Morse v. Riblet

• Decision Date: 08 November 1884
• Parties: MORSE and others v. RIBLET.
• Court: U.S. District Court — Western District of Michigan

22 F. 501

MORSE and others v. RIBLET.

United States Circuit Court, W.D. Michigan, Southern Division.

November 8, 1884

Fletcher & Wanty, for plaintiffs.

W. D Fuller and J. C. Fitzgerald, for defendant.

WITHEY J.

The mortgage which the defendant gave to McGraw & Co., dated October 20, 1884, presents all the questions bearing upon the alleged fraudulent character of the transaction involved in this application to dissolve the attachment in this case. It appears on the face of the mortgage that the mortgagor was to continue in possession of the stock of goods, and sell and dispose of them in the ordinary course of his business; was to keep the stock replenished as nearly as might be. The mortgage covered subsequently acquired goods put into the stock, and secured present and future indebtedness for goods bought of the mortgagees on credit. The mortgage was given with the understanding that it would enable the mortgagor to keep on in business and pay his debts by disposing of other property and applying the proceeds to their payment. It was understood that he was not able to pay his debts as they matured, but he believed he could pull through and pay if he could get time. The evidence outside of the mortgage shows that the mortgagor depended much on McGraw & Co.'s advice as to how he should deal with his other creditors in reference to giving security, etc., but there was no understanding and agreement as to this. He, subsequent to giving them the mortgage, sought their advice. They advised the giving of a second mortgage to Burnham & Co., and they expressed their opinion of the course the mortgagor should pursue in reference to other of his creditors. One of his creditors, for a small amount, had, it seems, proposed to take judgment against the mortgagor; and October 31st, 11 days subsequent to the date of the mortgage to McGraw & Co. one of their firm wrote to the mortgagor that he had better given them a mortgage on all his personal property, horses, w wagon, and everything subject to levy, saying: 'It will be the safest for you, and it will be easy for us, to turn it over to you when you get into shape. ' Riblet says he never answered this letter, and no such mortgage seems to have been given.

On these facts we are asked to find that the mortgage to McGraw & Co., given October 20, 1884, was given with intent to hinder and delay creditors, and is therefore void. First, it is urged that the mortgage is constructively fraudulent containing a provision that is beneficial to the debtor, and necessarily prejudicial to other creditors, viz., the permission to the debtor to sell and dispose of the stock of goods in the usual course of his business, thereby shielding the property of the debtor so that creditors are...