Bean v. Scheffer

• Decision Date: 26 April 1897
• Citation: 68 Minn. 33,70 N.W. 854
• Parties: BEAN v SCHEFFER ET AL.
• Court: Minnesota Supreme Court

68 Minn. 33

70 N.W. 854

BEANvSCHEFFER ET AL.

Supreme Court of Minnesota.

April 26, 1897.

(Syllabus by the Court.)

1. In an action brought by an assignee in insolvency, under the laws of this state, to set aside a sheriff's certificate of sale of real property on execution, and the lien of the judgment under which this execution was issued, on the ground that the judgment, obtained by default for want of answer, was an unlawful preference, under the statute, the court found that when the creditors commenced the original action the debtor knew he was insolvent; that the creditors knew him to be insolvent, and that the debtor well knew that the action was commenced against him for the express purpose of enabling the creditors to obtain an unlawful preference; and that, for such purpose, he willfully permitted the judgment to be obtained and docketed against him. Held, that there was no evidence upon which to base the finding that the debtor well knew that the action was commenced to obtain an unlawful preference, or that he willfully suffered the judgment to be obtained for such purpose.

2. This case, upon the facts, distinguished from Yanish v. Fuel Co., 62 N. W. 387, 60 Minn. 321.

3. It cannot be held, as a matter of law, that because a technically insolvent merchant or trader suffers an action to be commenced against him upon a claim against which he has no defense, by creditors who know him to be technically insolvent, and allows a judgment to be entered and docketed against him for want of answer, which judgment becomes a lien upon real property, the debtor intended to permit the judgment creditors to obtain an unlawful preference.

Appeal from district court, Ramsey county; J. J. Egan, Judge.

Action by Ed. S. Bean, assignee of F. X. Peyer, insolvent, against Alfred Scheffer and others. From a judgment for plaintiff, defendants appeal. Reversed.

Morphy, Ewing, Gilbert & Ewing, for appellants.

Henry & R. L. Johns, for respondent.

COLLINS, J.

Action by the assignee of an insolvent debtor to cancel and annul a sheriff's certificate of the sale of real property upon execution, and to set aside and vacate the lien of the judgment on said real property, upon which judgment the execution issued, on the ground that by means of the judgment lien and the sale these defendants, as creditors of the insolvent, obtained an unlawful and forbidden preference over other creditors. A trial was had, and the court, upon findings of fact, ordered judgment against defendants and in favor of plaintiff assignee. The appeal is from the judgment. The court found, among other facts, that when the original action was commenced, and when judgment was entered and docketed therein in favor of these defendants, the debtor was insolvent; that each of these defendants then and there well knew him to be insolvent; that the action was brought and the judgment obtained by these defendants for the express purpose of securing an unlawful preference over other creditors; and that for this same purpose the debtor willfully suffered said action to be brought, and judgment by default to be entered and docketed against him. On appeal the defendants assign as error that the evidence was wholly insufficient to warrant either of these findings, and no other question has been raised by either party.

The facts, as shown upon the trial, were that Peyer, the debtor, had been engaged in the retail harness trade in the city of St. Paul for about 15 years prior to the year 1893, while Scheffer & Rossum, these defendants, were wholesalers of the same line of goods in the same city. Peyer had traded with Scheffer & Rossum for a long time, and his credit seems to have been good up to August, 1893. He then failed to meet his payments, and on November 18th, the action in question was brought by service of a summons upon him. He had no defense, made no answer, and judgment by default was entered and docketed against him December 9, 1893, for the sum of $311.80. Upon this judgment an execution was duly issued, and duly levied upon his stock of goods December 12, 1893. Peyer made an assignment for the benefit of his creditors upon the same day, and the assignee (this plaintiff) immediately qualified and entered upon the discharge of his duties. The levy upon the stock of goods was at once released, and the execution returned unsatisfied. June 22, 1894, an alias execution was issued upon the judgment, and a levy made upon the real property in question. Such property had been included in the assignment, and particularly described in the inventory. A sale upon the execution was made; defendants becoming the purchasers, and receiving a sheriff's certificate of sale therefor. The assignee had no actual knowledge of such sale until a few days after the year for redemption expired, and, upon hearing the fact, brought this action. At the trial the insolvent testified that when he made the assignment his stock of goods exceeded $2,000 in value, but it also appeared from the evidence that the assignee had realized therefrom only $262, and had on hand...