68 Neb. 713 | Neb. | 1903
Lead Opinion
This is a rehearing of the case which appears in 63 Neb. 130. In that opinion the nature of the case and the fact that it is here on appeal by the plaintiff and two defendants, the Dixon National Bank, and the People’s National Bank of Rock Island, Illinois, sufficiently appear. As stated in that opinion, the appellants claim three funds out of which they are entitled to have their judgments against Mosher and Outcalt satisfied. The first, 200 shares of stock in the Lincoln Gas Company, transferred by C. W. Mosher January 23, 1893, to Ohas. O. Whedon, and 150
At the former hearing a conclusion adverse to the appellants was reached upon all three of these contentions. A rehearing was allowed on appellants’ contention that their position had been misunderstood Avith reference to the first fund; that the facts relating to the second fund were not fully discussed nor quite accurately stated in the former opinion; and that the conclusion Avith reference to the third fund is contrary to the evidence.
A somewhat careful re-examination has been made of the entire testimony in this case and of the several rehearing briefs which have been filed. As to the first contention, that the stock transferred to Whedon and Magoon was Avithout lawful consideration, and remains in their hands as a fund out of which Mosher’s and Outcalt’s creditors are at liberty to seek satisfaction for their claims, we can see no sufficient grounds for changing the conclusion reached before.
It does not seem necessary to discuss this part of the case at any length. The former opinion states that -it was “practically conceded” that there was no actual fraud in the transfer, and holds that under our statute there is no constructive fraud. Counsel for the appellants now say that it was not “practically” but “fully” conceded that
“All deeds of gift, all conveyances, and all transfers or assignments, verbal or written, of goods, chattels, or things in action, made in trust for the use of the person making the same, shall be void as against the creditors, existing or subsequent, of such person.”
They say that under the evidence in the case the contract of employment as attorneys, which the defendants Whedon and Magoon claimed was the consideration of the transfer, was an indefinite one; that it imposed a general care of the interest not only of Mosher but of his wife also; that under the testimony given by the grantees, they agreed to take no retainers against and to guard for all time the interests of Mosher and his wife; that such a contract is so indefinite in its character and is so completely in the nature of a trust for the grantor’s benefit, that property conveyed in pursuance of it must be held to have been transferred without any lawful consideration. It is urged that only a small portion of the services which constitute the consideration for this stock had been rendered at the time the transfer was made.
It was conceded at the hearing that the value of the services rendered pursuant to this agreement was at least as great as that of the stock. It is conceded, as above stated, that the arrangement was made in good faith about January 23, 1893. This action was commenced in June, 1894. It does not appear from the evidence how much of these services had been rendered at the time this action was commenced. It is clear, however, that a very large proportion of them had by that time been performed.
It must be remembered that counsel are claiming that this action is to reach a fund held without fraud in trust for the debtor, Mosher. It is evident that it can be main
Counsel, in claiming that only the services already rendered at the time the stock was transferred can be taken into account, are seeking to apply a rule which obtains only when there has been a fraudulent intent. Of course, where such an intent is present, the fact of the payment of a consideration will not sustain the transfer and the fraudulent grantee Avill he postponed in favor of an honest creditor; but where no bad faith is claimed, and no fraud is alleged nor attempted to be proved, counsel must take the situation as they find it at the filing of their petition. Curtis v. Leavitt, 15 N. Y. 9, 114-125. On that basis, there, is nothing in this record to show that Mosher had at that time any interest in these funds Avhatever or that he had not received more than the stock was worth.
The claim of indefinitness in the contract certainly can have no weight. When performed, it would become definite by reason of such performance. So far as it was performed in good faith before the commencement of the action, the grantees would he entitled to be protected. On this record we can see no ground for changing the former conclusion in reference to these 350 shares of stock.
