Kiser v. Dannenburg
| Decision Date | 19 February 1892 |
| Parties | KISER et al. v. DANNENBURG et al. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. A mortgage and other writings executed at the same time, and all springing out of the same agreement between debtor and creditor, are to be construed together, as one instrument.
2. An insolvent debtor, besides assigning to one of his creditors about $3,000 of notes and accounts as collateral security having made to him a mortgage upon a stock of goods and other personalty to secure an indebtedness of $3,400, the mortgage containing a power to sell the goods at wholesale or retail and the creditor, by contemporaneous writings, having stipulated to pay off the debt of another creditor out of the proceeds of the notes, accounts, and mortgaged property, and also to pay over to such other creditor all the money realized over and above $2,600, and stipulating, moreover that, when sold, the stock of goods should bring 80 per cent of invoice cost, the mortgage, together with the contemporaneous writings, constituted an "assignment," within the meaning of the act of 1881, and, unless the sworn inventory and schedule required by that act were prepared and attached, the mortgage was void.
3. The amendments to the petition offered and allowed being relevant to the purpose of the original petition, which was to obtain a receiver and set aside the mortgage, there was no error in allowing the amendments.
4. Where several defendants are all interested in the relief prayed against them, admissions of one of them, made against his own interest, are receivable in evidence to affect him, although they would not be evidence to affect his codefendants.
5. The judge did not abuse his discretion in granting an injunction and appointing a receiver.
Error from superior court, Crawford county; A. L. MILLER, Judge.
Suit by Dannenburg & Doody, Gibian & Co., and others against J. F. Hartley, Charles S. Taylor, and M. C. & J. F. Kiser & Co. for an injunction, the appointment of a receiver, and for the cancellation of a certain mortgage. On a judgment for plaintiffs, Kiser & Co. and others bring error. Affirmed.
Where several defendants are all interested in the relief prayed against them, admissions of one of them, made against his own interest, are receivable in evidence to affect him, although they would not be evidence to affect his co-defendant.
The following is the official report:
Dannenburg & Doody, Gibian & Co., and others, by their equitable petition alleged: Hartley was recently a merchant doing business in Crawford county, and is indebted to petitioners Dannenburg & Doody a sum past due since September 15, 1891, payment for which has been demanded and payment refused. This indebtedness is by note. He is also indebted to another of petitioners by note, part of the indebtedness being past due since October 1, 1891, and payment thereof has been demanded of him and payment refused. Also to Gibian & Co., $661.50 by an account. Up to October 9, 1891, he was in possession of a stock of goods, books of account, notes, etc., and certain personalty. On that day Kiser & Co., promising him that if he would turn over to them the stock of goods for an alleged indebtedness of $3,400, they would in future befriend him in such way as he might desire, they knowing at the time that he was insolvent, and was indebted to petitioners as before alleged, and their efforts being to make such an arrangement with him as to defeat petitioners in the collection of their claims, in order to carry out this scheme, procured from him a pretended mortgage for $3,400. Immediately upon its execution, and as part of the same transaction, he turned over the keys of the store in which his goods, books of account, notes, etc., were, making the agreement that, while the mortgage was apparently to secure an indebtedness of $3,400, Kiser would really collect only $2,600, and at the same time agreeing that he (Kiser) would sell the stock of goods at not less than 80 per cent. of their value, out of which he would first pay C. S. Taylor $785, and the surplus should be paid over to Taylor; stating at the time that it would be illegal to agree to pay this surplus to Hartley, but, when it was paid to Taylor, Hartley and Taylor might arrange the surplus between themselves. The arrangement was really for the benefit of Hartley, whom Kiser & Co. and Taylor knew to be insolvent, and owing about $7,500, and that he was indebted to petitioners and others. The arrangement was a fraud in law upon petitioners and other creditors, the mortgage is void, and the goods are now held in fraud of petitioners and other creditors of Hartley. The goods are now locked in the store under an agreement that Kiser & Co. will meet with Hartley and Taylor on Monday next to take an inventory, when the goods may be sold to some innocent party, unless the sale is restrained. There has been no complete sale, because no inventory has been taken, nor price agreed upon, nor was there to be an absolute delivery until the stock should be taken and the price ascertained. In the mean time, Kiser & Co. are authorized to sell the stock, books of account, and all the choses in action belonging to Hartley, and claim to have this power under the mortgage. Contemporaneously with taking the mortgage, Kiser & Co. gave Taylor a writing, to the effect that he was to pay to Taylor $785 from the proceeds of such sale as he might make, out of the first money realized from the sale of the goods, etc. The prayer was for cancellation of the instruments of writing referred to, receiver, injunction, judgment in favor of petitioners for their claims, to be paid from the proceeds of the sale of the property, etc. The Dunlap Hardware Company were made parties complainant, upon their petition alleging that Hartley owed them $257.50 on notes and accounts, the notes being due October 1st and 10th.
