Whittemore v. Fisher

• Decision Date: 31 March 1890
• Citation: 24 N.E. 636,132 Ill. 243
• Parties: WHITTEMORE v. FISHER et al.
• Court: Illinois Supreme Court

132 Ill. 243

24 N.E. 636

WHITTEMORE

v.FISHER et al.¹

Supreme Court of Illinois.

March 31, 1890.

Appeal from citcuit court, Sangamon county; JESSE J. PHILLIPS, Judge.

SHOPE, C. J., and WILKIN, J., dissenting.

Connolly & Mather and S. D. Scholes, for appellant.

Patton & Hamilton, Palmer & Shutt, and I. K. Bradley, for appellees.

BAILEY, J.

This was a bill in chancery, brought by Abram H. Fisher against Floyd K. Whittemore, for the appointment of a receiver to take possession and dispose of a certain stock of goods, consisting of jewelry, musical instruments, and other merchandise, then in possession of said Whittemore, and for an accounting. The circumstances out of which the controversy arose are as follows: For a number of years prior to February 26, 1883, Fisher had been dealing in jewelry and musical instruments, in the city of Springfield, and had been doing his banking business, to a large extent, with the State National Bank of Springfield, of which said Whittemore was the cashier. At that date Fisher was indebted to the State National Bank in the sum of nearly $15,000, for which said bank held his judgment notes, then past due. At the same time he was indebted to the Farmers' National Bank of Springfield in the sum of about $3,300, for which that bank also held his judgment note. In the afternoon of February 26, 1883, the Farmers' National Bank caused a judgment to be entered against Fisher on its note; and, in the evening of that day, Fisher called on Whittemore, and informed him of the entry of said judgment, and applied to him for assistance in paying it off, so as to prevent a levy and sale of his stock of goods. Fisher brought with him a satchel containing a quantity of jewelry and diamonds, which he represented to be worth at least $5,000, and which the evidence shows were in fact worth more than that sum, and offered to deposit the same with Whittemore as security for the money to be advanced. As a result of the interview, Whittemore agreed to and did advance a sufficient sum of money to purchase said judgment, taking an assignment thereof to himself, and also accepting from Fisher the satchel and contents as collateral security for the money advanced, and depositing it in the bank vault. On the day following, the State National Bank caused a judgment to be entered in its favor against Fisher upon the notes held by it, said judgment being for $14,898.05, and had execution issued thereon, and at the same time Whittemore, as assignee of the judgment in favor of the Farmers' National Bank, caused an execution to be issued on his judgment; and both executions were delivered to the sheriff, and levied upon Fisher's stock of goods. Fisher thereupon executed a general asignment of his property for the benefit of his creditors, and his assignee duly qualified, and entered upon the execution of his trust. An inventory of the property assigned, and also a schedule of Fisher's liabilities, having been filed, it was thought to be more advantageous, both for Fisher and his creditors, that an attempt should be made to compromise said indebtedness in such way as to have the business continued, and the stock of goods sold in the regular course of trade. The way in which this was proposed to be accomplished was for Whittemore to advance or guaranty the payment of the money which would be required to pay off the two judgments, and to compromise the other indebtedness on such terms as Fisher might be able to make with his creditors; Fisher on his part to transfer all his property, both real and personal, to Whittemore. In pursuance of this plan, Fisher caused a letter to be prepared and sent to his creditors, in which he represented to them the amount of his indebtedness, and also the amount, value, condition, and availability of his assets, in such manner as to show a large deficiency of assets, and offered to pay, by way of compromise, 30 per cent. of all claims in cash within 10 days, or 20 per cent. in cash within 20 days, and an additional 15 per cent. within 60 days; the deferred payments to be amply secured. Fisher's efforts resulted in a compromise with a large proportion of his creditors; and Whittemore, in addition to paying off the two judgments, paid or guarantied to the creditors compromised with about $30,000. The indebtedness guarantied was afterwards paid by him. A majority of the creditors who had proved up their claims in the county court having consented in writing to have the assignment proceedings discontinued, that was done; and the assignee conveyed and assigned the property in his hands back to Fisher.