It seems entirely superfluous and unnecessary to follow the somewhat heated discussion by counsel of the cases cited and doctrines stated in the former opinion. That
Another question arises as to the stock of the Lincoln Gas Company and the dividends paid upon it. It seems clear that at the time the attachment proceedings by the three appellants began, Mosher had some interest in the Lincoln Gas Company stock. There seems no reason to change the conclusion reached at the former hearing that by the garnishment of the corporation, any interest then actually held by a debtor in its stock can be reached. On January 27, 1893, the plaintiff caused notices of garnishment to be served upon the gas company, through its president, D. E. Thompson. Mr. Thompson was also personally garnished. On June 25,1894, a general judgment in favor of the plaintiff and against Mosher and Outcalt for |5,430.50 was rendered but no mention made of the attachment. In the meanwhile attachment had been issued to York and Hamilton counties and levied upon real estate, and on March 4, 1893, D. E. Thompson, as president of the gas company, answered that the books of the company showed at that time in Outcalt’s name 945 shares and in Mosher’s 2,580 shares. He also stated that dividends on these shares were payable to the parties in whose name the stock stood on the company’s books, unless a written order to pay elsewhere was received. He also stated that various parties were claiming rights under portions of this stock. No order was entered against the garnishee, either personally or as president, nor was he discharged. On the rendition of judgment in 1894, as above stated, only a general judgment was entered. A motion had been made by the defendants to dissolve the attachment, which was on January 30, 1894, overruled. The same time with his answer
As before stated, no'order against the garnishees was ever taken, but immediately after the rendition of the judgment the present action was begun, asserting a liability on the part of both the gas company and Mr. Thompson, as garnishees; alleging that at the time of the garnishment Mosher and Outcalt were the owners of a large amount of stock in the gas company, which at that time stood in their names on the books of the company, and of which Mosher and Outcalt were still the owners, and asking that the gas company be required to disclose fully and account for all of such stock, as well as asking for general relief.
The evidence discloses clearly that dividends on a large portion of this stocl? accrued and were credited to O. W. Mosher and to R. 0. Outcalt after service of garnishment. It shows that $1,079 were paid by the gas company to 0. O. Whedon in 1895, upon an order from R. 0. Outcalt, out of such dividends. It shows that there were paid in 1894,1895 and 1896, to D. E. Thompson, on the order from O. W. Mosher, by the gas company, $8,327.68. It is contended on behalf of the appellants that this money came out of the funds which the gas company should account for; that these moneys should have been held for Mosher’s creditors, and that the right of the plaintiff, by reason of the garnishment, to the funds, was not lost by reason of the failure to have an order entered against the garnishees, or by the failure to take more than a general money judgment, or by the issuance of an execution on that judgment and its return just prior to the inception of this action. The claim of the plaintiff is that it is entitled by means of this equitable proceeding to enforce its right gained by the garnishment.
It is urged on the other hand, that the attachment was waived by the rendition of the general money judgment and the issuance of an execution upon it, and that garnish
We are led to conclude that the weight of authority does not sustain the defendants’ contention. It is true that in Indiana it is held that taking- a general judgment and issuing an execution upon it waives an attachment lien, and the cases from that state are cited by the defendants. We do not think, however, that such is the general holding, nor that it is in accordance with justice. In this instance the moneys were paid out long after the institution of this action. The answers of the garnishees had not expressly admitted any liability. Mr. Thompson in his testimony expmr’y says that the money was subject to,garnishment as that of Mosher and that plaintiff’s counsel, if they had known, would have obtained it.
The use of an equitable remedy to enforce payment from garnishees is expressly upheld in this state. Hargreaves v. Tennis, 63 Neb. 356.
We conclude that the gas company is liable for these moneys paid on the orders of Mosher and Outcalt during the pendency of this action, on account of dividends upon its own stock. We are not satisfied from this record that appellants are entitled to anything more.
It seems clear that in commencing this action plaintiff assumed the burden of establishing Outcalt’s and Mosher’s ownership of this stock, or the failure of any third party to claim it before the garnishees’ liability for the stock itself would attach. It is contended that the record shows that 100 shares of it have never been demanded by anybody. The record shows in various places statements by the.officers of the company that all of this stock is claimed by other parties. It seems probable that there is a portion as to which the record does not disclose that any specific person is claiming it. We are not able to conclude from this fact alone, however, that the trial court was wrong in finding that the stock itself had all been transferred. But these unclaimed dividends that were paid on the debtor’s order pending this action could and sbou!4 have
There remains still to be considered, with reference to this stock and dividends, the situation of the appealing defendants. The Dixon National Bank had garnished the gas company on the same day as plaintiff, but at an earlier hour as shown by the sheriff’s return. The same is also true as to the People’s National Bank. The answers of the garnishees were to be taken as applying to each of the three cases. Motion was made to dissolve the attachment and to quash the garnishment service in each of these cases, which was overruled. In June, 1891, judgment was rendered for each of the appealing defendants, and an order entered that the attached property, including 2,580 shares in the capital stock of the gas company issued to C. W. Mosher, should be sold. Order of sale was issued on this stock, and the sheriff sold it to one W. Q. Bell in August, 1891. W. Q. Bell was the agent of D. E. Thompson in the -purchase. Thompson borrowed the f2,000 for which it was sold, and gave his note. This note was renewed several times and was finally paid by Mosher’s instructions, from dividends which the gas company had passed to his credit.
