J. Groetzinger & Co. v. Wyman

• Court: Iowa Supreme Court
• Writing for the Court: LADD, J.
• Citation: J. Groetzinger & Co. v. Wyman, 75 N.W. 512, 105 Iowa 574 (Iowa 1898)
• Decision Date: 19 May 1898
• Parties: J. GROETZINGER & COMPANY, et al., Appellants, v. JOHN WYMAN, DES MOINES NATIONAL BANK OF DES MOINES, IOWA, F. H. NICHOLS, W. W. MOONEY & SONS and HENRY H. GRIFFITH

75 N.W. 512

105 Iowa 574

J. GROETZINGER & COMPANY, et al., Appellants, v. JOHN WYMAN, DES MOINES NATIONAL BANK OF DES MOINES, IOWA, F. H. NICHOLS, W. W. MOONEY & SONS and HENRY H. GRIFFITH

Supreme Court of Iowa, Des Moines

May 19, 1898

Appeal from Polk District Court.--HON. T. F. STEVENSON, Judge.

ACTION to declare certain mortgages, and an assignment for the benefit of creditors, fraudulent. Decree dismissing the petition, and plaintiffs appeal.

Affirmed.

E. T Morris, Park & Odell, Dunshee & Allen and Granger & Bennett for appellants.

Dudley & Coffin and Cummins, Hewitt & Wright for appellees.

OPINION

LADD, J.

