Hershiser v. Higman

• Decision Date: 10 March 1891
• Citation: 48 N.W. 272,31 Neb. 531
• Parties: HERSHISER v. HIGMAN ET AL.
• Court: Nebraska Supreme Court

31 Neb. 531

48 N.W. 272

HERSHISER

v.HIGMAN ET AL.¹

Supreme Court of Nebraska.

March 10, 1891.

Syllabus by the Court.

An insolvent debtor, being pressed by several of his creditors for security, executed in good faith to each of certain creditors a chattel mortgage on all his property, each to secure a bona fide debt. The mortgages were in the usual form, and made to each creditor direct. The preferred creditors were not to prorate, but the mortgages were given priority in the order in which they were drawn. The mortgagees took possession of the mortgaged goods, and subsequently the sheriff levied thereon several writs of attachment, sued out by unsecured creditors. The property was then replevied from the officer by one of the mortgagees. Held, that the mortgages were not void on account of preference, and that the transaction did not constitute an assignment for the benefit of creditors, within the meaning of the assignment laws of the state.

Error to district court, Holt county; NORRIS, Judge.A. E. Rice and H. M. Uttley, for plaintiff in error.

M. F. Harrington, for defendants in error.

NORVAL, J.

The defendants in error brought an action in replevin in the district court of Holt county against the plaintiff in error to recover the possession of a stock of merchandise which Hershiser, as sheriff, had levied upon as the property of one L. H. Boylan, to satisfy five writs of attachment. L. H. Boylan, on the 17th day of August, 1887, was engaged in the mercantile business at Stuart, Holt county, and, being pressed by his creditors, he secured 12 of them; the others he failed to secure. Notes were given by Boylan to the following creditors for the amounts named: Kimberly & Wilson, $325.91; George Bouring, $200; C. Shankbey & Co., $300; Tollerton & Stetson Company, $329.64; J. Feldhenheimer, $200; W. E. Higman & Co., $500; L. A. Shankland & Co., $329; Peavey Bros., $84; H. B. Boylan, $400; H. E. Stetson, $24.30; Van Kirvin & Floyd, $100; J. & E. B. Friend Importing Company, $92.89. Each of the above-named creditors received a note for the full amount due him, except the defendants in error, W. E. Higman & Co., whose note represented one-half of the indebtedness to that firm. Two chattel mortgages were made on the entire stock of goods, each securing six of the notes, and in which each creditor and the amount due him was named. On the same day the mortgages were filed for record, and the mortgagees took immediate possession of the property. On August 18th these mortgages were released and withdrawn from the files, and separate mortgages, in the usual form, were given upon the same goods to secure each note. The creditors were given priority in the order named above. The mortgagees retained possession of the property until the sheriff levied the writs of attachment at the suits of some of the unsecured creditors. The notes secured by the mortgages amounted to $2,785.74, and the entire stock of goods was worth from $3,300 to $4,000. The testimony shows that Boylan was insolvent, and that the mortgages covered all his property, including that which was exempt by law. The cause was tried to a jury, which found a verdict for the plaintiffs for the possession of the property, and assessed their damages at one cent. A motion for a new trial was overruled, and judgment rendered on the verdict. The defendant brings the case here on error.

It fully appears that the mortgages were given to secure bona fide debts of the mortgagor, and without any fraudulent purpose. This court in numerous cases has held that it is competent for a debtor to secure one or more creditors, to the exclusion of others, where the transaction is not tainted with any fraudulent intent. Nelson v. Garey, 15 Neb. 531, 19 N. W. Rep. 630;Bierbower v. Polk, 17 Neb. 268, 22 N. W. Rep. 698;Grimes v. Farrington, 19 Neb. 44, 26 N. W. Rep. 618;Davis v. Scott, 22 Neb. 154, 34 N. W. Rep. 353;Ward v. Parlin, (Neb.) 46 N. W. Rep. 529. The fact that Boylan was insolvent does not affect his right to securea part of his creditors. They were pressing him for security, and in obedience to their demands the mortgages were executed for the sole purpose of securing the debts he justly owed them. Nor are the mortgages invalidated because they covered all the assets of the mortgagor. True, the value of the property exceeded the amount of the debts secured, but we do not think, under the circumstances of the case, that the excess was so great as to make the mortgages fraudulent as to his unsecured creditors. Considerable margin should be allowed for costs and expenses. Besides, property like that in controversy seldom, if ever, brings at forced sale its full value. Some of the provisions of our assignment law have a bearing upon the question involved herein. Sections 42 and 43 of that law are as follows: “Sec. 42. If a person, being insolvent, or in contemplation of insolvency, within thirty days before the making of any assignment, makes a sale, assignment, transfer, or other conveyance of any description, of any part of his property to a person who then has reasonable cause to believe him to be insolvent or in contemplation of insolvency, and that such sale, assignment, transfer, or other conveyance is made with a view to prevent the property from coming to his assignee in insolvency, or to prevent the same from being distributed under the laws relating to insolvency, or to defeat the object of, or in any way to impair, hinder, impede, or delay the operation and effect of, or to evade, any of said provisions, the sale, assignment, transfer, or conveyance shall be void, and the assignee may recover the property or the assets of the insolvent. And if such sale, assignment, transfer, or conveyance is not made in the usual and ordinary course of business of the debtor, that fact shall be prima facie evidence of such cause of belief. Sec. 43. If a person, being insolvent, or in contemplation of insolvency, within thirty days before the making of the assignment, with a view to give a preference to a creditor or person who has a claim against him, procures any part of his property to be attached, sequestered, or seized on excution, or makes any payment, pledge, assignment, transfer, or conveyance of any part of his property, either directly or indirectly, absolutely or conditionally, the person receiving such payment, pledge, assignment, transfer, or conveyance, or to be benefited thereby, having reasonable cause to believe such person is insolvent, or in contemplation of insolvency, and that such payment, pledge, assignment, transfer, or conveyance is made in fraud of the laws relating to insolvency, the same shall be void, and the assignee may recover the property, or the value of it, from the person so receiving it, or so to be benefited.” The above provisions do not in any manner affect mortgages given to preferred creditors more than 30 days before the making of an assignment, but such mortgages are valid unless followed by an assignment within 30 days after the same are given. But the provisions of sections 42 and 43 must be construed in connection with those of section 44 of the same act, which provides that “nothing in this act contained shall be construed so as to prevent any debtor from paying or securing to be paid any debt not exceeding the sum of one hundred dollars, for clerks' or servants' wages, or from paying or securing any debt which shall have been created within nine months prior to the date of such payment or securing, or to affect any mortgage or security made in good faith to secure any debt or liability created simultaneously with such mortgage or security, provided any such mortgage shall be filed for record in the proper office within thirty days from its date.” It will be observed that a chattel mortgage given to secure any debt mentioned in the last-quoted section is not invalid, although the same was...