At the former hearing it was thought that this transaction being an absolute sale to W. Q. Bell and being-made under garnishments prior in time to that of plaintiff, appellants could none of them claim any right or interest in this gas stock. We are obliged now to conclude that this is not true. Doubtless the defendants who procured this sale are bound by it. We do not see how they can claim by virtue of their garnishment any interest which did not pass by this sale. As to the plaintiff, no connection with the sale appears, and its rights as garnishing creditor are not affected except to the extent that the money applied by means of that sale to the doing away with the prior liens of the appealing defendants must be credited to the purchaser. The f2,000 were paid out in satisfaction of the two liens upon the Mosher stock and dividends. The fund has been diminished to that extent,
The conclusion reached at the former hearing as to the transfers of real estate and personal property by Mosher and Outcalt to D. E. Thompson in December, 1892, and January, 1893, is assailed on the ground that the deeds, while absolute on their face, were given as security for the payment of a note and that the note was without consideration; also that the grantee in these deeds immediately set about disposing of the lands. This is claimed to be sufficient in connection with the other transactions between the parties to conclusively establish the fraudulent character of these conveyances. This would have to be granted if the want of consideration were established. It appears that the consideration was a note given in November, 1891, for shares in the Capital National Bank. The claim of no consideration rests upon the proposition that the shares in the Capital National Bank were worthless in 1891, and that all the parties to the transaction knew it. This, in turn, rests upon the statement of Kent K. Hayden, receiver of the Capital National Bank, that he had examined the books and assets of the bank, and in his opinion it was insolvent at that time; that is,, that in November, 1891, the whole value of the bank’s assets was not equal to the amount of its liabilities. This in the light of subsequent events is no doubt true, but it appears that at that time the stock was at twenty-five per cent, premium on the street. The note was for stock at that price and was secured, when given, by a deposit of stock in the Lin-
No doubt, as against one who has a right to rely upon his official statement, a director is presumed to know the condition of his bank and the falsity of his statement if it is false. The official knowledge which a director may be presumed to have should be taken into consideration in a case like the present one. It doubtless was. Otherwise, the trial court would not have allowed the fact in evidence. But in this case it is not conclusive. Mr. Thompson says that he retired from the bank owing to a disagreement with Outcalt, and that the note was taken for the market price of his stock. The fact that he had collateral security consisting of f40,000 worth of gas stock, a fact attested by his own oath and those of Mr. Mullen and O. W. Mosher, is not denied.
It is true that the taking of security by means of a deed absolute on its face is a badge of fraud, especially if the security is excessive. In this case there is no claim of the latter, except as it is claimed that the indebtedness was fictitious; and the fact that the deeds are in terms abso>lute is, like the knowledge of a bank director, a circumstance to be considered. The court, in our opinion, was warranted in believing that the sale of the bank stock took place as claimed in 1891; that its price was secured by collateral which was. given up in exchange for real estate and personal property just before the failure. The consideration is sufficient to support the transaction if the latter was made in good faith. We are by no means clear that the trial court was wrong in finding the exchange was made in good faith, and we adhere to the conclusion formerly reached, that this part of the decree is sustained by the evidence.
As only these three parts of the case are touched upon in the rehearing application, it is not necessary to discuss the remainder of the decrea
By the Court: For the reasons stated in the foregoing opinion, it is ordered by the court that a judgment be entered in this court in conformity to the foregoing opinion, and special recommendations therein contained.
Judgment accordingly.
