82 Neb. 761 | Neb. | 1908
Plaintiffs and interveners are judgment creditors of the defendant Szwanek, who was formerly engaged in the mercantile business. The aggregate amount of the judgments, exclusive of costs and interest, is $2,139.35. This action is in the nature of a creditor’s bill, wherein it is sought to annul a transfer of a stock of merchandise from Szwanek to the defendant G-alczenski, and to subject the remainder of the stock and the proceeds of what had been sold to the payment of the several claims of the creditors. Each plaintiff and intervener, either in aid of attachment or execution, had garnisheed the purchaser, but thereby was unable to accomplish satisfactory results. By this process, however, they obtained equitable liens iipon the property transferred to Galczenski if the sale was void, or upon that portion thereof, if any, which is in equity subject to the payment of the general indebtedness owing by Szwanek. Hargreaves v. Tennis, 63 Neb. 356. In 1905 the defendant Galczenski became surety for $800 of borrowed money, and later for other sums, aggregating $1,-646.45 on June 18, 1906. The defendant Jasczenski loaned to Szwanek at different times in the latter part of 1905 and early in 1906 various sums of money amounting to $1,545. The defendant Chilewski had become surety for SzAvanek on notes for $1,500, and had loaned him $500. On June 18, 1906, Galczenski and Chilewski, and on July 17 Jasczenski took notes from the debtor, representing the amounts of their respective claims, and SzAvanek gave to each a chattel mortgage in blanket form upon his stock of goods, ostensibly to secure éach of these creditors for the amount they had loaned to or secured for him. But no rights were ever claimed under the mortgages, and particular reference to them is unnecessary. On July 18, 1906, Szwanek sold and delivered to- Galczenski all of his
Plaintiffs contend that the sale is but pretended, and that it was made to defraud them; that the stock of goods was of the value of $10,000. Plaintiffs strenuously urge that they have proved fraud, and that they are entitled to a judgment against the conspiring defendants. As we view the case, its disposition depends upon the value of the stock of goods and Galczenski’s intentions in purchas-' ing the same. If the value materially exceeded the consideration paid therefor, then the amount, of the defendant Galczenski’s liability depends upon his motive in thus accepting the goods. Plaintiffs made an honest and industrious effort to prove the value of the goods. They proved that it was listed by Szwanek for assessment’in 1906 at an actual valuation of $10,000, and that it had invoiced that sum the preceding January. They produced evidence of several witnesses who had' seen and had not closely inspected the stock, but estimated it at $10,000. This, of course, was unsatisfactory evidence, but was undoubtedly the best plaintiffs could do, not having access to the stock. On the other hand, Szwanek as a witness for the defendants testified that, when the transfer was made to Galczenski, the stock was worth between $6,000 and $7,000, and on cross-examination he fixed the value at $6,711, an amount which exceeded by $1,525 the consideration paid by Galczenski. As will be hereafter shown, we cannot take this testimony as conclusive on the question of value, yet the defendants cannot reasonably contend in the face of this evidence that the valuation was less at the time of the sale than was testified to by Szwanek. It is therefore established that the value of the goods materially exceeded the indebtedness for which it was given. This makes it obviously necessary to ascertain what are the rights of the parties as they are affected by this fact.
In Chamberlain Banking House v. Turner-Frazier Mercantile Co., 66 Neb. 48, it appears that a chattel mortgage had been given to secure the preferred creditor, who not only canceled his debt and certain other claims, but paid the debtor $500 in money. The contention of the aggrieved creditor was very similar to the contention made in this case. But the facts are different. There all the property owned by the debtor was conveyed, and the preferred creditor knew that the transaction would result in hindering and delaying other creditors. Creditors who deal for the collection of their debts by taking excessive property, paying the balance to the debtor, are classed with other purchasers. Hence, as to them, two rules have become established: First, the rule followed in Henney Buggy Co. v. Ashenfelter, supra, and other cases, which will avoid a transfer of property excessive in value, the difference being paid to the debtor with the creditor’s knowledge (hat such sale will result in defrauding other creditors; second, that a creditor may not take property in payment of his debt which is appreciably greater in value than the amount of the debt. The first rule necessarily avoids the transfer made under the circumstances stated therein. The second rule does not necessarily avoid a transfer of property excessive in value. If the purchaser did not actually participate in the fraud, but in good faith accepted the property of his debtor expecting that all of it would be applied upon his debt, he is not a participant, and should not be deprived of his preference. Although this court has not discussed this question, there are cases Avherein we have refused to hold a conveyance wholly void when the value of the property exceeded the amount of the debt. See Bartlett v. Cheesbrough, 28 Neb. 767; Lininger v. Herron, 18 Neb. 450; Goldsmith v. Erickson, 48 Neb. 48. Other courts have held frequently, in substance, that, when a creditor without participating in the fraud
The leading American decision, and perhaps the earliest one of particular value in the solution of such problems, is Boyd & Suydam v. Dunlap, 1 Johns. Ch. (N. Y.) *478. The transfer there considered was one wherein the grantor preferred his son, who Avas one of his creditors. The property conveyed exceeded the value of the consideration, and, although it was conceded that in laAV such a conveyance should be adjudicated either as void or as valid because there was no medial course opened to courts of law,, yet in equity it was held otherwise, and the grantee was chargeable with the valuation of the property conveyed in excess of the consideration paid. The reasons therefor were expressed by Chancellor Kent in part as follows: “I, do not discover, from a view of the plead1 ings and proofs, such traces of actual and direct fráud, as to feel myself warranted in directing the conveyance of the real estate to be delivered up and canceled, as absolutely null and void. * * * The only question with me has been, whether the plaintiffs ought to be left to their legal remedy, or whether the case affords sufficient ground for a limited interference, by allowing the deed of the real estate to stand as a security only for such consideration as has been shown by the younger Dunlap. There appears, to be very considerable inadequacy of price, even admitting the consideration expressed in the deed, and to allow the deed to stand as security only for the true sum due would be doing justice to the parties, and granting a relief which cannot be afforded at law. A court of law can hold no middle course. The entire claim of each party must rest and be determined at law, on the single point of the validity of the deed; but it is an ordinary case in this court that a deed, though not absolutely void,
This court has frequently declared void contracts of sale, but only where it was made to appear that the vendee shared the vendor’s fraudulent intentions. But, unless it is made plain that the vendee acted with fraudulent intent, such contracts should not be set aside. But, where the case is in doubt, considerable danger of doing one party a great injustice exists, if the strict rules of law are followed, which require that the contract be wholly sustained or wholly defeated. But in cases such as this, where actual fraud of the vendee is not proved, but where he accepts more property than is permitted, it seems necessary to take a medial course. Courts of equity, aided by strenuous efforts of outraged creditors, are frequently unable to detect actual fraud, although the case may savor strongly of its odium, and frequently equitable relief is denied because the court adheres too closely to hard and fast rules. But in such cases, where the vendee has proceeded irregularly, but without fraudulent intent, the transaction is at most only constructively fraudulent. Such is the status of this case, and we consider it necessary to adopt the rule in Boyd & Suydam v. Dunlap, supra, which has been followed by many courts.
We recommend that the judgment of the district court be reversed and this cause remanded for further proceedings.
Reversed.