Teitig v. Boesman

• Decision Date: 29 July 1892
• Parties: TEITIG et al. v. BOESMAN et al.
• Court: Montana Supreme Court

12 Mont. 404

TEITIG et al.

v.BOESMAN et al.

Supreme Court of Montana.

July 29, 1892.

Appeal from district court, Lewis and Clarke county; WILLIAM H. HUNT and HORACE R. BUCK, Judges.

Action by Henry Teitig and others against Boesman Bros. & Co. and Reinhold H. Kleinschmidt. Judgment for plaintiffs. Defendants appeal. Reversed.

The other facts fully appear in the following statement by HARWOOD, J.:

It appears that in October, 1888, a corporation was organized under the laws of Montana, in the name of Boesman Bros. & Co., for the purpose, as set forth in its certificate of incorporation, of “conducting and carrying on a general liquor business, such as dealing, at wholesale or retail, in beer, wine, liquor, mineral water, tobacco and cigars, and the importing and bottling of all kinds of mineral water, beer, wine, and all kinds of liquors.” That three brothers, named, respectively, Charles, Henry, and Richard Boesman, were the incorporators of said company, as shown by said certificate; and the same persons were named therein as trustees to manage the concerns of said company for the first three months of its existence. That the capital stock of said company, stated in said certificate, was $10,000. That said company entered upon the conduct of said business, and continued to carry the same on until June 12, 1890, when it made and executed an alleged assignment, and delivered possession of all its property therewith, to defendant Reinhold H. Kleinschmidt, in trust, for the purpose of converting the same into money, and therewith to pay its debts, as directed in the assignment, the creditors of said company being set forth in the five several lists, or classes, which lists were attached to said assignment; and the assignment directed payment of said creditors in the order us thus classified. That defendant Kleinschmidt was among the creditors of said company in the first class, to the extent of about $10,907, and the Union Warehouse Company, of which defendant Kleinschmidt was president, appears as creditor of said company in the second class of creditors, to the amount of $13,750. That at the time of said assignment and delivery of said property to Kleinschmidt the plaintiffs in this action were severally creditors of said company in various sums, ranging from about $100 to about $1,500, respectively. That said creditors, who now appear as plaintiffs in this action, each severally brought suit against said company, obtained process for the attachment of the property of said company, and served on defendant Kleinschmidt, who was then in the possession of said property formerly owned by said company, a process of garnishment. That said Kleinschmidt made answer to each of said garnishments substantially as follows: “In reply to the garnishment in the above-entitled action, I hereby make return that I am the assignee of Boesman Bros. & Co., and that all the property which I have in my possession is subject to the provisions of the assignment made to me by the said Boesman Bros. & Co., and I have not in my hands any property whatever subject to levy as the property of said corporation of Boesman Bros. & Co., nor am I indebted to said corporation in any sum whatever.” That replies were made by said creditors to the answer of Kleinschmidt to said several processes of garnishment, controverting the allegations thereof; whereupon an order was made by the court requiring said garnishee, Kleinschmidt, to appear and answer, under oath, concerning the same, which was complied with. That judgments were obtained in due course by each of these plaintiffs against the defendant Boesman Bros. & Co; and such proceedings were had that an order was made in each of said cases directing an action to be brought by the parties in interest against said garnishee, Kleinschmidt, under the provisions of section 356, Code Civil Proc., to contest his claim upon said property, which he had in his possession, and claimed the right to hold under and by virtue of said assignment. This action was brought pursuant to that order.

