Dahlman v. Greenwood

• Decision Date: 08 February 1898
• Citation: 74 N.W. 215,99 Wis. 163
• Parties: DAHLMAN v. GREENWOOD.
• Court: Wisconsin Supreme Court

99 Wis. 163

74 N.W. 215

DAHLMAN

v.GREENWOOD.

Supreme Court of Wisconsin.

Feb. 8, 1898.

Appeal from circuit court, Jefferson county; John R. Bennett, Judge.

Garnishment by Anthony Dahlman against John T. Greenwood, assignee for the benefit of creditors, interpleaded with others. From a judgment for plaintiff, defendant assignee appeals. Affirmed.

This is an action of garnishment. On the 15th of October, 1896, William Schneider and George Schneider were co-partners in the mercantile business at Lake Mills, Wis. Upon that day George Schneider executed a chattel mortgage, in the name of the firm, upon the stock in trade and book accounts of the firm, to four creditors of the firm; the understanding being that Greenwood State Bank, one of said creditors, should take possession of the property, converting the same into money for the benefit of all the mortgagees. The firm had no other property, except claims against two insurance companies for $500 each, resulting from a fire which had occurred some time before. The bank immediately took possession of the mortgaged property and the books of the firm. Schneider Bros. were insolvent when the mortgage was given. Upon the following day the plaintiff, who was a creditor of the firm in an amount of over $500, commenced action upon his claim against Schneider Bros., and garnished the mortgagees, and also garnished the insurance companies above referred to. Other garnishment suits followed on behalf of other creditors, but the insurance companies were not again garnished. On the 23d of October the firm executed a voluntary assignment, under the statute, to the appellant, Greenwood, who duly qualified; and upon the following day, upon petition of the assignee, and upon notice to the mortgagees and garnishing creditors, the circuit court ordered the mortgagees to turn over to the assignee the property in their possession under the mortgage, without prejudice to the rights and interests of any of the parties, and that the assignee convert the same into money, and hold the same subject to any rights of the several parties which might thereafter be established in the garnishment suits. The assignee subsequently realized from the sale of the merchandise, clear, $2,250, and had collected from the book accounts $400 at the time of the trial of this action. Subsequently, Greenwood, as assignee, was interpleaded as a defendant in the garnishee actions, and the action was tried by the court upon stipulated facts, and certain additional testimony; a motion on the part of the principal defendants to dismiss the garnishment action, as an abuse of process, being heard and decided at the same time. The court held, in substance, that the chattel mortgage was in effect a voluntary assignment, and void as to the plaintiff, and that it was void as to all other creditors by reason of the subsequent assignment of Schneider Bros., and that the assignee, Greenwood, stood liable to the plaintiff, in lieu of the garnishees, to the extent of all the merchandise, book accounts, and claims against insurance companies which had come into his possession as assignee. The judgment also directed that Greenwood pay to the plaintiff, out of any funds in his hands derived from the insuranceclaims, or, if such funds were insufficient, then out of such funds in his hands derived from the merchandise and accounts, the sum of $556.01 and interest; being the amount of the plaintiff's judgment against Schneider Bros., as well as the costs in the garnishment action. The judgment further provided for the marshaling of the firm assets in the hands of the assignee, and for the payment of subsequent garnishing creditors as their rights should appear in the several garnishment actions. The judgment also provided that said subsequent garnishing creditors be subrogated to the plaintiff's rights against the insurance companies in case the plaintiff's judgment should be paid out of the mortgaged merchandise and accounts; also, that the assignee proceed to collect the accounts and insurance claims, and hold the proceeds subject to further equitable distribution in the other garnishment actions. From this judgment the assignee appeals.

R. M. Bashford, for appellant.

Rietbrock & Halsey, for respondent.

WINSLOW, J. (after stating the facts).

Schneider Bros. gave a chattel mortgage upon their stock of goods and book accounts to several creditors, with the oral understanding that one of such creditors (i. e. Greenwood's Bank) should take possession of the property, and convert it into money for the benefit of all the mortgagees. The mortgage covered all the firm property save two claims of $500 each against certain insurance companies, and the bank immediately took possession of the mortgaged property. This transaction unquestionably constituted a voluntary assignment for the benefit of creditors, which, not being executed in the manner provided by the statute, was void as to the other creditors of the firm. Winner v. Hoyt, 66 Wis. 227, 28 N. W. 380. The fact that the mortgage did not cover all of the property of the firm does not affect the legal consequence. Maxwell v. Simonton, 81 Wis. 635, 51 N. W. 869;Jameson v. Maxcy, 91 Wis. 563, 65 N. W. 492. The plaintiff was a creditor of Schneider Bros. at the time the mortgage was given, and garnished the bank while the stock of goods was still in its possession under the mortgage, and upon the same day garnished both the insurance companies. A few days later, Schneider Bros. made a voluntary assignment, under the statute, of all of their property, to the defendant Greenwood, who duly qualified and assumed the duties of his trust, and took possession of the mortgaged property under an order of court, and proceeded to convert the same into money; such action, however, being without prejudice to the rights of the mortgagees and garnishing creditors. The right of the plaintiff to claim any advantage over other creditors by reason of his garnishment is...