First Nat. Bank v. Prager

• Decision Date: 01 March 1902
• Citation: 41 S.E. 363,50 W.Va. 660
• Parties: FIRST NAT. BANK OF PARKERSBURG v. PRAGER et al.
• Court: West Virginia Supreme Court

41 S.E. 363

50 W.Va. 660

FIRST NAT. BANK OF PARKERSBURG v. PRAGER et al.

Supreme Court of Appeals of West Virginia.

March 1, 1902

Submitted June 16, 1901.

Syllabus by the Court.

1. A bill in equity to enforce a legal claim under section 1, c 106, Code, which distinctly attacks a general assignment by the defendant as fraudulent and made with intent to delay hinder, and defraud his creditors, and prays that the lien of attachment of plaintiff be established and enforced, and for general relief, is good on demurrer; and an amended and supplemental bill may properly be filed containing further allegations of fraud and conspiracy in making the assignment and sale by the trustee thereunder of the assigned property with prayer that both the assignment and sale by the trustee be set aside as fraudulent and void.

2. Syllabus 5, Bank v. Parsons, 24 S.E. 554, 42 W.Va. 137, is not applicable in a suit to set aside a gift, conveyance, or transfer, etc., as fraudulent under section 1, c. 74, Code, and in which the question of unlawful preference is not involved.

3. When a bidder is paid a consideration to refrain from bidding on the property of an insolvent debtor in order that the purchaser may obtain it at a reduced price, it is a fraud upon the rights of creditors.

4. When evidence is introduced in a cause to which there are objections and exceptions taken, and a decree rendered without the court passing upon such objections and exceptions, and there is sufficient legal evidence in the cause, together with the facts and circumstances of the case, to justify the decree, the same will not be reversed because the court may have considered at the hearing the evidence so objected and excepted to, or because it failed to pass on such objections and exceptions.

Appeal from circuit court, Wood county; L. E. Tavenner, Judge.

Bill by the First National Bank of Parkersburg against Isaac Prager & Son and others to set aside a general assignment as fraudulent towards creditors. From a decree in favor of plaintiff, Julius Katzenstein, purchaser at the trustee's sale, appeals. Affirmed.

W. N. Miller, for appellants.

Camden & Peterkin, for appellees.

MCWHORTER J.

