Hastings Malting Co. v. Heller

• Decision Date: 28 July 1891
• Citation: 49 N.W. 400,47 Minn. 71
• Parties: HASTINGS MALTING CO. v HELLER.
• Court: Minnesota Supreme Court

47 Minn. 71

49 N.W. 400

HASTINGS MALTING CO.vHELLER.

Supreme Court of Minnesota.

July 28, 1891.

(Syllabus by the Court.)

1. Where a debtor knows that he is insolvent, and gives security to one creditor to the full amount of his debt, and is unable to secure others, the inference arises that he intended to create an unlawful preference in favor of the creditor so secured.

2. Evidence held sufficient to show indisputably that the agents of the plaintiff corporation had notice sufficient to put them upon inquiry, when they took the mortgage in controversy here, that the mortgagor was in fact insolvent.

Appeal from district court, Dakota county; F. M. CROSBY, Judge.

Action by the Hastings Malting Company against H. H. Heller to recover possession of certain personalty. Verdict and judgment for plaintiff. Defendant appeals. Reversed.

Southworth & Coller, for appellant.

Stringer & Seymour and E. A. Whitford, for respondent.

VANDERBURGH, J.

On the 25th day of March, 1890, one Herman Husmann was adjudged an insolvent, in pursuance of a petition filed in the district court of Scott county on the 19th day of March; and one Theodore Weiland was thereafter duly appointed receiver of the property of the insolvent. Among other property the receiver took possession of the chattels described in the complaint, to recover possession of which this action is brought. Thereafter, pursuant to an order of the court, the receiver sold and delivered the same to the defendant. On the 6th day of February, 1890, Husmann had executed a chattel mortgage of the personal property in question, to the plaintiff corporation to secure a debt due to it, amounting to the sum of $930. The plaintiff claims title under this mortgage. The defense is that Husmann was insolvent when the mortgage was executed, of which fact plaintiff had notice, and that the mortgage created an unlawful preference in favor of the plaintiff over other creditors of the insolvent. The questions raised are chiefly questions of fact, involving these issues. Upon the question of the insolvency of Husmann the evidence is substantially undisputed, and is unquestionably sufficient to establish that fact. He knew his financial condition, and must be presumed to have known the effect of the mortgage. It follows that he intended to secure to plaintiff the preference created thereby. And from the evidence in the case it must be inferred that the plaintiff had reasonable cause to believe that when the mortgage was executed the mortgagor was insolvent.

1. The debtor was engaged in the brewing business,-buying malt and grain, and making and selling beer. Courts have held that brick-makers and lumber manufacturers, who sell their own manufactures, are “traders” under bankrupt and insolvent laws. Bouv. Law Dict. “Trader.” And undoubtedly the debtor comes within this definition, and he was indisputably unable to meet his obligations in the ordinary course of business as they became due. He was largely indebted; his property was heavily incumbered,...