Early in January, 1894, Thomas A. Mansfield, who had been engaged in the wholesale leather and saddlery business at Des Moines for several years, discovered, upon taking an inventory, that his assets amounted to eighty-six thousand, seven hundred and ninety-nine dollars and twenty-five cents, and his liabilities to eight-four thousand and thirty-seven dollars and sixteen cents, leaving the small margin of two thousand seven hundred and sixty-two dollars and ninety cents in his favor. Thereupon he exhibited a statement of his financial condition to William Mooney, of Mooney & Sons, and to R. T Wellslager, president of the Des Moines National Bank. After several conferences, a contract was entered into, January 16, 1894, reciting Mansfield's indebtedness to the bank to be forty-eight thousand, six hundred and fifty dollars, and that to W. W. Mooney & Sons, of Columbus, Indiana, nine thousand, one hundred and eighteen dollars and forty cents; the demand of these creditors for security, and Mansfield's belief that, with indulgence, he would be able, in the ordinary course of business, to discharge his liabilities; and providing that in consideration of one dollar, and the promise of said creditors not to enforce all of said indebtedness at the present time, Mansfield, upon his part, agreed to pay said parties a certain amount during that and each of the five months following, and: "Third. That he will, in case demand be made upon him by either the said Des Moines National Bank or said W. W. Mooney & Sons, give unto them (said bank and W. W. Mooney & Sons) a chattel mortgage upon all his stock of merchandise, consisting of saddlery, hardware, harness, leather, and findings, and store fixtures, of every kind and character whatsoever, owned and kept by him in storerooms Nos. 221 and 223 Court Ave., and also in room No. 209 West Third street, and room over 219 Court Ave., in the city of Des Moines, Polk county, Iowa and will also, upon like demand, assign unto said creditors, all and singular, his accounts and demands and bills receivable owing to him, and arising out of said business so carried on by him; such chattel mortgage and the assignment of said accounts to be as security for such sums of money as may be due and owing by said Mansfield to the said Des Moines National Bank and W. W. Mooney & Sons, respectively, at the time of giving of such security. And it is further agreed that said creditors shall have a lien upon the above-described personal property and choses in action to secure the performance of this contract upon the part of Mansfield." Mansfield continued in business, but was unable to comply with the terms of the contract. About the middle of February, Mooney & Sons and the bank requested him to secure their indebtedness. He insisted, and they finally conceded, that he was entitled to the entire month of February within which to make payments then maturing. During these negotiations a general assignment for the benefit of his creditors was signed, with the intention of placing it on record in event the bank or Mooney & Sons attempted to obtain preferences; but this was afterwards destroyed. On February 28th the attorney of Mansfield notified the bank that he was unable to meet the payments under the contract, and was ready to execute the mortgages, but desired a conference of the officers of the bank. This was had, and, as the outcome, Mansfield executed a chattel mortgage upon his entire stock of goods, fixtures, and tools owned by him, and also transferred and assigned all book accounts, demands, or bills receivable, due or to become due, to the Des Moines National Bank, to secure the payment of eighteen thousand, five hundred and fifty dollars; also, a mortgage describing the identical property to W. W. Mooney & Sons, securing the payment of seven thousand, six hundred and seventy-six dollars and forty-eight cents; also, another mortgage to F. H. Nichols, trustee, covering the same property, securing notes to the amount of twenty-nine thousand, six hundred dollars. It may be added that these notes had been executed by Mansfield to Mooney & Sons, indorsed by the latter firm, and discounted by Mansfield to the Des Moines National Bank, and that Nichols simply acted as trustee for the bank. No question is made as to the validity of the indebtedness secured. At the time these mortgages were executed a contract was entered into, reciting the execution thereof, and as follows: "Now, therefore, it is agreed that T. E. Given shall take possession of said property as the agent of said mortgagees, and shall account to them for all expenses paid by him, and money and property thus coming into his possession; that said mortgages shall not be recorded unless, in the judgment of said bank, it shall become necessary for the protection of the interests of said mortgagees, or unless said Mansfield shall be unable to secure extensions of time from all of his other creditors; that if such extensions shall be secured, and if it shall not be necessary to record such mortgages as aforesaid, that said Mansfield shall remain in charge of such business; said Given still accounting to such mortgagees for all receipts and collections aforesaid; said Mansfield receiving not to exceed $ 150.00 per month for his services; and no purchase of goods shall be made, or indebtedness incurred, except upon the consent of said mortgagees, but all expenses shall be cut down as fast as possible, and goods purchased upon such consent shall be paid for by said Given from the money received by him. The delivery of said mortgage to W. W. Mooney & Sons is conditioned upon their acceptance of, and ratification of this agreement; and, should they refuse to accept or ratify the same, then said Mooney & Sons shall be remitted to such rights as they may have under the agreement entered into by said Mansfield, said bank, and said Mooney & Sons, dated January 16, 1894; and in such event nothing contained in this agreement, nor the acceptance by said bank of the mortgage herein mentioned as made to said bank, shall deprive said bank of its rights under said agreement of January 16, 1894, or have any effect whatever upon its said rights." On the same evening, without the knowledge of the mortgagees, Mansfield executed a mortgage to H. H. Griffith, as trustee, securing the claim of G. D. King for the sum of eight hundred and forty-eight dollars and ninety cents, and an attorney's fee of five hundred dollars owing Henry, and signed a deed of general assignment for the benefit of creditors to John Wyman. These were left in the hands of Griffith, with instructions to secure the acceptance of Wyman, and place on record when directed. Mansfield and Reynolds, cashier of the bank, arranged to meet at the Great Northern Hotel in Chicago the following day, and each telegraphed Mooney to this effect. Reynolds, after conversing with Mooney, went to the hotel, where he met Mansfield and Henry, and Mooney soon followed. An appointment was made for the afternoon, and they again met, when Mooney signed the contract heretofore referred to. It appears that the Globe Tanning Company, of Louisville, Kentucky, of which Thomas Mooney was president, was also a creditor. After the contract had been signed, Mansfield asked Mooney if this company would extend the time of payment, and was informed it would not. Upon inquiries, he was then told that the company would proceed against him by attaching his property. Henry at once telegraphed to Griffith to file the deed of general assignment for record. Reynolds had already telegraphed the bank to record the three mortgages, and Mooney, in behalf of the Globe Tanning Company, had ordered the attachment proceedings. The three mortgages were filed first, though less than a half hour prior to the filing of the mortgage to Griffith and the assignment to Wyman. The plaintiffs have recovered judgments against Mansfield, and join in this action, asking relief against the mortgages of the bank, Nichols, and Mooney & Sons. The evidence shows, without dispute, that there is enough money in the hands of the Des Moines National Bank and John Wyman, as assignee, to satisfy all these judgments. It may be added that Wyman took possession of the property as assignee, and, under the direction of the court, sold it, and applied the proceeds to the payment of the mortgages attacked.

I. The contention of appellants that the minds of the parties never met in the matter of delivering the mortgages is not sustained by the evidence. By the terms of the contract those to the bank and Nichols were delivered at the time, and Given appointed to take possession as their agent. The conditions relate to ratifications by Mooney & Sons, and this firm accepted the mortgage by signing the contract. Nor were these securities obtained by fraud. Under the agreement of January 16, 1894, Mansfield had obligated himself to execute them, and in so doing he was simply complying with the terms of that contract. This contract was not pleaded, but was admissible in evidence, as bearing on the bona fides of the transaction. As to whether there was an oral understanding...