On being reinvested with title, Fisher, on the 21st day of June, 1883, executed a deed, absolute on its face, by which, in consideration of one dollar and other good and valuable considerations, he conveyed to Whittemore his real estate, consisting of lots 1, 2, 3, and the E. 1/2 of lot 4, block 3, in Edwards & Mather's addition to the city of Springfield; said real estate being then subject to a mortgage for $10,000, which, by the terms of the deed, Whittemore assumed. Fisher also, on the same day, executed and delivered to Whittemore an instrument by which he bargained and sold to Whittemore said stock of goods, together with all the furniture, fixtures, and personal property in the store in which said stock of goods was situated, the consideration expressed in said instrument being ‘one dollar and other good and valuable considerations;’ and said instrument purported on its face to vest in Whittemore an absolute title to the goods thus bargained and sold to him. Upon the execution of said papers, and as a part of the arrangement under which they were executed, Fisher took possession of said stock of goods, and commenced carrying on the business under the name of ‘A. H. Fisher, Agent;’ and it was agreed between him and Whittemore that he should manage, and have the general oversight of, said business, employ and discharge salesmen and other employes; buy new goods, from time to time, as it should become necessary; that he should deposit all the proceeds of sales in the State National Bank, but was at liberty to withdraw from said proceeds sufficient money to pay his current personal expenses, the expenses of the business, and the cost of new goods; and that, when Whittemoreshould receive from the business enough money to repay him all his advances, with 8 per cent. interest, he should turn over to Fisher the residue of the property remaining undisposed of. The business was carried on under this arrangement until October 10, 1884, when certain of the credicors of Fisher, whose claims had not been compromised, filed their bill against Fisher and Whittemore, and obtained an injunction restraining them from selling said goods, or paying out any moneys arising therefrom, until their claims should be paid. Whittemore thereupon paid out $6,900 more in settlement of the claims thus presented, and the business was continued by Fisher as before until December 20, 1884. At that time Whittemore, as he claimed, had received the amount of his advances and interest only in part, and, being dissatisfied with the manner in which Fisher was conducting the business, he demanded of Fisher a surrender to him of said stock of goods and business; and, upon Fisher's refusal to comply with such demand, he brought his suit in replevin against Fisher, and replevied from him said goods, and thereafter excluded him from possession thereof. After the execution of the replevin writ, Whittemore continued to carry on the business himself, employing generally the same salesmen and employes who had formerly been employed by Fisher, and conducting the business in substantially the same manner it had been carried on by Fisher.

On the 21st day of April, 1885, Fisher filed the bill in this case, alleging that his sale to Whittemore was only by way of mortgage as security for his advances, that said advances had been fully paid at the time the goods were replevied, and that the replevin, therefore, was wrongful, and praying for an award of damages for such wrongful seizure of said goods; for a return of said personal property, and a reconveyance of said real estate; for an accounting, and a decree against Whittemore for the amount found due from him to Fisher; and for a receiver to take charge of said stock of goods, and carry on the business, pending the litigation. A receiver was appointed, who continued the business until May 5, 1886, when, in pursuance of an order of court, he sold said stock of goods at public auction to the highest bidder, and closed out the business. At that sale Whittemore became the purchaser, his bid being $16,685.11; and for that sum he executed to the receiver his promissory note. Whittemore, the defendant, answered, insisting that the conveyance of said real estate, and the sale of said stock of goods, by the complainant to him, were absolute, and not as security for any indebtedness or advances made or to be made by the defendant for the complainant; that the management and control of said stock of goods and business by the complainant after said sale was merely as the agent of the defendant; that after said sale it was arranged between the defendant and complainant that the complainant should manage said business as agent for the defendant, and sell said merchandise as expeditiously as possible, and deposit all the moneys received therefrom in the State National Bank as fast as received; and that, for managing said business as agent, the complainant should be allowed to withdraw or withhold such sums of money as should be necessary to pay the operating expenses of the business, and afford himself a reasonable support, and, when he should thereby reimburse the defendant for his advances and liabilities in full, with interest at the rate of 8 per cent. per annum, the defendant would give the complainant the residue of said property, if any, as further compensation for said...