignment; that the inventory of assets and lists of creditors were duly verified, certified, and filed; that all the property of the assignor omitted from the inventory was so omitted by mistake, and that all errors therein, if any, were by mistake; that any creditor omitted, and all errors in the list, were by mistake; that the assignment was made in good faith, and with no intent to hinder, delay, or defraud creditors; that the garnishee summons was served on the defendant, Jonas H. Sleeper, November 28, 1883; that all the property of the assignor he then held was under and by virtue of said assignment; and that he was not then indebted to the assignor, and had none of the property in his possession or under his control.

As conclusions of law, the court found, in effect, that the assignment was valid; that the assignee held the property assigned in trust for the benefit of the assignor's creditors; that the plaintiff had no cause of action against the defendant as garnishee; that the latter was entitled to judgment against the former for his costs and disbursements, and the same was ordered accordingly. From the judgment entered thereon the plaintiff brings this appeal.

Frisby & Gilson for appellant.

Hall & Skinner, for respondent.

CASSODAY, J.

The plaintiff was a creditor of the assignor. The amount of his claim was nearly $4,000, due on express contract. He commenced this action at the time named against the assignor, and also the assignee as garnishee. The garnishee answered the assignment, and claimed the assignor's property under it. The liability of the garnishee depends entirely upon the validity of that assignment. Such validity is the only question here involved. Undoubtedly the assignee must be considered in a position to represent the rights and interests of creditors as against all transfers and conveyances fraudulent or void as to them. Chapter 170, Laws 1882; Batten v. Smith, 62 Wis. 97, 98;S. C. 22 N. W. Rep. 342. He had the right to bring and maintain actions to avoid such fraudulent conveyances and transfers the same as creditors formally could have done. Id. These things are, in effect, re-enacted in section 2, c. 349, Laws 1883. By that act every execution levy under judgment confessed, or entered upon judgment note, and every sale, mortgage, hypothecation, lien, or other security made, given, or executed by an insolvent debtor, within 60 days prior to the making of any such assignment, and in contemplation thereof, or of insolvency, is void and of no effect, in case the person benefited thereby, or receiving such mortgage, pledge, lien, or other security, knew or had reasonable cause to believe, such debtor insolvent. Id.

True, as this court has heretofore indicated, the manifest purpose of these enactments was to uphold general assignments, and to prevent all preferences (except for labor) through the acting agency of the debtor, either by direct or indirect...