The complaint sets forth the facts concerning the bringing of said actions by the several plaintiffs against Boesman Bros. & Co.; the procurement of the attachment process; service of garnishment on Kleinschmidt; his answer; the reply controverting said answer; the order of the court requiring him to appear and be examined in supplemental proceeding; the obtaining of the several judgments in those actions against Boesman Bros. & Co.; and the order of the court directing this suit to be brought. Having set forth those allegations, it is alleged in the complaint that “said Boesman Bros. & Co. is, and for a long time past has been, insolvent, and has not any property of any kind except the property taken and held by defendant Kleinschmidt, and, unless this property is subject to plaintiffs' claims, they will be without remedy, and without means to enforce their said judgments.” Paragraph 24 alleges as follows: “That the answer of said Kleinschmidt to each of the said attachments was and is false and untrue, and that said pretended assignment under which said defendant Kleinschmidt claims said property is illegal, fraudulent, and void, in that, among other things, it was executed without authority of law, and without authority of said corporation, and was procured by said Kleinschmidt for the purpose of hindering, delaying, and defrauding the creditors of said Boesman Bros. & Co., and particularly these plaintiffs.” The foregoing paragraph was amended after the trial commenced, by permission of court, as shown below, upon the allowance of which amendment error is assigned. It is further alleged in the complaint that the said pretended assignment directed the payment of a large sum of money to defendant Kleinschmidt as one of the preferred creditors,-a sum sufficient to absorb the entire assets of said Boesman Bros. & Co.,-which pretended indebtedness is fraudulent, false, and fictitious, and the said assignment so directs said payment for the purpose of defrauding all other creditors, particularly these plaintiffs; that said Kleinschmidt was instrumental in organizing said corporation of Boesman Bros. & Co., and caused it to be organized for his own use and purpose, and directed and managed its affairs, and was at all times cognizant of the condition of said corporation, and, knowing that said Boesman Bros. & Co. had purchased a large quantity of goods and merchandise, and was owing large amounts therefor, he procured said pretended assignment for the purpose of defrauding said creditors, and particularly these plaintiffs; that at the time said writs of attachment and notices were served on defendant Kleinschmidt, he had in his possession, and now has in his possession, a large amount of money, credits, and other valuable property belonging to the said Boesman Bros. & Co., all of which said property was and is subject to plaintiffs' said attachments and executions, and right to subject the same to the payment of their said claims. Wherefore plaintiffs demand judgment, annulling said assignment; that defendant Kleinschmidt be required to account for and pay into court all moneys and other effects received by him from said company; that a receiver be appointed to take charge of said property, and convert the same into money, and apply such money to the payment of said judgments rendered in favor of these plaintiffs, in the order of the several alleged liens acquired by said garnishment processes. To this complaint Kleinschmidt made answer, specifically denying the allegations thereof, except the service of the several processes of garnishment, and his answer thereto. He denied the validity of said processes and other allegations as to the due and regular prosecution of said actions, and the obtaining of the processes therein obtained. And further answering said complaint, by way of new and affirmative matter of defense, alleged: “That on or about the 12th day of June, 1890, the corporation of Boesman Bros. & Co. duly made, executed, and delivered to this defendant its deed of assignment, in writing, wherein and whereby it transferred to this defendant all of its property, of every kind and character whatsoever, in trust for the benefit of its creditors, which said assignment, and the trust therein, were duly accepted by this defendant, in writing therein, and was thereupon duly recorded in the office of the county recorder of the county of Lewis and Clarke, state of Montana, a copy of which assignment, with the indorsement thereon, is hereto attached, and hereof made a part, marked ‘Exhibit A;”’ that immediately upon the delivery of said assignment, said Boesman Bros. & Co. delivered to this defendant the actual possession of all its personal property, real estate, choses in action, credits, and effects of every kind and character, and this defendant received the actual possession thereof from said company, and held the same in his possession until disposed of as hereinafter set forth; that as speedily as possible this defendant converted said property into cash, and applied the same to the payment of the indebtedness of said corporation, in accordance with the terms of said assignment; that the amount realized by him from all said property is the sum of $10,611.34; that he has disbursed said sum to the creditors of said assignor, in accordance with the terms of said assignment, as follows:

-That long prior to the commencement of this action, and long prior to any proceedings herein, all property of said Boesman Bros. & Co. has been applied by this defendant upon the indebtedness of said corporation, as above set forth; that said corporation was indebted at the time of said assignment to this defendant, individually, in the sum of $10,907.67; that he applied on said indebtedness the sum of $4,957.72, being all the assets remaining in his hands after payment of the credits above set forth; that there is...