Cook v. Moody

• Decision Date: 12 November 1897
• Citation: 50 P. 1020,18 Wash. 114
• Parties: COOK v. MOODY.
• Court: Washington Supreme Court

50 P. 1020

18 Wash. 114

COOK v. MOODY.

Supreme Court of Washington

November 12, 1897

Appeal from superior court, Skagit county; Henry McBride, Judge.

Suit by Nevada Cook against C. S. Moody, the Belfast Shingle Company and others. Plaintiff obtained a decree, from which defendant Moody appeals. Affirmed.

Gordon J., dissenting.

E. C. Million, for appellant.

J. K Chambers, for respondent.

SCOTT C.J.

This action was brought in the nature of a creditors' bill to wind up the affairs of the Belfast Shingle Company, a corporation, and cancel a mortgage on its property held by appellant on the ground that an illegal preference had been given over the other creditors of the company, and resulted in a decree adjudging it insolvent, appointing a receiver therefor, and setting aside the mortgage and sale thereunder. The appeal is taken from that part of the decree holding the appellant's mortgage invalid. The evidence is not brought here, and the contention is that the decree is not supported by the findings.

It appears from the facts found that in April, 1896, said company was indebted to various creditors in about $9,100 including a $1,200 purchase-price mortgage on its machinery. At that time the mortgage in question was given to secure the payment of $4,800 of its indebtedness, which amount of claims appellant held as trustee for the owners thereof; the officers of the company representing at the time to appellant that the company was indebted (outside of said $1,200 mortgage and the claims secured by the mortgage then given) in only the sum of $1,000, when in fact such indebtedness was much more than that, and the known liabilities of the company then exceeded its assets, of which fact appellant had notice but the officers of the company and appellant believed that by extending the time of payment of said $4,800 for one year the company could pay its other debts, and be able to operate its mill, and carry on its business. The court found that no fraud was intended by appellant or the company, but also found that at the time of the execution of said mortgage said company was unable to pay its debts in the ordinary course of business affairs, and was insolvent, and would have been compelled to shut down its mill, and cease doing business, had it not been for the execution of said mortgage, and the obtaining of the extension of time of payment of the indebtedness thereby attempted to be secured; all of which was well known to the said C. S. Moody. The...