Barth v. Graf

• Decision Date: 01 November 1898
• Citation: 76 N.W. 1100,101 Wis. 27
• Parties: BARTH v. GRAF ET AL.
• Court: Wisconsin Supreme Court

101 Wis. 27

76 N.W. 1100

BARTH

v.GRAF ET AL.

Supreme Court of Wisconsin.

Nov. 1, 1898.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Suit by John Barth, as receiver, against John Graf and others. From a decree for defendants, plaintiff appeals. Reversed.

This is a contest for priority between attaching creditors of real estate. The plaintiff, claiming title under a sheriff's deed based upon a junior attachment, followed by a judgment, execution, and sale, brings this bill in equity to restrain the defendants from making sale of the real estate under an execution and judgment based upon a prior attachment, and to set aside the levy under that attachment and the lien of such judgment as a cloud upon the plaintiff's title. The facts in regard to the respective claims are to the effect that July 11, 1893, Koetting was cashier of the South Side Savings Bank; that he was at the time heavily indebted to the bank, and grossly insolvent; that, as trustee under the will of one Shepardson, he filed a bond in favor of the Shepardson estate, for $164,000; that the several defendants in this action, except Isenring, the sheriff, signed that bond as sureties of Koetting; that thereupon and about that date, Koetting received from the estate $38,275.62, and deposited the same in that bank; that July 21, 1893, the bank suspended, and Koetting absconded; that July 24, 1893, the plaintiff was appointed receiver of that bank; that July 26, 1893, the defendants in this action, as such sureties, commenced an action against Koetting, and obtained an attachment upon an affidavit of the defendant Peter Barth, to the effect that Koetting was indebted to the plaintiffs therein in the sum of $56,272.52, as near as might, be over and above all legal set-offs, and that the same was due upon an express contract, and that Koetting absconded with intent to avoid service of a summons and attachment on the real estate in question. The complaint therein was not made until August 18, 1893, nor filed until August 29, 1893, and alleged, in effect, such insolvency of Koetting, and that the same was known to himself, but unknown to such sureties, the appointing of Koetting as such trustee, the giving of such bond by Koetting as principal, and by the plaintiffs therein as sureties, and contained the further allegation that, at the time of so signing the bond as sureties, Koetting “covenanted and agreed with the plaintiffs, and each of them, that, in consideration of the plaintiffs becoming such sureties on said bond, he (the said defendant) would indemnify and save harmless the said plaintiffs, and every of them, from and against any liability upon said bond, or growing out of the signing thereof,” and prayed judgment against Koetting for $40,000 and costs; that August 21, 1893, Koetting entered his appearance in said cause, and waived service of any further process upon him, and consented to the entry of judgment therein in favor of the plaintiffs for the amount claimed in the complaint; that judgment was accordingly entered therein for that amount August 29, 1893; that August 10, 1893, and after the attachment of the defendants, but before judgment therein, the plaintiff, John Barth, as such receiver, commenced an action against Koetting, and upon his affidavit, to the effect that Koetting was indebted to him, as such receiver, in the sum of $109,482.54, with interest from July 1, 1893, over and above all legal set-offs, and that the same was “due upon implied contract,” and that Koetting had absconded, obtained an attachment, and attached the real estate in question; that the complaint therein alleged, in effect, the suspension and failure of the bank, the appointment of the plaintiff as such receiver, and his acceptance and qualification as such; and that Koetting, as managing officer of the bank, and knowing all the facts, had since 1886, by himself, and by and through one Jacob Wuster, an irresponsible person, fraudulently drawn money from the bank to the amount of $109,225.46, and used and lost the same in speculating on the board of trade, and thereby caused the property and assets of the bank to be illegally and unlawfully converted to his own use, and thereby became and was indebted to the bank and to the plaintiff, as such receiver, in the sum mentioned, and prayed judgment accordingly; that November 3, 1893, judgment was entered therein for $111,449.74, for principal, interest, and costs; that execution was thereupon issued, and levied upon said real estate, based upon such attachment, and the same was sold to the plaintiff, as such receiver, on such execution, February 10, 1894; that May 28, 1895, a sheriff's deed of the premises was issued thereon to the plaintiff of all the title Koetting had in the premises August 10, 1893, and that such sheriff's deed was recorded June 8, 1895; that March 20, 1897, the plaintiff, as such