Des Moines Packing Co. v. Uncaphor

• Decision Date: 10 February 1916
• Docket Number: 30241
• Citation: 156 N.W. 171,174 Iowa 39
• Parties: DES MOINES PACKING COMPANY, Appellee, v. CHAS. UNCAPHOR, Defendant, G. F. DYSON, Garnishee, Appellant
• Court: Iowa Supreme Court

156 N.W. 171

174 Iowa 39

DES MOINES PACKING COMPANY, Appellee, v. CHAS. UNCAPHOR, Defendant, G. F. DYSON, Garnishee, Appellant

No. 30241

Supreme Court of Iowa, Des Moines

February 10, 1916

Appeal from Boone District Court.--R. M. WRIGHT, Judge.

THIS is a garnishment proceeding. In the main action, the appellee obtained judgment by default against Chas. Uncaphor. Plaintiff caused a writ of attachment to issue, and appellant, G. F. Dyson, was garnished thereunder as a supposed debtor of the said Uncaphor. The plaintiff claims that Dyson, the garnishee, is liable because of the sale by Uncaphor, the principal defendant, to Dyson of a stock of goods without giving notice to his creditors, as provided in Chapter 150, Acts of the Thirty-fourth General Assembly, now Sections 2911-a to 2911-c, Code Sup., 1913. The trial court held that the transfer was invalid, and, the value of the stock being larger than plaintiff's judgment, the court rendered judgment against the garnishee for the full amount of plaintiff's claim against Uncaphor. The garnishee appeals.

Reversed.

D. G Baker, for appellant.

Whitaker & Snell, for appellee.

PRESTON J. EVANS, C. J., DEEMER and WEAVER, JJ., concur.

OPINION

PRESTON, J.

There is no dispute in the facts. On and prior to November 22, 1912, the garnishee, Dyson, was running a grocery business by himself at Boone, Iowa, and the principal defendant, Uncaphor, was running a retail butcher business by himself in the same room. The answer of the garnishee is that, on that date, he claims to have bought Uncaphor out, under an agreement that appellant was to have enough out of the business to pay Uncaphor's debt to him, and Uncaphor was to have the rest. Dyson had stood good to two packing houses for Uncaphor's bills. Uncaphor's bills were due weekly, but he had been selling his merchandise on a monthly credit to his customers, and had run short of money to pay his bills, and Dyson lent Uncaphor the money and stood good for him at two packing houses. Uncaphor and Dyson entered into an agreement that Dyson was to take appellant's stock and sell it out and apply it on the indebtedness which Uncaphor owed Dyson, and the balance was to be turned over for the benefit of Uncaphor. The stock invoiced $ 170 and the tools and fixtures, about $ 185, for which amounts Dyson gave Uncaphor credit. The stock was worth the amount allowed, but he allowed Uncaphor the cost price of the tools and fixtures, which Dyson thinks was somewhat more than their actual cash value. Uncaphor's accounts were also turned over to Dyson and he has collected a part of them, but all the money Dyson has received is not sufficient, by about $ 50, to pay Uncaphor's debt to Dyson. Dyson paid to five of Uncaphor's creditors $ 125.77, for which he had stood good for Uncaphor because he had to sign security blanks to these parties for him. The assets of Uncaphor consisted of the property before enumerated. Dyson never at any time paid any money to Uncaphor. No notice was given, as required by the act of the Thirty-fourth General Assembly before referred to. The trial court held that, because of the failure to give notice, the transaction was invalid.

The statute before referred to provides:

"No person, firm, or corporation engaged in the retail or wholesale business of buying and selling merchandise for profit shall at a single transaction, and not in the regular course of business, sell, assign, or deliver the whole, or a major part of his stock in trade unless he shall, not less than three days previous to such sale, assignment, or delivery, send or cause to be sent to his creditors by registered mail, a notice of his intention to make such transfer, assignment or delivery, which notice shall be in writing describing in general terms the property to be sold, assigned, or delivered, and the parties thereto.

"All such sales, assignments, or deliveries of commodities which shall be made without the formalities required by the provisions of section one hereof, will be presumed to be fraudulent and void as against all persons who were creditors of the vendor at the time of such transaction."

The act further provides in Section 3, in substance, that transfers under this act shall include sales, exchanges and assignments, but that nothing in the act shall apply to the transfers by or to executors, etc. The act does not in terms read that such sales or transfers are in fact void, or that they are conclusively presumed to be so.

It is the contention of appellant that the presumption referred to in the act has no other effect than to shift the burden of proof upon the party desiring that the sale shall be held valid, instead of requiring the litigant attacking said sale to show that the sale was fraudulent.

There is no claim by plaintiff that the transaction with Uncaphor was not in good faith, or that it was fraudulent, except that the statutory notice was not given; and we are of opinion that, from the evidence, it could not be justly claimed that in fact the transaction was not in good faith.

The appellee seems to concede in argument that appellant's proposition as to the presumption referred to in the statute is correct; for they say:

"The contention of appellant, and thoroughly approved by us, is that the statute establishes a legal presumption that a sale or transfer of property without complying with the requirements of the previous section of that law is fraudulent and void. The burden of proof was, therefore, clearly upon appellant Dyson to show that such transfer was not fraudulent. . . . The trial judge, after due consideration of the facts and the law as presented, held that the presumption was not overcome. There is no showing whatever in the record produced that the trial judge held, by ruling or by inference, that, the law as above referred to made such sales void per se. We must, therefore, conclude that the trial judge was fully advised as to the nature of the law and simply was not persuaded that the evidence submitted was sufficient to overcome the legal presumption."

No authorities are cited by appellee on the question of presumption; so that, without determining the point, we shall so consider it for the purposes of this case.

Appellant contends that Uncaphor had a right to prefer appellant as one of his creditors and pay him in full the amount to which he was indebted to him, including the amounts for which he had stood good to other creditors of Uncaphor, and for such purpose to transfer his personal property in bulk, and cites 20 Cyc., 572; and that appellant, when he secured such preference, violated no rule of law, although others may thereby have been deprived of all means of obtaining satisfaction of their equally meritorious claims, citing 20 Cyc. 576; that Uncaphor had the right to dispose of the property in question, if done in good faith, for the payment of one of his creditors, although other creditors may have been defeated in the enforcement of their claims, citing Flood v. Bollmeier, a case which, on the original submission, was affirmed (Dec. 13, 1912), but which on rehearing, was reversed. See 165 Iowa 88. Though this case was decided by this court after Chapter 150, Acts of the Thirty-fourth General Assembly, took effect, the case did not arise under such statute. The defendant cites also Curie v. Wright, 140 Iowa 651, 119 N.W. 74, to the proposition that appellant had the legal right to...