Sweet, Dempster & Co. v. Neff

• Decision Date: 14 March 1899
• Court: Wisconsin Supreme Court
• Parties: SWEET, DEMPSTER & CO. v. NEFF ET AL.

102 Wis. 482

78 N.W. 745

SWEET, DEMPSTER & CO.

v.NEFF ET AL.

Supreme Court of Wisconsin.

March 14, 1899.

Appeal from circuit court, Winnebago county; George W. Burnell, Judge.

Action by Sweet, Dempster & Company, a corporation, against J. A. Davis and another, defendants, and W. W. Neff and others, garnishees. From a judgment for the latter, plaintiff appeals. Reversed.

August 27, 1897, the principal defendants were insolvent merchants having on hand a stock in trade and some store fixtures of the value of some over $2,000 and about $500 in book accounts. Among the creditors of such defendants were plaintiff and the mortgagees hereinafter mentioned. Such mortgagees, each acting independently of the other, and knowing of the insolvent condition of such defendants, gave his or its claim to M. H. Eaton, an attorney at law, with instructions to collect or secure it. After receiving such claims, the attorney demanded payment or security, in accordance with his instructions from the creditors. Such defendants thereupon gave such creditors mortgages upon their entire property, each being in form independent of the others. All the mortgages were made at the same time, in the same place, and in the order the claims were received by the attorney. The first mortgage was given to W. W. Neff for $550. That was followed by others in the following order: E. H. Hicks, $300; Commercial Bank of Oshkosh, $175; German American Bank of Oshkosh, $175; South Side Exchange Bank of Oshkosh, $240; Frank A. Leach, $150.26. The last mortgage covered the book accounts as well as the stock. Each mortgage contained a provision as follows:

“It is further understood and agreed between the parties hereto that for further security the said ______ shall take, and does take, the actual and full possession of said property and every part thereof, so as to be and become the mortgagee in possession, and it is further agreed that all proceeds derived by said second party from sales of any of said property shall be applied to the payment of the aforesaid notes, and said second party shall well and truly account for all money received by him from such sales.”

All of the mortgages were filed by the attorney in the office of the city clerk at the same time, but in the order in which they were made. The attorney handled the matter for all of the creditors named, drew the mortgages, obtained the signatures thereto, placed the same on file, obtained certified copies of them preparatory to taking possession of the property, and delivered to Neff his copy, who immediately took possession of such property, and that was speedily followed by a taking possession by the attorney for the other mortgagees in their order. Thereafter, Neff sold sufficient of the property to more than cover his claim, then accounted to Eaton, the attorney, as agent for the other mortgagees, who then took absolute control of the property and continued the conversion of the same into money till the whole business was closed out. The mortgagee, Leach, asserted a right in the meantime to control the book accounts, and made some collections thereon. After the mortgages were made and Neff had taken possession of the property, and Attorney Eaton had asserted possession thereto subject to the rights of Neff, plaintiff commenced an action to recover its claim against the principal defendants, and this garnishee proceeding, summoning all the mortgagees as garnishees. Such garnishees answered separately, putting in issue the claim of the plaintiff as to the validity of such mortgages. On the trial the evidence established the bona fides of the indebtedness secured by the mortgages, and established the facts substantially as before indicated. There was considerable direct evidence that the mortgages were taken for no other purpose than to recover the indebtedness secured thereby from the principaldefendants. The court found the facts as indicated; that the several mortgages were separate and distinct transactions; that there was no concert of action between the mortgagees; that Neff acted solely for himself in taking possession of and selling the mortgaged property, and that the mortgages were all valid and the garnishees not liable. Judgment was entered accordingly.

Felker, Stewart & Felker, for appellant.

Eaton & Weed, for respondents.

MARSHALL, J. (after stating the facts).

The question for decision on this appeal is: Did the mortgages given by Davis & Buckstaff to the garnishee defendants, under the circumstances, constitute an assignment for the benefit of creditors within the decisions of this court in Winner v. Hoyt, 66 Wis. 227, 28 N. W. 380,Strong v. Kalk, 91 Wis. 29, 64 N. W. 295,Jameson v. Maxcy, 91 Wis. 563, 65 N. W. 492,Collins v. Corwith, 94 Wis. 514, 69 N. W. 349, and similar cases? The principles of law governing the subject are too well known to require any discussion here. It is the established doctrine that if an insolvent debtor make a conveyance to, or by any arrangement place his property under the...