Baumann v. Cunningham

• Decision Date: 01 February 1892
• Citation: 48 Minn. 292
• Parties: EDWARD C. BAUMANN <I>vs.</I> WM. CUNNINGHAM.
• Court: Minnesota Supreme Court

48 Minn. 292

EDWARD C. BAUMANN vs. WM. CUNNINGHAM.

Supreme Court of Minnesota.

Argued January 11, 1892.

Decided February 1, 1892.

Appeal by plaintiff, Edward C. Baumann, from an order of the district court of St. Louis county, Stearns, J., made September 28, 1891, refusing a new trial.

Evar O. Wohlin, of Duluth, on April 20, 1891, made an assignment to plaintiff under Laws 1881, ch. 148, of all his nonexempt property, in trust to pay those of his creditors who should release the unpaid residue of their claims. Plaintiff accepted the trust, and

within a few days thereafter brought this action against William Cunningham, a merchant of St. Paul, to set aside a mortgage given to him by Wohlin on March 16, 1891. Wohlin was then a tailor doing business at Duluth, and had a stock of cloths, trimmings, and tailor's furnishings and store fixtures. He owned and occupied a homestead incumbered for $1,000. He also owned an undivided half of five town lots, and an undivided third of three other town lots, all situated in Duluth. He was indebted to divers persons between five and six thousand dollars, and was unable to pay his debts as they matured, in the ordinary course of business, and was insolvent. He was indebted to defendant, Cunningham, $470.74, and to Friedlander & Co., of Chicago, Ill., about $432. Cunningham had at that time good reason to believe Wohlin was insolvent, in that he was unable to pay his debts in the ordinary course of business as they matured. But he had reason to believe, and did believe, that Wohlin had property which exceeded in value the amount of his debts. To enable Wohlin to continue in business, and to retain him as a customer as well as to save his claim, Cunningham proposed to Wohlin that, if he would give him security, he (Cunningham) would become surety for him to Friedlander & Co., and would make further advances to him (Wohlin) in money or goods, as he might need. Wohlin accepted the proposition, and he and wife on that day (March 16, 1891,) made and delivered to Cunningham their notes and a mortgage upon all their real estate, including the homestead, for $1,000, and interest due in installments in two to seven months. Cunningham thereupon became responsible to Friedlander & Co. for their claim, and advanced to Wohlin $25. He did not file the mortgage for record until April 22, 1891, two days after Wohlin made his assignment. He claimed to hold the mortgage as security for the debt Wohlin owed him, and to indemnify him as surety to Friedlander & Co. The trial court, in its findings of fact, held and found that Wohlin did not make the notes and mortgage with a view to giving a preference to defendant, but with a view to being enabled to continue in business, and on that ground directed judgment to be entered for defendant. In a memorandum attached to the findings the judge stated his opinion, in substance, that, to render the mortgage voidable under the insolvent act, (Laws 1881, ch. 148, § 4,) it must be shown that in giving it Wohlin intended to prefer Cunningham. The mere fact that a preference afterwards resulted was not enough.

Wm. C. McAdam, for appellant.

W. W. Billson, for respondent.

COLLINS, J.

The only finding of fact assailed by the assignments of error herein is that whereby the court below found that the insolvent, Wohlin, did not make the notes and mortgage in question with a view of giving a preference to the defendant, Cunningham, but with a view to being enabled to continue his business, which was that of a merchant tailor, at retail. It therefore stands admitted that on the day of the execution and delivery of the notes and mortgage — March 16, 1891 — by Wohlin to defendant, Cunningham, and to whom he was indebted in the sum of $470.74 for goods sold, Wohlin was simply technically insolvent, because unable to pay his debts as they matured in the ordinary course of business. It also stands admitted that Cunningham had good reason to believe that Wohlin was insolvent in this technical sense, but that he also had reason to believe, and did believe, that the insolvent had assets which in value exceeded the amount of his...