Rankin v. Schultz
| Citation | 118 N.W. 383,141 Iowa 681 |
| Parties | ESTHER RANKIN, Appellee, v. HERMAN L. SCHULTZ and H. C. SCHULTZ, Appellants |
| Decision Date | 23 November 1908 |
| Court | Iowa Supreme Court |
REHEARING DENIED THURSDAY, MARCH 18, 1909.
Appeal from Wright District Court.--HON. C. G. LEE, Judge.
SUIT in equity to subject certain personal property to the payment of a judgment held by plaintiff against Herman L. Schultz, to set aside a mortgage upon said goods held by H. C. Schultz for the appointment of a receiver, and for other equitable relief. The trial court refused to set aside the mortgage but directed a sale of the property, and out of the proceeds ordered the receiver to first pay the amount found due on the mortgage, and the remainder upon plaintiff's judgment. Defendants appeal.--Affirmed.
Decree affirmed.
J. H Scales, for appellants.
Nagle & Nagle and R. W. Birdsall, for appellee.
The action is a creditor's bill, or rather an equitable levy upon a drug stock in the town of Belmond to subject the same to the payment of a judgment held by plaintiff against defendant Herman L. Schultz. It appears from the testimony that defendant, Herman L. Schultz, acquired a one-half interest in a certain drug stock and business in the town of Belmond some time in the year 1904. At that time the stock was invoiced at something like $ 7,800. In December of the year 1905 this defendant purchased the half interest owned by his partner Kenefick, and thenceforth, and until September 28, 1906, conducted the business in his own name. Some time in May, 1906, plaintiff applied to defendant Herman Schultz for some spirits of camphor, and by mistake this defendant gave her carbolic acid instead. Not knowing of the error, plaintiff used the acid with disastrous results. She commenced suit for damages early in September of the year 1906, but defendant Herman Schultz was made aware of her injuries shortly after they were received. Judgment was rendered in plaintiff's favor for the sum of $ 1,500 on December 20, 1906. Herman L. Schultz is a son of H. C. Schultz, and it appears that the father furnished most of the money for the purchase of the drug stock, taking the son's notes therefor, one for $ 3,895, dated September 21, 1904, which it is claimed was paid by other notes dated August 20, 1906, one for $ 1,000, one for $ 900, and another for $ 3,000. These latter notes were secured by a chattel mortgage upon the drug stock and business under date August 20, 1906. The last-mentioned notes matured November 1, 1906, May 1, 1909, and January 1, 1908. The chattel mortgage was duly recorded. Afterward, and on Sept. 28, 1908, defendants, father and son, entered into a written agreement by the terms of which Herman L. sold and transferred the business and stock of drugs to his father, H. C. Schultz, in payment of the notes and chattel mortgage aforesaid. This agreement also provided that:
In consideration of a sale and transfer of the stock of drugs and the drug business at Belmond, Iowa, by H. L. Schultz to H. C. Schultz in virtue and in satisfaction of a chattel mortgage thereon executed by the said H. L. Schultz to the said H. C. Schultz, it is agreed by the parties hereto, that the said H. L. Schultz shall clerk for and manage said drug stock business at Belmond, Iowa, for and on behalf of the said H. C. Schultz and in his name and buy stock when instructed to do so, to replenish said stock of drugs, and account to said H. C. Schultz for any and all sales made and moneys received, and render an accurate account of such business to said H. C. Schultz showing the aggregate receipts and disbursements, at the end of every quarter--three months period--or monthly when required. He shall conduct the said business carefully and avoid any liability to the said H. C. Schultz for or on account of the conduct of said business, which he hereby agrees to indemnify him against. The said H. L. Schultz may, with the consent of the said H. C. Schultz, employ a competent clerk to aid him in the conduct of said business whose salary or compensation shall be paid from the receipts of said business. It is further agreed between the parties hereto that the said H. L. Schultz shall receive as compensation for his services as proprietary manager of said business one-third of the net proceeds after deducting all expenses and liabilities thereof, to be paid to him at the period of accounting to the said H. C. Schultz, as required herein.
It was never recorded and no actual physical change was made in the possession of the goods at any time thereafter. From the time the agreement was made the business was conducted in the name of H. C. Schultz & Co., Herman L. Schultz being, as he said, the company. It is claimed by defendant that the business was so conducted in order to save a permit issued to Herman L. There was, as we have said, no actual or visible change made in the possession of the goods or in the conduct of the business, although there was a change in the name of the firm, as above indicated. Plaintiff commenced this action on December 26, 1906, the petition being filed December 27 and the original notice being served upon H. C. Schultz on January 5, 1907.
It appears that since January 1, 1907, defendant Herman Schultz has drawn out of the business something like $ 556, and that since the making of the contract of sale H. C. Schultz has drawn out $ 1,088. The trial court held the mortgage to H. C. Schultz valid, but decreed the sale fraudulent and void. It also made an accounting of the amount due on the mortgage indebtedness, finding it to be $ 3,391.28, with 6 per cent. interest from May 1, 1907, declared this to be a first lien upon the goods, established a second lien on the goods in plaintiff's favor to the amount of her judgment with interest, appointed a receiver, and directed a sale of the goods to pay these liens. Plaintiff did not appeal; but defendants did, and are here challenging the correctness of the decree in so far as it is adverse to them. In view of this record we can not do more for plaintiff than affirm the judgment. Defendants' appeal, however, presents for our consideration several propositions which we shall consider in the order in which they are discussed in counsel's brief.
It is contended that the sale of the drug stock and business was and is valid, and should have been sustained. The trial court found it to be fraudulent, in that it was made with intent to hinder, delay and defraud creditors, and counsel also contend that it was fraudulent...
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