Joseph Schlitz Brewing Co. v. Childs
| Decision Date | 07 July 1896 |
| Citation | 65 Minn. 409,68 N.W. 65 |
| Parties | JOSEPH SCHLITZ BREWING CO. v CHILDS. |
| Court | Minnesota Supreme Court |
OPINION TEXT STARTS HERE
(Syllabus by the Court.)
On April 2, 1895, W., being insolvent, to the knowledge of S., executed to him his two promissory notes, the consideration of which was a past-due indebtedness of $888.83 and a then present loan of $300, made by S. to W., and secured the whole amount by a chattel mortgage. This loan was not made for the purpose of inducing W. to secure the past indebtedness, but to enable him to continue his business with the expectation that he might thereby pay his debts; and S. was not guilty of any fraud in fact in taking security for his debt, but the same was void as a preference under the insolvency laws of this state. W. made an assignment under such laws, for the benefit of his creditors, to the defendant, May 15, 1895, who took possession of the property described in the chattel mortgage. Held that, while the mortgage was void as a preference as against the assignee, so far as it secured the past indebtedness, it was valid as a security for the loan, and that the plaintiff is entitled to maintain this action to recover possession of the property covered by the mortgage.
Appeal from district court, Hennepin county; Robert D. Russell, Judge.
Replevin by the Joseph Schlitz Brewing Company against C. H. Childs, assignee of John M. Wark, insolvent. There was a verdict for defendant, and plaintiff appeals from an order denying a new trial. Reversed.
Rea, Hubachek & Healy and A. D. Smith, for appellant.
J. D. Shearer, for respondent.
On March 30, 1895, one John M. Wark was engaged in the retail saloon business in the city of Minneapolis, and was then indebted to this plaintiff in the sum of $888.83 for money loaned on two separate occasions in the year 1894, and which was past due and unsecured. He had been a customer of plaintiff for several years, with a good reputation, and reliable in business matters. He held a license to sell liquor, granted by the city of Minneapolis, which would expire the next day, and had no money with which to purchase a new license. The plaintiff knew of an unexpired license which then had three months to run, and informed Wark of it, who requested plaintiff to loan him $300 with which to purchase the unexpired license, Wark then stating to plaintiff that if he could get the license he would, by the time it expired, be able to purchase a new license for a year, and continue his business, as it was increasing, and he expected to get some money from the West. Wark was owing at this time somewhere from $2,651 to $5,600, the exact amount not definitely appearing. His estate was worth $3,500. Only one creditor was pressing him for payment, and he was willing to give him time. Of this claim plaintiff knew, except he had no knowledge of the amount. Plaintiff never pressed Wark for payment, and told him to pay when convenient, which he did weekly, and plaintiff believed him to be solvent. Plaintiff asked Wark for his financial condition, and Wark told him that he owed about $2,000, and that his assets were about $4,000, which statement plaintiff testified he believed to be Wark's true financial condition. At this time -March 30, 1895-they went to the office of plaintiff's attorney to have a chattel mortgage executed for the past indebtedness, and also to include the $300 which plaintiff was to loan Wark to purchase the unexpired license, but Wark, expecting his brother from Montana, concluded to wait until the next day, when he thought he could get the money from him without security. Not succeeding in this, Wark, on the 2d day of April, 1895, executed to the plaintiff a chattel mortgage for $1,188.83, which included the past indebtedness and the $300 then loaned by plaintiff to Wark, who immediately used it in purchasing the unexpired license, and all of which was done to enable Wark to continue in his business. On the 15th day of May, 1895, Wark made a general assignment by deed in writing of all his unexempt property for the benefit of his creditors under the insolvent laws of this state. This assignment was made by reason...
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