North Star Boot & Shoe Co. v. Ladd

• Decision Date: 11 August 1884
• Citation: 32 Minn. 381
• Parties: NORTH STAR BOOT & SHOE COMPANY <I>vs.</I> JOSEPH W. LADD, and Garnishee, and Claimant.
• Court: Minnesota Supreme Court

32 Minn. 381

NORTH STAR BOOT & SHOE COMPANY vs. JOSEPH W. LADD, and Garnishee, and Claimant.

Supreme Court of Minnesota.

August 11, 1884.

Appeal by James A. Lovejoy, as claimant in an action against Joseph W. Ladd, defendant, and the Shoe & Leather Ins. Co., garnishee, from an order of the district court for Hennepin county, Koon, J., presiding, refusing a new trial after verdict for plaintiff.

C. H. Benton, for appellant.

Lane & Dodge, J. M. Shaw and A. B. Jackson, for respondent.

BERRY, J.

The Shoe & Leather Insurance Company insured defendant Ladd against loss by fire to the amount of $1,000, upon a stock of goods owned by him, and upon its face the policy made "the loss (if any) payable to James A. Lovejoy, as his interest may appear." On January 20, 1883, Ladd gave Lovejoy a chattel mortgage on the goods, ostensibly to secure four promissory notes held by Lovejoy against him. The mortgage was filed February 23, 1883. On February 8, 1883, the goods were totally destroyed by fire, and prior to May 19th following the loss was adjusted. On May 19th, plaintiff, as a creditor of Ladd, garnished the insurance company, which, upon disclosure, admitted an indebtedness of $1,000 on the policy, further disclosing the fact that the loss was, by the terms of the policy, made payable to Lovejoy, and that he claimed it. Under Gen. St. 1878, c. 66, § 174, Lovejoy appeared as a claimant of the fund in the garnishee's hands, and filed a formal complaint, setting up a claim to such fund under and by virtue of the chattel mortgage. The plaintiff answered, alleging, in substance, that the mortgage was fraudulent as to Ladd's creditors, and that both it and the notes mentioned were without consideration. Lovejoy replied, denying these allegations of the answer.

Upon the trial of the issue thus raised, the court below properly ruled that the affirmative was upon Lovejoy. The statute (section 174, supra) under which Lovejoy came into the proceedings provides that the claimant may appear and "maintain his right." We see no substantial distinction between this case and Donnelly v. O'Connor, 22 Minn. 309, where the affirmative was held to be upon the claimant, to whom (as here) a "loss" was made payable to the extent of his interest. The indorsement upon the policy, by which in that case the "loss" was made payable to the claimant, is of the same effect as the clause in the policy in this case, by which the "loss" is made payable to Lovejoy. Ladd was the insured, notwithstanding this clause, just as was the party to whom the policy ran in the case cited.

On the part of the plaintiff and the court below, this case was tried and submitted to the jury upon the theory that the question was whether, as respected the plaintiff, the chattel mortgage was valid; or, as otherwise stated, whether, as respected the plaintiff, the mortgage was executed in good faith, and not for the purpose of defrauding Ladd's creditors. This theory was entirely correct. The plaintiff was a creditor of Ladd on account of the claim sued for in this action at the time when the chattel mortgage was made. The "loss" secured by the policy belonged to Ladd, and upon the adjustment was an "indebtedness" of the insurance company to him, except to the extent of the interest of Lovejoy under his chattel mortgage. If Lovejoy had no such interest as against the plaintiff, for the reason that, as to plaintiff, as one of Ladd's creditors, the mortgage was void as having been given for the...