Jaffray & Co. v. Raab

• Decision Date: 14 June 1887
• Parties: JAFFRAY & Co. ET AL. v. RAAB ET AL
• Court: Iowa Supreme Court

33 N.W. 337

72 Iowa 335

JAFFRAY & Co. ET AL. v. RAAB ET AL

Supreme Court of Iowa, Des Moines

June 14, 1887

Appeal from Des Moines District Court.

THE partnership of Greenbaum, Schroeder & Co. was for many years engaged in mercantile business in the city of Burlington, in this state. They also carried on a branch store at Lincoln Nebraska. On the 14th day of May, 1879, the said firm, being insolvent, executed a chattel mortgage or deed of trust on their entire stock of goods and other property to secure certain preferred creditors. These secured claims amounted in the aggregate to about $ 40,000. In a short time after the execution of the chattel mortgage or deed of trust, the plaintiffs herein, who were creditors of said firm, and whose claims were not secured by the chattel mortgage, sued out attachments, and levied the same upon the stock of goods. The firm had leased the building in which they carried on their business at Burlington from Gilbert, Hedge & Co., and the lease did not by its terms expire until 1884. Gilbert, Hedge & Co. commenced an action for an injunction to restrain any further sale of the goods, claiming a landlord's lien for the rent to accrue under the lease. The chattel mortgage or trust deed, as originally executed, provided that the creditors preferred thereby should consent to an extension of one year on their demands. After the attachments of plaintiffs were served, and after the suit of Gilbert, Hedge & Co. was commenced, and on the 24th day of June, 1879 Greenbaum, Schroeder & Co. executed another writing, by which they waived their right to one year's possession of the goods, and consented that the trustees named in the chattel mortgage should take possession of all of the property, and dispose of it at public or private sale, and apply the proceeds upon the claims secured by the mortgage. On the next day, E. S. Jaffray & Co., and Dunham, Buckley & Co., the attaching creditors, and the plaintiffs herein, filed an original bill in equity against all of the other parties, in which they claimed that the trust deed or chattel mortgage was void, because made with intent to delay and defraud creditors. They also alleged that the lien of Gilbert, Hedge & Co. was much less than claimed by them, and they recited all the facts, and prayed the appointment of a receiver, with power to proceed and dispose of said property in the ordinary course of business. On the 28th day of June a receiver was appointed.

An order was entered consolidating all the cases into one, and issues were made up and a trial was had, and in the final decree it was found that Gilbert, Hedge & Co. were entitled to a lien for the rent due to them as a first lien upon the assets of the firm, and that the trust deed was a valid instrument, and that the creditors secured thereby were entitled to a second lien. It will thus be observed that the plaintiffs were defeated in the action as consolidated, and they, with other intervening creditors, were postponed to the lien for rent, and to the claims of creditors secured by the mortgage. The receiver took possession of the property, and disposed of it by sale, and collected the claims...