17 Neb. 498 | Neb. | 1885
This is an action to recover a judgment for the sum of $650 against Kent, who is alleged to be a fraudulent grantee of certain goods belonging to one Sands, by reason of which the plaintiffs were defrauded. A demurrer to the petition was sustained in the court below and the action dismissed. It is alleged in the petition in substance that, on the 18th day of January, 1884, the defendant, Sands, and his co-partner, Hullquist, were doing business at Orleans in this state; that during the year 1883 the plaintiffs sold to said firm divers goods, wares, and merchandise, for which said firm, on the 18th of January, 1884, was indebted to the plaintiffs in the sum of $503.88; that at the last mentioned date said firm had in their store at Orleans a large and valuable stock of “ general merchandise, notions, boots and shoes, and goods and wares of various kinds, and notes, and accounts, and credits, the value whereof amounted
“That said chattel mortgage was .accompanied by a written agreement reserving a secret trust for the benefit of said defendant Sands, in fraud of the rights of plaintiffs, whereby the defendant Kent promised to pay over to defendant Sands all sums arising from the sale of said goods over and above the sum of seven hundred dollars.” It is also alleged that this writing was kept secret by the parties to it; that the firm of J. B. Sands & Co. is insolvent, and that by means of the chattel mortgage the defendants
That the fraudulent grantee in possession of the property , of the debtor cannot be protected as against the creditors of the debtor is too well established to require the citation of authorities. Such property is held by the fraudulent grantee in trust for creditors of the debtor, and if the property is converted into money it is impressed with the same trust, and it is the duty of the court to see-that the property or money, being that of the debtor, is. applied upon the debts.
The question here involved was before the supreme-court of Wisconsin in Ferguson v. Hillman, 55 Wis., 181. In that case one Mathews was in embarrassed circumstances and unable to pay his debts. Hillman was well acquainted with all the facts, and took conveyances from. Mathews of all his real estate not exempt from execution,i paying nothing therefor except the assumption of certain mortgages and judgment liens on the premises, and the-debt of one creditor in addition to a claim due to Hill-man himself. At the same time Hillman look two chattel mortgages upon all the exempt personal property of-Mathews, and as a consideration therefor gave his promissory note for $3,000, due in three and six months, and in exchange for this note took two notes of Mathews, one for-$1,500, and one for $2,000, due at a future date, and the chattel mortgage was given to secure these notes. The $500 difference between the notes was claimed to be a debt due from Mathews to Hillman. The court held that these facts with others shown in the record were sufficient to prove the intent to hinder and delay creditors' of Mathews, and personal
A debtor, while the owner of his property, sustains two distiuct relations in regard to it, viz., as owner and as quasi trustee for his creditors. If his creditors have taken no lien upon the property as security they may be said to have given him credit upon the implied agreement that his property shall, if necessary, be applied to the payment of his debts, and such creditors have an equitable lien upon the property for that purpose. Bump on Fraudulent Conv., 13, 14. Eppes v. Randolph, 2 Call, 125. Seymour v. Wilson, 19 N. Y., 417. The law requires the debtor to act in good faith with his creditors, ■and apply his property not exempt, if need be, to the payment of his debts. If he attempts to evade this duty, and for the purpose of hindering or defrauding his creditors by transferring his property to another without consideration, ■or with knowledge on the part of grantee of the fraudulent intent, such grantee will take the property charged with
Reversed and remanded.