receiver, commenced this action in equity to set aside and remove as a cloud upon his title the lien so claimed by the defendants by virtue of their attachment, judgment, and execution mentioned; that the complaint herein alleged, in effect, the facts stated, and that at the time of the rendition of the judgment against Koetting, and in favor of the defendants as such sureties, Koetting was not indebted to them in any sum or any amount whatsoever, and that the affidavit of Peter Barth had no foundation except that the plaintiffs therein had signed such bond as such sureties of Koetting, on which they had not made any payment on behalf of Koetting; that they instituted the attachment for the purpose of acquiring a lien upon such real estate, and appropriate the same to themselves, in order to hinder and delay the creditors of Koetting in the collection of their debts; that such sureties were not then creditors of Koetting; that the obtaining of such attachment, judgment, and execution was fraudulent and void as to the plaintiff in this action; that the defendants herein, except the sheriff, answered such complaint by way of admissions, denials, and counter allegations, and, among other things, to the effect that, at the time Koetting requested them to become sureties on his bond, he covenanted and agreed with them and each of them that, in consideration of their becoming such sureties upon his bond and incurring such liability for and on his behalf, he would indemnify and save harmless every one of them from and against any liability upon said bond as such sureties or growing out of their signing the same; that Koetting committed a breach of his covenant with such sureties by depositing the trust moneys in the bank, and thus knowingly squandering and losing them, and thereby rendering such sureties liable to the beneficiaries of said trust; that, after the entry of said judgment, the defendants, as such sureties, actually paid the sum of about $36,000 as a partial payment to such estate on account of such loss, and that a judgment had been recovered against them in favor of the estate for $63,975.96; that, the cause having been tried, the court filed its findings of fact and conclusions of law, wherein the facts stated were in effect found, and it was also found in effect that, prior to the commencement of said action by said sureties against Koetting, no proceedings had been instituted in the county court to establish the default of Koetting as such testamentary trustee, or the liability of the sureties for such default, and no citation or order of any kind had been issued by or from the county court calling upon or citing him to account to the court or otherwise as such trustee, and no demand of any kind whatever had been made upon Koetting, as such trustee, to account; that no order or permission was ever obtained from the county court by the sureties authorizing or permitting them to institute said suit or any suit whatever against Koetting; that July 26, 1893, the default of Koetting had not been in any wise established or adjudicated, and that his liability and that of his sureties was still undetermined and contingent so far as the proceedings in the county court were concerned, but that his default had in fact occurred, and was well known to him and his sureties; that subsequently to the entry of said judgment, August 29, 1893, the sureties were compelled to pay, by reason of their liability upon said bond for the defalcations of Koetting, to his successor, and did actually pay, an amount much in excess of the entire amount of said judgment with interest from the date of its entry; that such judgment against Koetting has not been paid to the sureties, nor has any part thereof, and that each of the sureties, except one, paid separately towards such judgment the sum of about $13,000; that the sureties instituted their action, and caused the writ of attachment to be issued therein, and the complaint to be filed, and the judgment to be entered, and all proceedings to be had therein without any fraud, and without any intent on their part, or on the part of any of them, to hinder, delay, or defraud any other creditor of Koetting, and in entire good faith, and in order to secure themselves against loss on their liability on such bond, and in good faith indemnify themselves out of the property of Koetting against their liability upon the bond. And, as conclusions of law, the court found, in effect, that the plaintiff's lien by virtue of his attachment was subordinate and subject to the lien of the defendants by virtue of their attachment; that whether the defendants or any of them were indemnified severally against liability upon the bond otherwise than by operation of law was immaterial to the decision of this case, and was not decided; that as to whether there was an agreement to indemnify the defendants jointly, as distinguished from a several indemnity, there was no evidence of such joint indemnity; that the defendants were entitled to judgment dismissing the plaintiff...