Winner v. Hoyt

• Decision Date: 15 May 1886
• Citation: 28 N.W. 380,66 Wis. 227
• Parties: WINNER v. HOYT, GARNISHEE, ETC.
• Court: Wisconsin Supreme Court

66 Wis. 227

28 N.W. 380

WINNER

v.HOYT, GARNISHEE, ETC.

Supreme Court of Wisconsin.

May 15, 1886.

Appeal from county court, Milwaukee county.

TAYLOR, J., dissents.

The following facts were mostly found by the trial court. The balance appear or are clearly inferable from the undisputed evidence.

April 15, 1885, the debtors, E. S. Hoyt and Wesley Kinney, were wholesale liquor dealers in Milwaukee, under the firm name of E. S. Hoyt & Co., and had been since 1877. April 15, 1885, the firm was indebted to Frank M. Hoyt, Wisconsin Marine & Fire Insurance Company Bank, Alice McLeod, Ephraim Mariner, and Brown, Merritt & Moore, respectively, in the aggregate amount of $17,184.68, and to other parties, including the plaintiff, in the sum of about $6,000, making in all over $23,000. The assets of the firm consisted of stock, furniture, fixtures, etc., then on hand, and estimated to be worth $5,000 or $6,000; and outstanding accounts, amounting to about $10,000, from which it was then estimated that 75 per cent. could be realized, making the complete value of the assets about $13,000. The firm had no other property, except a horse, harness, and delivery wagon. Neither of the firm had any other property, except Mr. Kinney, who had a life-interest in part of a homestead which was mortgaged to Mrs. Alice McLeod. At the time named Mr. Kinney had been confined to his house by sickness for some days. Mr. E. S. Hoyt was then traveling for the firm. The store and business was then in charge of their book-keeper, porter, and a clerk. E. S. Hoyt is the uncle of the garnishee, Frank M. Hoyt, and had been his guardian. The garnishee had been in the habit occasionally of looking over the books of the firm in the interest of his uncle and himself. In the last of March, 1885, he was informed by his uncle that the firm were having hard work to get money enough to pay their bills as they became due. About that time the garnishee examined the accounts, and looked over the books, and told Mr. Mariner the firm were getting into close quarters, and suggested to him that he had better take a judgment note for his debt. Judgment notes were then held by Mrs. McLeod, the bank, and Frank M. Hoyt. Mariner took a judgment note, April 2, 1885. The firm insisted, for about a week, that they could pull through. E. S. Hoyt in the mean time went into the country. On his return, a week or ten days after, Frank M. Hoyt again went over the books, and became alarmed at the situation of affairs. He then informed Mr. Mariner and also Mr. Ferguson, the cashier of the bank, of the condition in which he found the affairs. In pursuance of an arrangement between the three, they met the next day, April 13, 1885, and talked over what had better be done. Nothing was done until Wednesday, April 15, 1885, when they went to Mr. Kinney's house and insisted upon their money, security, chattel mortgages, and assignments of the accounts, etc. Mr. Kinney at first thought he could go on, and wanted Mr. Ferguson to let him have more money to go on with, which he declined to do; and so Kinney finally consented to give chattel mortgages and assignments as requested. Upon the evening of the same day, Mr. Frank M. Hoyt drew up the chattel mortgages, and he and Mr. Mariner and Mr. Ferguson went to the house of Mr. Kinney the next day, April 16, 1885, and the following papers were thereupon executed by Kinney in the name of the firm, all bearing that date, to-wit: (1) A chattel mortgage in the usual form upon the stock, safe, furniture, fixtures, and all other property in the store, to Ephraim Mariner, to secure a note of $1,635.05, dated April 2, 1885, due on demand, with $100 indorsed, and to secure which note said Kinney, in the name of the firm, over the same date, assigned to said Mariner certain scheduled accounts, etc., amounting in the aggregate to $976.58. (2) A chattel mortgage, in the same form, upon the same stock, safe, furniture, fixtures, and other property in the store, to Alice McLeod, to secure a note of $4,000 dated April 2, 1883, due 15 days after the date thereof, and to secure which note said Kinney, in the name of the firm, over the same date, assigned to said Alice McLeod certain scheduled accounts, etc., amounting in the aggregate to $2,485.81. (3) A chattel mortgage, in the usual form, upon the stock, safe, furniture, fixtures, and other property in the store, to the Wisconsin Marine & Fire Insurance Company Bank, to secure a note of $5,000 dated April 13, 1885, due on demand; also another chattel mortgage upon a horse, delivery wagon, and harness, to said bank, to secure the same note; and to secure which note said Kinney, also in the name of the firm, over the same date, assigned to said bank certain scheduled accounts, etc., amounting in the aggregate to $3,633.70. (4) A chattel mortgage, in the usual form, upon the stock, safe, furniture, fixtures, and other property in the store, to Frank M. Hoyt, to secure a note for $3,160, and interest, dated April 13, 1885, due on demand; also a chattel mortgage, in the usual form, upon the same property, to Frank M. Hoyt, to secure a note for $2,749.63, dated February 20, 1884, due on demand; and to secure which two last-named notes said Kinney, in the name of the firm, over the same date, assigned to said Frank M. Hoyt certain scheduled accounts, etc., amounting in the aggregate to $3,443.50; and also to secure which two last-named notes said Kinney, in the name of the firm, over the same date, assigned and set over to the said Frank M. Hoyt “all and singular” the “notes, accounts, claims, demands, debts due, and to become due, of every name, nature and description” belonging to said firm, thereby authorizing him to ask, demand, sue for, collect, and, upon such terms as he should see fit, compromise the same, or any of them, applying the proceeds towards the payment of said notes and returning the balance over and above the costs of such collection, and the amount due on said notes, to said firm.

