Costello v. Chamberlain

• Decision Date: 03 January 1893
• Citation: 36 Neb. 45,53 N.W. 1034
• Parties: COSTELLO, SHERIFF, v. CHAMBERLAIN.
• Court: Nebraska Supreme Court

36 Neb. 45

53 N.W. 1034

COSTELLO, SHERIFF,

v.CHAMBERLAIN.

Supreme Court of Nebraska.

Jan. 3, 1893.

Syllabus by the Court.

1. A debtor in failing circumstances may lawfully prefer one or more of his creditors, and secure such creditors by mortgage or conveyance absolute, provided the transaction is in good faith, and not made with intent to defraud other creditors.

2. An instrument in the form of a mortgage or bill of sale will not be held to be an assignment for the benefit of creditors unless it creates trust in favor of some person or persons other than the mortgagor or vendor.

3. H., a merchant in failing circumstances, with intent to prefer certain creditors, executed to C. a bill of sale of his entire stock of goods, the latter paying the preferred claims in full out of the consideration named in the bill of sale. In an action of replevin by C. against the sheriff who had seized the goods on an order of attachment in favor of an insecured creditor, held that, inasmuch as C. is the only person beneficially interested in the transfer, it cannot be held to be an assignment for the benefit of creditors, and that it is immaterial whether the bill of sale was intended as an absolute sale or as a mortgage only.

4. Evidence examined, and held sufficient to sustain the verdict and judgment of the trial court.

Error to district court, Hall county; HARRISON, Judge.

Replevin by Henry Chamberlain against James A. Costello, sheriff of Hall county. To a judgment for plaintiff, defendant brings error. Affirmed.Abbott & Caldwell, for plaintiff in error.

Thompson Bros., for defendant in error.

POST, J.

This was an action of replevin in the district court of Hall county, the pleading being in the usual form. Trial, and judgment for the plaintiff below, whereupon the case was removed to this court upon petition in error.

1. The material facts are as follows: For about a year previous to the 18th day of January, 1890, John W. Hoppel had been engaged in business as a general merchant in the town of Wood River. On the day above named he was, it is admitted, in failing circumstances, his assets, aside from a homestead of small value, consisting of a stock of merchandise, worth, according to the estimate of witnesses, from $1,400 to $2,000, with liabilities amounting to $2,864. Among his creditors were certain parties residing at Wood River, mostly for money advanced, to wit, J. Bowen, $600; F. M. Penny, $100; the First National Bank of Wood River, $300. Of the last-named amount $100 was on his unsecured note, and $200 secured by the note of Mr. Bowen. The morning of the day named, Bowen, after making an ineffectual effort to have Hoppel pay or secure the $600 due him, called upon the defendant in error, who was cashier of the bank above named, and of which he, Bowen, was a stockholder, and made some inquiry about the standing and credit of Hoppel. The question of the value and cost of the goods was also discussed. Hoppel followed Bowen to the bank, where he executed to Chamberlain an instrument in the form of a bill of sale, by which he conveyed to the latter his entire stock of goods for the expressed consideration of $1,600. Chamberlain at the time paid the full amount of the consideration named in the bill of sale as follows: Cash to Bowen, $600, being the amount due from Hoppel; by paying and satisfying in full the notes of Hoppel above named, $400; and the balance, $600, in cash to Hoppel. Upon the execution of the bill of sale Chamberlain took possession of the goods in controversy, which were seized by the plaintiff in error, as sheriff, two days later, to satisfy an order of attachment against Hoppel in favor of Allen Bros. A question to which prominence was given at the trial below, and also in this court, is whether the transaction is to be treated as a sale of the stock of goods by Hoppel, or whether the so-called “bill of sale” was intended merely as a security for the $1,600 advanced by Chamberlain. It is claimed by the latter that he purchased the goods for the consideration named, while the testimony of the former is relied upon to prove that the transaction is but a mortgage. This contention is supported by the fact that Hoppel, on the delivery of the bill of sale, executed to Chamberlain a note for $1,600. The latter, however, explains the execution of the note last mentioned thus: In the purchaseof the goods in question he was acting in the interest of the bank, and the money paid was a part of its funds; and that he insisted upon the note in order to balance his books until the goods could be disposed of, in order to avoid having them appear as a part of the resources of the bank. As the law applicable to this branch of the case plaintiff requested the following instruction: “You are also instructed that if you find from the evidence that the bill of sale was made to enable Chamberlain to dispose of the goods, and out of the proceeds pay Hoppel's indebtedness to the bank, to Bowen, and Peycke Bros., and that, after such debts were paid, any part of the goods or their value was to be returned to the said Hoppel, then such sale was void, and you should find for the defendant, without regard to what the intentions of the parties, or either of them, might have been.” It is claimed that this case is within the rule stated in Bonns v. Carter, 20 Neb. 566, 31 N....