Thompson v. Johnson

• Decision Date: 18 December 1893
• Parties: THOMPSON v. JOHNSON ET AL.
• Court: Minnesota Supreme Court

55 Minn. 515

57 N.W. 223

THOMPSON

v.JOHNSON ET AL.

Supreme Court of Minnesota.

Dec. 18, 1893.

(Syllabus by the Court.)

1. Findings of fact held sustained by the evidence.

2. When a creditor of an insolvent debtor secures an unlawful preference by the transfer of property, the transfer will, at the suit of the assignee in insolvency, be wholly void. It will not be partly valid because the creditor, to secure the preference, paid in money part of the agreed price of the property.

3. And where the preference is given by transferring property to the creditor and others, who pay part of the agreed price in money, the transfer will not be valid as to them, if they knew the purpose was to give a preference to the creditor.

4. A judgment declaring such a transfer void relates back to its date, so that the transferee may be charged with the value of the use of the property, and for the damages to it while in his possession; and if, when, pursuant to the judgment, the property is delivered to the assignee, it appears to have been damaged, the court may then ascertain the amount thereof, and modify the judgment accordingly.

Appeal from district court, Fillmore county; Whytock, Judge.

Action by Swen L. Thompson, assignee of Carl C. Hourn, individually and as sole surviving partner of Hostvet & Hourn, insolvent, against Andrew P. Johnson, Aaron Abrahamson, James P. Onstad, Andrew Nash, Jonas Olander, Lewis Lilly, and Carl C. Hourn, individually and as sole surviving partner of Hostvet & Hourn, to cancel a deed as in fraud of creditors, and for other relief. There was a verdict for plaintiff, and a new trial denied. Defendants appeal. Affirmed.

Wells & Hopp, S. B. McIntyre, G. W. Rockwell, and W. H. Harries, for appellants.

H. S. Bassett, for respondent.

GILFILLAN, C. J.

There can be little doubt that at the time of the alleged preference the concern of Hostvet & Hourn, conducted by Hourn as surviving partner, was, and for some time had been, a losing and failing concern, and had reached that stage when it did not and could not pay its debts as they matured in the usual course of business. Where such is the case, it is a matter of no consequence that in the opinion of the debtor or of any one else he is not insolvent. A witness' testimony that a debtor is solvent is of very little weight without knowing what he regards as insolvency. And the evidence would justify a finding that all the property the concern had, and all Hourn had, taken at its full value, was insufficient to pay its and his debts. The finding that he and the concern were insolvent was therefore justified by the evidence.

The finding as to insolvency, and the judgment in the case of this plaintiff against Pederson, were not only not res adjudicata, but they were not even evidence on the point, not being between the same parties.

There can be no doubt either that Hourn knew the pecuniary condition of himself and the concern, so that when he paid in part, at any rate, one creditor, by a transfer of property of the concern, knowing he could not pay all the debts as they matured, he knew he was giving a preference to that creditor, and he must be presumed to have intended it. Malting Co. v. Heller, 47 Minn. 71, 49 N. W. 400.

The court found that the defendants Johnson, Abrahamson, Onstad, Nash, Olander, and Lilly, to whom Hourn transferred the property, received the transfer as copartners, and have ever since owned and held it, and now hold and own it, as such; and that in the negotiation for the purchase Johnson was and acted as the agent for the others. On the question whether Johnson's knowledge of the facts was attributable to the others it is immaterial whether, in negotiating for the transfer, he was acting as a partner or was only agent for the others, there being no partnership. But the evidence clearly shows a partnership. The six agreed that each should contribute a specified sum, and that they would...