108 Wis. 634 | Wis. | 1901
A previous creditors’ bill seeking to set aside as fraudulent the mortgage and subsequent deed of Leahy's half of the sawmill property was before this court in the case of Collins v. Corwith, 94 Wis. 514. It was there held, in accordance with the decision of the trial court upon evidence less full than that now before us, that the mortgage was fraudulent as to creditors, because withheld from record for years pursuant to agreement of the parties, for the purpose of giving Leahy a false financial standing, and that the deed of December 3, 1890, to Charles R. Corwith was simply one part of an entire transaction which constituted an assignment for the benefit of creditors and was void because not executed as required bylaw; following the rule laid down in Winner v. Hoyt, 66 Wis. 227, and subsequent cases along the same line.
While this former decision is in no sense res adjudícala in the present case, it concerns the same transaction, and is founded upon much the same evidence, and is entitled to considerable weight. Certainly, if a different conclusion is now to be reached, it should be because a substantially different case is presented by the evidence. Instead of this, however, the evidence now before us makes the fraudulent character of the mortgage in 1886 plainer than before. The agreement not to record the mortgage was made in writing. It was observed for more than four years. The reason was, according to Leahy’s own statement, that if recorded it would injure his credit in the matter of hiring men and teams in the woods and at the mill. The reason given is
This mortgage, then, being void as to the plaintiffs, we come nest to the consideration of the real-estate and chattel mortgages of November 13 and 21, 1890, to McGrossen and Corwith, and the transfer of the boom stock of November 22, 1890. While the consideration for these transfers was attacked in the plaintiffs’ complaint, the evidence showed beyond dispute that the indebtedness which they were given to secure was bona fide, and the court so found. The court also found that these mortgages and transfers were all made in good faith and with no intent to defraud or delay creditors. While it may be true that there was evidence in the case pointing to a different conclusion, still we are unable to say that the conclusion reached by the court is against the clear preponderance of the evidence. The facts that the mortgages were made to secure bona fide debts; that the creditors had 'a right to collect or secure such debts, even though Leahy was insolvent; that they at once recorded their mortgages,— are all cogent facts in favor of the conclusion reached by the trial court, and doubtless had great weight. For the reasons already stated, we are compelled to affirm the conclusions of the trial court as to the validity of the transactions of November 13, 21, and 22, 1890, including the transfer of the boom stock.
Giving the testimony all reasonable weight so far as it tends to support the conclusion of the trial court on this
But it is said that the transaction was not attacked on this ground in the complaint, but only on the ground of actual fraud, and hence that it cannot be set aside, even if it be in violation of the assignment law, because no such issue has been raised. While the complaint does not charge in so many words that the transaction constituted an unlawful voluntary assignment, it sets forth the tripartite agreement in full, and contains the general allegation that all the said transfers were executed as parts of one transaction, with the intent and purpose of having all the property held, in trust for the use and benefit of said Leahy contrary to law; and we think this allegation amply sufficient to cover the proposition.
The transfers of December 2 and 3, 1890, were therefore constructively fraudulent and void as to creditors, although not tainted with actual fraudulent intent. But it is said that by delaying the commencement of this action for nearly five
The fact that the transfers attempted to be made by the tripartite agreement are void does not, however, avoid the prior valid mortgages. The fraudulent agreement being set aside, the grantees are restored to their legal rights under the mortgages. Bump, Fraudulent Conveyances (4th ed.), § 484. From these conclusions it necessarily results that the plaintiffs were entitled to an accounting at the hands
It may not be wise or practicable to lay down exact rules-in advance upon which the accounting is to be conducted,, but, the action being in equity and the defendants not being chargeable with actual fraudulent intent, equitable principles must prevail. Generally it may be said that they will be chargeable with the property which they received, and
As to the claim that the Mortenson Lumber Gompa/ny purchased the undivided half of the mill with notice- of the claims of the plaintiffs, and hence that their conveyance can be set aside in this action, we find no occasion to set aside the conclusions of the trial court in that regard, to the effect that said company purchased in good faith with out notice. No claim had been made by any of the plaintiffs against this, property at the time of their purchase. It is true that when the company purchased the property the Collins suit was. pending, brought to set aside the Corwith mortgage and deed as fraudulent as against creditors, and that a lis pen-dens was then on file, and that their abstracts showed the filing of the lis pendens, describing the action as an action to set aside the mortgage. These facts the company’s officers knew. The object of the Collins suit was simply to set aside the Corwith mortgage and deed to an extent sufficient to satisfy Collins’s judgment against Leahy, amounting to
Did the actual knowledge which the Mortenson Compcmy had that Collins had brought action claiming that the Cor-with deed was fraudulent as matter of law prevent the company from becoming purchasers in good faith? Certainly the fact was competent proof on the subject, and might, in connection with other facts, constitute notice which should have put the purchaser upon inquiry, but we do not think that it can be held conclusive. The fact that the company immediately spent at least $8,000 in improvements on the mill is a circumstance properly to be considered on the question of good faith, as well as the fact that they were advised by their attorneys who examined the abstract that the title was good. Upon the whole case we are unable to say that the finding of the court upon this question is erroneous. But Corwith, having received $6,000 for the undivided half of the mill upon sale thereof to the lumber company, and having no valid lien thereon or title thereto as against these plaintiffs, must be held liable to account for the same in this action,'except for such part thereof, if any, as he has paid to discharge the Collins debt.
By the Court.— As to the defendants Corwith, James McCrossen, and J. E. Leahy, the judgment is reversed, and the action remanded for further proceedings in accordance with this opinion, with disbursements and clerk’s fees to be taxed against said respondents, but no attorney’s fees. As to the remaining defendants the judgment is affirmed, without costs.