Isaac Prager and Maurice Prager, partners as Isaac Prager & Son merchants, doing business in the city of Parkersburg, running three stores, one known as the "Big Store," where their principal business was done, on Market street, and on the opposite side of the street their "Auction Store," and another store called "The Racket." Though apparently doing a large and prosperous business, they had become involved to the extent of total insolvency, and on the 29th of December, 1896, made a deed of general assignment to Henry Keller, trustee, conveying "all and singular every and all fixtures, stock in trade, goods, wares, merchandise, book accounts, notes, bonds, and evidences of debt, policies of insurance, and all other property and assets of every kind, character, and description owned by said firm, wherever the same may be situated, including the unexpired terms of years or agreement for any premises occupied by said firm, and especially and singular such property, goods, wares, merchandise, and fixtures in and upon the premises occupied by said firm in what is known as the 'Smith Building,' Nos. 308 and 310, Market street, 'Racket Store' No. 313 Market street, and the room No. -- Market street in said city, but not including, and expressly excepting, all property exempt by law." Said deed provided that on the execution and delivery thereof the said trustee should take full possession and custody of said property, make a full inventory thereof, and have the same appraised as to value by three competent and qualified appraisers, who should be duly sworn for the purpose to honestly, fairly, and to the best of their judgment, skill, and ability appraise and value such property; and said trustee was authorized thereby "to sell such property at public or private sale and collect book accounts, notes, or evidences of debt due and owing said firm; and in making sale of such property he may, if in his judgment that would be most advantageous to creditors, keep such store open and sell such goods, wares, and merchandise and other property at private sale, remove the goods all into one room to minimize expenses, to reduce such property to money as soon as the same can wisely, prudently, and properly be done, using his (said party of the second part) best judgment therein; and for that purpose, at his best discretion and judgment, he may compromise claims, discount bills, and may complete or refuse to complete and cancel contracts of said firm now in force, so that the largest sum possible under the circumstances may be realized; and in the execution of this trust may employ such labor as shall, in his opinion, be necessary and proper for the economical and faithful administration of the trust hereby imposed upon him or shall be requested by the creditors secured thereby." The trustee was further authorized to pay, satisfy, and discharge from the proceeds, after deducting all necessary costs, expenses, and charges, including preparation of the deed and advice of counsel necessary to a proper execution of his duties and other debts, liabilities, and obligations which were by the then-existing law entitled to preference of payment in full; all other debts, liabilities and obligations of said firm equitably and ratably, without preference or priority, among creditors of the same class unsecured, or to such secured creditors as should surrender to him the security held by them and accept the promise hereof, the creditors of said copartnership being first paid out of said property; said trustee to make such payment by such installments and at such times as he should think fit, and to pay the surplus, if any, to the party of the first part or the survivor. And the said Isaac Prager by the same deed conveyed to said trustee a certain piece of real estate on Juliana street, 40 by 170 feet, then occupied by the Bonton Dry Goods Store, conveyed to said Isaac Prager by John J. Jackson and wife, which real estate was subject to a deed or deeds of trusts in favor of the Homestead Building Association, and other liens thereon having legal preference, to be sold by said trustee, as provided by law, for cash, or on such credit as he might deem most advantageous, having reference to said liens and rights to be created, and from the proceeds, as well as the rents to be collected by him in excess of said deeds of trust and other liens, and after deducting expenses, commissions, and charges, to pay the individual creditors of said Isaac Prager, and, if any surplus, to be paid to the creditors of the firm, which deed of assignment was recorded on the day of its execution, and the trustee on that day took possession of the property so conveyed. On the same day of the making of the assignment, Julius Katzenstein brought his action of assumpsit in the circuit court of Wood county against said firm, and filed his affidavit, and sued out an attachment against the firm, claiming that he was entitled to recover in said action $41,986, and caused the same to be levied on the goods of Isaac Prager & Son in the said three stores, which levy was made on the said 29th of December, at 4:53 p. m. Katzenstein afterward took judgment by default on the 17th of February, 1897, in said action for $37,983.08. On the same day Henry Keller, the trustee, moved to quash the attachment of said Katzenstein, which motion was set down for argument. On the 31st day of December, 1896, the First National Bank of Parkersburg filed the affidavit for attachment in the circuit court of Wood county of H. H. Moss, its cashier, and instituted suit in equity to recover its debt against said Isaac Prager & Son, and sued out its attachment without bonds, and on that day levied same on the said goods in the three stores, and also served the same on Henry Keller, the assignee in said deed of assignment, as being indebted to or having in his possession the effects of Isaac Prager & Son, and at the January rules, 1897, said bank filed its bill in said court against said Isaac Prager & Son and Henry Keller, as trustee and in his own right. Said bill set up the claim of the said plaintiff, being four notes of Isaac Prager indorsed by Isaac Prager & Son, amounting, in the aggregate, to $2,500, and all of which would fall due on different dates shortly thereafter, alleging the insolvency of Isaac Prager & Son and Isaac Prager individually, and that said notes would not be paid when due and payable by them; alleging the execution of the assignment for the pretended benefit of their creditors, but which, they allege, was made in reality to defeat and defraud their creditors; that, while it pretended to include and embrace all the property and assets, it did not do so; that before making said assignment said firm shipped goods consigned to Max Adler, Gallipolis, Ohio, when there was no such person there, and no sale of said goods had been made; but said shipment was a fraudulent attempt to make away with a part of the goods of said firm, for the purpose of defrauding their said creditors; that, shortly before making said assignment, said firm had collected all the ready cash they could in their business, and discounted bills payable to them by many of the best citizens of Parkersburg, to get hold of and conceal and make away with said money, and sold goods at prices ruinously below costs; and in this way, and in other ways, large sums of money were raised by them and appropriated and withdrawn from their business and kept concealed by them for the purpose of defrauding their creditors; that on the 26th of December, 1896, Maurice Prager, a member of the...