Harris v. Spencer
| Decision Date | 18 June 1915 |
| Docket Number | 19,332 - (176) |
| Citation | 153 N.W. 125,130 Minn. 141 |
| Parties | C. C. HARRIS v. ALBERT SPENCER |
| Court | Minnesota Supreme Court |
Action in the district court for Blue Earth county to recover $500 for rent. Defendant's motion to vacate a writ of attachment was granted, Comstock, J. From the order vacating the writ, plaintiff appealed. Affirmed.
Chattel mortgage -- intent to defraud creditors -- attachment.
Defendant to secure a pre-existing debt gave a chattel mortgage to his father covering the first 2,500 bushels of corn harvested from the crop then growing on the farm of the mortgagor. The total crop was estimated by the mortgagor and mortgagee to be over 3,000 bushels. It was understood that the mortgagor might continue for a time to feed the small amount of stock that he had, but how long this was to continue or whether the security would thus be impaired, did not appear. It is held:
(1) The chattel mortgage was not void as a matter of law within the rule that a mortgage of chattels, coupled with an agreement that the mortgagor may sell or dispose of the mortgaged property as his own without satisfaction of the mortgage debt, is, as a matter of law and without reference to the actual intent of the parties, fraudulent and void as to creditors.
(2) Such constructive fraud in a transfer will not alone support an attachment made on the ground that a debtor has assigned secreted and disposed of his property with intent to delay or defraud his creditors. An actual personal intent to defraud is necessary. The evidence justifies the decision of the trial court that such intent did not exist in this case.
Ivan Bowen, for appellant.
A. C Remele, for respondent.
Plaintiff appeals from an order of the trial court vacating a writ of attachment issued on an affidavit of his attorney alleging that defendant "has assigned, secreted and disposed of his property with intent to delay or defraud his creditors." Defendant moved to vacate the writ on affidavits denying this allegation, and the motion was heard on these and further affidavits in rebuttal and sur-rebuttal. The trial court in effect found this charge untrue, and the question on this appeal is whether this finding is against the evidence.
The facts, as shown by the record, which consists of the complaint, the affidavits referred to and certain exhibits are as follows: Hans C. Larsen leased a farm to defendant for one year from March 1, 1914, at a rental of $1,000, payable one-half November 1, 1914, the balance January 1, 1915. In August, 1914, Larsen sold the farm to plaintiff, and assigned the lease together with the notes which defendant had executed for the rent. The payment due November 1 was not made and this action was brought to recover it. The facts relating to defendant's alleged disposition of his property with intent to delay or defraud his creditors are these: On October 20, 1914, defendant gave to his father a chattel mortgage covering the first 2,500 bushels of corn harvested from the 1914 crop, then standing and growing on the farm. The mortgage recited that it was given to secure an indebtedness of $1,200 due from defendant to his father. The affidavits of the father and son tend to show that this was a bona fide indebtedness, and hence that there was a consideration for the mortgage. There is nothing to contradict this, and we must assume it to be the fact. Defendant was indebted to the others at the time, and his stock and other personal property on the farm were covered with chattel mortgages. He had no unencumbered property except the corn. The mortgage to his father was undoubtedly a preference, but of course it does not follow that it was void as against other creditors. Crookston State Bank v. Lee, 124 Minn. 112, 144 N.W. 433. The claim of fraud in the mortgage is based upon the statement in the affidavit of defendant that the yield in the field described in the mortgage was estimated by defendant and his father at to exceed 3,000 bushels, and that it was understood by the parties to the...
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