The mortgages were all made and delivered at one time, and the assignments of accounts and credits were all made to bear even date with the mortgages. The firm was known to be insolvent by each of the mortgagees and assignees at the time of receiving the mortgages and assignments. The property so mortgaged, and the accounts, etc., so assigned, covered all the property of the firm, and all the property of the respective members of the firm, not exempt, and were not worth to exceed 60 per cent. of the debts they were so given to secure. The note of $3,160 was for a debt owing by the firm to the said bank, or to Ferguson on account of the bank, and the note for that amount, and the mortgage and assignments to secure the same, were taken in the name of Frank M. Hoyt for the benefit of the bank or Ferguson, and Frank M. Hoyt had no other interest therein than to make collections and account for the same. Mrs. McLeod was the daughter of Mr. Kinney, and Frank M. Hoyt took it upon himself to provide for her claim, as it was for borrowed money, and she a woman; and so did obtain the securities in her name as mentioned. Frank M. Hoyt took possession of the entire stock, safe, furniture, fixtures, and property in the store, under the several chattel mortgages, in the forenoon of April 16, 1885; and also took possession of all the accounts, etc., covered by said several assignments. Judgments were entered upon the $5,000 note in favor of the bank, April 16, 1885; on the $2,743 note in favor of Frank M. Hoyt, April 16, 1885. Garnishee summons were served on Frank M. Hoyt, April 17, 1885, one in favor of the bank on the $5,000 note; one in favor of Mrs. McLeod on the $4,000 note; and one in favor of Brown, Merritt & Moore, on a claim of $650, for whom Mr. Mariner was attorney or counsel. Frank M. Hoyt helped make the papers in the garnishees in favor of the bank and Mariner. April 23, 1883, it was agreed in writing, in effect, by the several mortgagees, that upon Frank M. Hoyt's offering the stock, etc., for sale, and failing to sell for what he might deem to be a fair price, then it should be bid in by him for the benefit of all the mortgagees, and thereafter sold by him for their benefit, and the proceeds divided among them in proportion to their several claims. April 29, 1885, the property covered by the several mortgages was sold by Frank M. Hoyt, in pursuance of the agreement stated, and bid in by Mr. Mariner, at 80 per cent. of the invoice cost-price; and the amount realized by the garnishee therefrom was $4,332.27. At the time of the trial he had also collected on the old accounts, etc., in the aggregate $4,435.01, including expenses of collection. The moneys so collected were kept in common, without any attempt to apportion them to the several assignees. The mortgagees and assignees all acted in concert in taking the several securities, and with the intention of having Frank M. Hoyt immediately take possession of all the property covered by the several mortgages and assignments, and convert the same into money, and apply the same on their respective claims pro rata according to their several amounts. In executing the several mortgages and assignments, Mr. Kinney expected and intended the same things, and that if there should be anything left of such proceeds after paying those claims, then it would go to the unsecured creditors. On the return of E. S. Hoyt, three days after the execution of the papers, he fully sanctioned and ratified all that had been done. April 23, 1885, the plaintiff commenced an action against said firm upon a debt accruing prior to April 16, 1885, and judgment was recovered thereon against said firm, May 28, 1885, for $2,203.18, in the county court for Milwaukee county; that an alias execution was issued thereon to the sheriff of said county, and a garnishee summons was issued thereon, and served on said Frank M. Hoyt, August 7, 1885. August 25, 1885, the garnishee answered,...