Rehearing
The following .opinion on rehearing was filed June 9, 1904. Judgment below affirmed:
At the first hearing in this case, upon the opinion of Mr. Commissioner Day, the decree of the district court was affirmed. 63 Neb. 130. At the second hearing, and upon the opinion of Mr. Commissioner Hastings, the decree of the district court was modified, and a decree entered in this court against two of the defendants. Ante, p. 713. Upon the motion of these defendants for rehearing further argument was had before the court. The issues are somewhat complicated and the evidence is very voluminous. Upon an examination of this record, we find no cause to doubt the correctness of the conclusions reached upon the several hearings, unless it be upon the matters suggested in the seventh paragraph of the syllabus of the opinion upon the second hearing. The trial court found: “That prior to the commencement of such proceedings at law by the plaintiff, and the several cross-petitioners herein, wherein garnishment proceedings were had, the said Charles W. Mosher and E. C. Outcalt had transferred, assigned and delivered all of the stock appearing by the books of the said several companies as belonging to them, either by actual sale as collateral security or in manner as is herein found, and were not the owners of any stock in the said several companies at the time of the institution of the proceedings at law by the plaintiff and the several
It is insisted in the briefs that dividends declared upon the stock after the attachment and garnishment proceedings would not be bound thereby. Very many authorities are cited upon the proposition that “the validity of an attachment depends upon the state of facts existing at the time when levied. It can not reach any liability of the garnishee accruing after the service of process upon him.” These authorities are not in point upon the question presented.
A stockholder’s interest in a corporation and in all of its property -and rights is represented by his stock. There can be no question that the levy upon the stock by the garnishment of the corporation pursuant to the statute will impound the whole interest of the stockholder in the property and rights of the corporation, and that the right to receive dividends goes with the stock. We are satisfied with the discussion of this question by Mr. Commissioner Day in the first opinion herein. We think he has correctly construed the statutes quoted and properly applied
It was sought in the petition to charge the gas company as trustee of the stock belonging to Mosher and Outcalt. It was alleged that other parties were claiming the stock;
Under our practice, established by a long line of decisions, upon appeals in equity the findings of the trial court must stand or fall upon the pleadings and evidence contained in the record. The party complaining of the decree of the trial court must choose his remedy, Avhether by appeal or by proceedings in error. An error of the trial court in receiving or in refusing evidence can only be corrected upon proceedings in error. If this rule of practice leads to injustice in many cases, it remains to the legislature alone to supply the remedy.
Undoubtedly, the general rule is, as stated in the last opinion, that “in commencing this action, plaintiff assumed the burden of establishing Outcalt’s and Mosher’s ownership of this stock.” The plaintiff insists that the burden of rebutting that presumption is cast upon the defendant. Several cases are cited upon this point, one
In Barker v. Osborne, 71 Me. 69, it was said: “Where, by the disclosures of an alleged trustee, it appears, that at one time prior to the service of the writ upon him, he held funds of the principal defendant, which would be attachable in that suit, the burden is upon the trustee to show, that, prior to the service, he had expended such funds for the defendant’s benefit, and this can not be done by doubtful, indefinite, and sweeping statements, with an omission of details and particulars.” In that case the trustee relied upon his own act to relieve him of liability. He was therefore in position to know and, if true, to sustain his allegation. When the corporation is garnished, the plaintiff claiming that it holds the stock for the debtor, it is sufficient answer for the garnishee to show that there is reasonable ground to believe that some third party, who is not a party to the litigation, is the owner of the stock, and that the corporation will be liable to such owner thereon. In an action in equity to determine the question of the ownership of the stock, and to appropriate it in satisfaction of plaintiff’s claim, all persons claiming the stock should be made parties. If the claimants are unknown, or the corporation as garnishee attempts to disguise the facts and
Time and space will not admit a complete review of the facts disclosed by this record bearing more or less directly upon this point. It must be conceded that the record is unsatisfactory. It may be that the plaintiff, by erroneous rulings upon the trial, has been deprived of an opportunity to frame the pleadings and furnish the evidence necessary to sustain the burden which the law casts upon him. These errors can not now be corrected in this form of procedure, for the reasons above indicated.
The findings of the trial court being supported upon the pleadings and the evidence preserved in the record, the decree properly entered thereon must be sustained. The judgment entered in this,court is vacated, and the decree, of the district court
Affirmed.