Dow v. Sutphin

• Decision Date: 09 December 1891
• Citation: 47 Minn. 479
• Parties: JAMES O. DOW and another <I>vs.</I> JOHN B. SUTPHIN.
• Court: Minnesota Supreme Court

47 Minn. 479

JAMES O. DOW and anothervs.

JOHN B. SUTPHIN.

Supreme Court of Minnesota.

December 9, 1891.

Plaintiffs, as holders of a chattel mortgage made to them by the members of the firm of Rickard, Witt & Co., on July 17, 1888, brought this action in the district court for St. Louis county against defendant, assignee in insolvency of the mortgagors, by assignment made

in August 1888, to recover $1,678.60 for alleged conversion of the mortgaged property by defendant. In his answer the defendant pleaded that the mortgage was void as an unlawful preference under the insolvency law. A jury was waived, and the action tried by Stearns, J., who ordered judgment for defendant, which was entered, and the plaintiffs appealed.

Wm. E. Wright and Wm. B. Phelps, for appellants.

White, Reynolds & Schmidt, for respondent.

COLLINS, J.

But two questions are presented by this appeal. One is whether the plaintiffs had reasonable cause to believe Rickard, Witt & Co. insolvent at the time of the execution and delivery of the chattel mortgage under which they claim the right to recover in this action for conversion. The other question is as to the right of the defendant, who is the assignee of Rickard, Witt & Co. under the insolvency statutes, to defend herein upon the ground that when taking the mortgage the plaintiffs had obtained the fraudulent preference forbidden by the law, having at the time reasonable cause to believe the mortgagors insolvent.

Rickard, Witt & Co. were retail butchers at Duluth, and were insolvent, beyond any question. The plaintiffs, engaged in wholesaling butchers' supplies at Red Wing, held a past-due account against them for the sum of $1,678.60. One of the firm, Mr. Dow, went to Duluth to collect the money, but, being unable so to do, took the debtors' notes, dated July 17, 1888, maturing in a short time, secured by the mortgage herein involved, which was duly filed, and covered "all books, book-accounts, store-building, (frame,) with fixtures, consisting of meat-racks, scales, one sleigh, harness, (two single sets,) together with all and singular all personal property owned by" the mortgagors, of the total value of about $3,500, considerably less than the amount of their indebtedness. The building mentioned stood upon leased ground, and, in fact, according to the evidence, the mortgage was upon and included all property belonging to the insolvents, who soon thereafter, on August 8th, made an assignment to this defendant. The property in dispute was inventoried and turned over to him, and he proceeded to convert the same into money for the benefit of the creditors.

Taking up the second, in order of statement, of the questions to be disposed of, it may be said that the defence found in the answer herein was a perfectly proper one, and fully justified by the statute, (Laws 1881, c. 148, § 4,) which provides that "the assignee may, by action or other proper proceedings, have all such conveyances, payments, and preferences annulled and adjudged void," etc. The right to the possession of the property, for the time being, without regard to the character of the mortgage, was...