Lead v. Union Oil & Paint Co.

• Decision Date: 20 September 1898
• Citation: 76 N.W. 359,100 Wis. 488
• Court: Wisconsin Supreme Court
• Parties: PENINSULAR LEAD & COLOR WORKS v. UNION OIL & PAINT CO. ET AL.

100 Wis. 488

76 N.W. 359

PENINSULAR LEAD & COLOR WORKS

v.UNION OIL & PAINT CO. ET AL.

Supreme Court of Wisconsin.

Sept. 20, 1898.

Appeal from circuit court, Milwaukee county; D. H. Johnson, Judge.

Attachment proceedings by the Peninsular Lead & Color Works against the Union Oil & Paint Company. Defendant made an assignment for the benefit of creditors within 10 days after the levy, and Frank B. Schutz and others, creditors of defendant, moved to dissolve the attachment. At the time chapter 334, Laws 1897, went into effect, defendant Union Oil & Paint Company was indebted to plaintiff for merchandise sold defendant by plaintiff in the regular course of business. Subsequently suit was brought to recover such indebtedness, and the property of the defendant was duly attached to satisfy the plaintiff's claim. Within 10 days after the attachment, the defendant made and perfected an assignment for the benefit of creditors, and thereafter, pursuant to chapter 334 aforesaid, moved the court for an order vacating the attachment in consequence of the making of the assignment. The motion was denied, and the petitioners appealed. Affirmed.

Cassoday, C. J., dissenting.D. S. Rose and Bloodgood, Kemper & Bloodgood, for appellants.

Miller, Noyes, Miller & Wahl, for respondent.

MARSHALL, J.

When the contract was made on which the writ of attachment issued, the creditor had the absolute right, on the facts set forth in the affidavit, to that remedy to secure the payment of the indebtedness. In case of a resort to such remedy and the acquirement of a lien on the debtor's property thereby, there was nothing in the law of assignments for the benefit of creditors whereby the creditor's right of preference over all other creditors as to such property, to the extent of the attachment lien, could be taken away, though such laws had all the elements of a bankrupt law even to the absolute discharge of all debts of the debtor on his conveying his property not exempt from attachment or execution for the benefit of his creditors, and complying with the prescribed procedure in such cases. All assignments containing preferences, all preferences given or secured by the act of the debtor by confession of judgment within 60 days of the making of an assignment, or by giving security upon or parting with his property in any manner whatever, in contemplation of insolvency within such time, were declared void, provided the person benefited thereby knew, or had reasonable cause to believe, the debtor to be insolvent. There was still left to creditors, however, the remedy of securing by attachment or garnishment proceedings, conducted in good faith, a preference over other creditors of the debtor, which could not be disturbed by a subsequent assignment. With that condition of things existing, chapter 334, Laws 1897, was passed for the purpose of taking away the opportunity for obtaining a preference by attachment, which purpose was effectually accomplished as to all contracts, whether then existing or subsequently made, if it is valid as to such prior contracts. It provides in section 3, that, “whenever the property of an insolvent debtor is attached or levied upon by virtue of any process in favor of a creditor, or a garnishment is made against such a debtor, such debtor may, within ten days thereafter, make an assignment of all his property and estate not exempt by law, for the equal benefit of all his creditors as provided by law, whereupon all such attachments, levies, garnishments, or other process shall be dissolved and the property attached or levied upon shall be turned over to such assignee or receiver.” Prior to that enactment, no assignment could in any way defeat a debtor's prior attachment. The act not only took away the remedy by attachment, but left none whatever to the creditor for the collection of his claim except that of participating in the assignment proceedings and taking his distributive share of the debtor's property equally with all other creditors in proportion to their respective claims, in full settlement and discharge thereof. The proceedings in this case raise the single question of whether the act referred to, so far as it attempts to take from creditors rights existing when it took effect, is void because prohibited by section 10 of article 1 of the constitution of the United States, which provides that, “no state shall * * * pass any law impairing the obligation of contracts.”

The case is ruled by Bank v. Schranck, 97 Wis. 250, 73 N. W. 31. The law governing the subject was there so fully discussed and clearly declared in the exhaustive opinion written by Mr. Justice Pinney, that little if anything can be added to it or said without danger of repeating in substance what was there said. The decision of the court, as stated in unmistakable language, was that a statute affecting the relations between debtor and creditor as to existing contracts, so as to impair materially their value by acting on the remedy alone, in effect substantially impairs the obligations of such contracts and is void on that account the same as though such legislation acted directly on the contracts themselves. That was but reiterating what has been said by this court frequently before, and by the highest court in the land, whose judgments as to the meaning of the federal constitution are binding on this and all courts. The question really seems hardly open to discussion at all at this late day. Courts can draw no distinction between the right and the remedy where the latter affects materially the value of the contract obligation, and say the former is, and the latter not, within the scope of the constitutional inhibition upon the states. The debates in the constitutional convention show most clearly that legislative interference with the rights of creditors by operating upon the remedy for the enforcement of contracts by means of exemption laws, stay laws, unreasonable limitation laws, laws bearing on the value of the medium of payment, tender laws, and other like ways, were the very mischiefs which it was intended to prevent under the new order of things, by conferring upon the general government exclusive power to coin money and fix the value thereof, and by prohibiting the states from issuing paper money or making anything but gold and silver a tender in the payment of debts, or making any laws impairing the obligation of contracts. Mr. Madison, replying to objections to the latter prohibition, in that it would prevent legislation as to remedies to recover debts, and to observations that circumstances might arise rendering such interferences proper and essential, said, in substance, that the inconvenience would be overbalanced by the utility of it, and that, without an absolute prohibition, evasions might and would be devised by the ingenuity of legislatures. The truth of that observation and the wisdom of adopting a safeguard against the dangers it pointed out, are evidenced by the repeated attempts to overcome such safeguard, some of which attempts, it may be claimed with reason, have successfully passed the scrutiny of the court, which is the special guardian of the constitution; but no attempt such as the one under consideration, it is...