Marlin v. Teichgraeber

• Decision Date: 05 October 1901
• Docket Number: 12,158
• Citation: 66 P. 234,63 Kan. 521
• Parties: W. S. MARLIN, Assignee, v. R. E. TEICHGRAEBER
• Court: Kansas Supreme Court

66 P. 234

63 Kan. 521

W. S. MARLIN, Assignee, v. R. E. TEICHGRAEBER

No. 12,158

Supreme Court of Kansas

October 5, 1901

Decided July, 1901.

Error from Greenwood district court; A. M. JACKSON, judge.

Judgment reversed.

SYLLABUS

SYLLABUS BY THE COURT.

1. GENERAL ASSIGNMENT -- Chattel Mortgage -- Fraud. A corporation, being insolvent and having decided to draw its business to a close, executed a chattel mortgage to a creditor, and on the next day made a general assignment of all its property for the benefit of creditors, subject to the mortgage. The chattel mortgage was never accepted by the mortgagee and no lien asserted under it. Held, that the assignment was not invalidated, and that if the execution of the mortgage and deed of assignment be regarded as part of the same transaction the mortgage alone falls and the assignment is not affected.

2. GENERAL ASSIGNMENT -- Attachment -- Insufficient Ground. There being no fraud shown which inhered in the assignment itself, the fact that the debt sued for was fraudulently contracted furnished no ground for the seizure by attachment of property covered by a deed of general assignment made by the debtor.

James Schultz, and Howard J. Hodgson, for plaintiff in error.

D. B Fuller, for defendant in error.

SMITH J. JOHNSTON, GREENE, ELLIS, JJ., concurring.

OPINION

SMITH, J.:

In an action brought by the defendant in error against the Greenwood County Cooperative Exchange Association, a corporation, on an account for goods sold and delivered, a writ of attachment was sued out at the commencement of the suit and levied on personal property in the possession of the assignee for the benefit of the creditors of said corporation. The deed of assignment was executed and delivered on July 15, and the writ of attachment levied on July 30, 1896. The grounds for the attachment, as stated in the affidavit, were two: (1) That the defendant corporation had assigned, removed and disposed of its property, or a part thereof, with intent to hinder and delay its creditors; (2) that it fraudulently contracted the debt and incurred the obligation and liability for which the suit was brought.

Upon the hearing of a motion filed by the assignee to discharge the attached property, it appeared that at a meeting of the directors of the association held on July 14, 1896, it was decided to draw the business of the company to a close. A resolution was passed authorizing a mortgage to be executed in favor of the First National Bank to secure a note of the association indorsed by the directors. At an adjourned meeting, held on the following day, the directors ordered that an assignment be made for the benefit of creditors. Pursuant to this action, a chattel mortgage was executed on July 14 to secure a note to the bank for $ 350. The bank officers, however, refused to accept the mortgage, giving as a reason that the note held by the bank was amply secured by individual indorsement. The mortgage, however, was filed for record. The deed of assignment purported to transfer all the property of the corporation, for the purpose of paying the debts of the concern ratably and without preference, except that it was subject to the chattel mortgage mentioned. It was shown on the hearing that the balance of the account sued on was contracted for goods obtained on representations which led the seller to believe that the concern was solvent, when in fact the contrary was...