SanGer v. Freie Presse Co.

• Decision Date: 29 January 1889
• Citation: 41 N.W. 436,73 Wis. 354
• Parties: SANGER v. FREIE PRESSE CO. ET AL.
• Court: Wisconsin Supreme Court

73 Wis. 354

41 N.W. 436

SANGER

v.FREIE PRESSE CO. ET AL.

Supreme Court of Wisconsin.

Jan. 29, 1889.

Appeal from superior court, Milwaukee county; J. E. MANN, Judge.

Action by Caspar M. Sanger against the Freie Presse Company, L. R. Roeder, and M. L. Roeder, on promissory notes. Richard Guenther was garnished, and appeals from a judgment rendered against him.Frisby, Gilson & Elliott, for appellant.

Markham, Williams & Bright, for respondent.

COLE, C. J.

The counsel for the respondent is fully justified in insisting that this case, in all its essential facts, is the same as Standard Paper Co. v. Guenther, 67 Wis. 101, 30 N. W. Rep. 298. The cases cannot be distinguished in principle. The findings of fact by the trial court abundantly sustain this view. The head-note in the Standard Paper Case correctly states the principle decided in the following language: “When the mortgagee of chattels delays the filing of his mortgage at the request of the mortgagor, and in order that the credit of the latter may not be injured, he is estopped to assert such mortgage as against creditors, who, after the execution of the mortgage, and before its filing, gave credit to the mortgagor upon the faith that his property was unincumbered; and this is so, although the mortgagee had no actual intent to defraud any creditor.” In this case the trial court found, in substance, that the note which is the basis of the judgment on which this garnishee process was issued was given on the 16th day of June, 1884, in consideration of the settlement and discontinuance by the plaintiff of a certain action then pending, and being prosecuted by the plaintiff, against the Freie Presse Company; that such note was received in settlement of that suit, and further credit extended to the Presse Company in good faith, upon the belief that the property of the Presse Company was unincumbered. The chattel mortgage was then in existence, but had been kept from the files of the proper office by the mortgagee and garnishee, at the solicitation of the agents of the mortgagor, because it would hurt its credit, and interfere with its business, to have it placed upon record. The court also found that the plaintiff herein had no notice of the existence of this mortgage when he took the note, but relied upon the property of the Presse Company being unincumbered. That there is abundant testimony to sustain these findings cannot be successfully denied. Now, in the Standard Co. Case, Mr. Justice TAYLOR, in effect, says that the withholding of the mortgage from the record by the mortgagee, at the request of the mortgagor, operates as a fraud upon the parties who deal with and give credit to the mortgagor upon the supposition that the property which he apparently owns is unincumbered; that, if the mortgagee is permitted to insist upon the validity of his mortgage as against those who had given credit under such circumstances, it amounts to a legal fraud, whether there is any actual intent on the part of the mortgagee to defraud a creditor or not. This undoubtedly would be the inevitable effect of such secret arrangements between the mortgagor and mortgagee about withholding from the record the chattel mortgage. It would in many cases operate as a fraud upon parties dealing with the mortgagor without notice of any...