Kiser & Co. demurred, on the ground that the petition did not set forth any cause for injunction or receiver, and answered: Up to October 9th Hartley was a merchant, and on that day executed to these defendants a mortgage, with power of sale to his entire stock of goods and some personalty. This mortgage was made to secure a bona fide indebtedness, due by him to them, of the amount and character described in the mortgage; and he was not only so indebted to them, but by far the larger part of the goods mortgaged were the identical goods for which the indebtedness was contracted. They took possession of the goods under the power in the mortgage, and would have proceeded to invoice them, and offer them for sale, but for the temporary injunction. They did not promise to befriend Hartley in such a way as he might desire, but did assure him that if he would secure them they would be ready and willing to befriend him in any proper way, and showed him how it would be for his best interest to have a guaranty that his goods would bring full value instead of being sacrificed, and also that it was due them, to whom he owed about half of his indebtedness, and of whose goods from two thirds to three fourths of the stock was composed, that they should not take chances on any more debt than other creditors. Their effort was not to make such an arrangement with him as would defeat petitioners in collecting their claims, nor did they enter into any scheme for that purpose, but it was to secure the indebtedness due them, and they did nothing unwarranted by law, right, and justice. They would have gotten fuller and better security if they could, but could do no better than to leave nearly one fourth of the indebtedness due them unsecured, and in the same condition as that of petitioners. Such security as they got--the mortgage, transfer of the notes and accounts as collateral, and possession of the stock--was obtained as follows: Petitioners and Ragan, a member of defendants' firm, had for a day or more been trying to get security for their claims, each urging Hartley to secure them, but to no purpose, until Ragan suggested to him that, as he had no other creditor whose claim amounts to over $800, it would be but fair to secure these defendants to such an extent as would not force them to lose more than any other creditor. This suggestion seemed to meet with some favor, and Hartley said he wanted his friend Taylor paid, $2,600 of defendants' debt paid, and the balance divided pro rata among his creditors, including defendants for their balance, but that he was afraid his stock would be sacrificed. Defendants then agreed that, if he would execute a mortgage with power of sale for their entire debt, deliver possession of the stock, and transfer the notes and accounts, they would take charge of the stock, and sell it to the best advantage, guarantying it should realize 80 cents on the dollar, and would let the debt of Taylor be first paid, and, after realizing $2,600 on their debt, would let the balance stand unsecured, to share in a pro rata division of any surplus. The mortgage was executed, the notes and accounts transferred to defendants, and they put in possession of the stock. They deny that there was any purpose to create a trust for the benefit of any of the defendants, but, on the contrary, it was the purpose and agreement to give the creditors the benefit of all the property in the manner stated. All allegations of fraud were denied, etc. The stock of goods did not exceed, at invoice price, $3,500, and were not worth and would not have brought over $2,500. It was not expected that the stock would invoice enough to pay Kiser & Co. $2,600 and Taylor his debt. It was expressly understood that any surplus from the sale of...
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