63 Neb. 363 | Neb. | 1901
Lead Opinion
On April 24, 1896, the Hobrecker Stove Company, a corporation doing business in the city of Omaha, made a bill of sale of all its stock in trade to the Merchants’ National Bank of Omaha, to secure the payment of notes in the sum of about $10,000, claimed to be made by said corporation to the bank, and which notes James C. McKell, a director and president of the corporation, signed as co-maker or surety. On the same day, and as a part of the same transaction, the corporation assigned all its book accounts and bills receivable to Luther Drake, trustee, for the purpose of further securing the payment of said notes to the bank. It is conceded that at that time the corporation was insolvent. On said April 24, 1896, the Ellwood Gas & Va.por Stove Company commenced an action in the district 'court against the Hobrecker Stove Company to recover the sum of about $1,000, and a writ of attachment was issued in that action and levied upon a portion of the stock in trade of the defendant, the Hobrecker Stove Company. On April 27, 1896, the Cleveland Steel Range Company and the Galusha Stove Company each commenced actions in the district court against the Hobrecker Stove Company, which actions were aided by attachment, and the remainder of the stock in trade, not levied on under the attachment
The conveyance to the bank and to Drake, trustee, are void, for two reasons: First. McKell, a director of and president of the Hobrecker Company, was a co-maker or surety upon the notes which these conveyances were made to secure. An insolvent corporation can not prefer its officers by securing debts due to third parties for which they are liable. Tillson v. Downing, 45 Nebr., 549; Ingwersen v. Edgecombe, 42 Nebr., 740. Second. By a supplemental decree entered April 13, 1898, it was found that the debt due the bank, and which these conveyances were made to secure, was the individual debt of McKell, for which the Hobrecker Stove Company was in nowise liable. The question raised by the appeal of the interveners is hot only important, but interesting. Are they entitled to priority in the distribution of the assets of the corporation over the non-judgment creditors because of their proceeding in reducing their claims to judgment, and causing the parties in possession of the assets to be garnished, and thereafter intervening in this action? The plaintiff the March-Brown-back Stove Company undoubtedly filed its petition in the belief that this court would adopt what is commonly known as the “trust fund doctrine” in relation to insolvent corporations, and deny a preference to any creditor of the corporation, regardless of the steps that had been taken to secure such priority. The question was an open one at the time this action was commenced, but has since been settled against the contention of the plaintiff in Shaw v. Robinson, 50 Nebr., 403. Upon the theory that the assets of an insolvent corporation are a trust fund, to be distributed rat-ably among the creditors of the concern, the action was
As we now view the case, it is not necessary to determine the effect of the garnishment proceedings instituted by the interveners to reach the fund in controversy. The authorities are all agreed that the filing of a creditors’ bill gives the plaintiff a lien upon the property sought to be reached thereby. It is an equitable levy upon the property, and binds it from the time of the filing of the bill. When these parties intervened in this action they acquired a lien on the fund in dispute prior and superior to the non-judgment creditors, who had not taken the necessary steps to maintain a creditors’ bill to reach the fund. Their intervention was the first equitable levy upon the fund, excluding the garnishment proceedings from consideration, and the effect of which we are not considering. This is well illustrated in Miers & Coulson v. Zanesville and Mayville Turnpike Co., 13 Ohio, 197, where a bill veas brought by a judgment creditor to reach the arrears of certain shares of stock subscribed and unpaid. By its answer the company admitted the existence of the assets, and asked that an account be taken of the creditors of the company, and the amount realized distributed equally among them all. The court refused this, saying: “This claim of the company for equal distribution is inadmissible; for the vigilant creditor, pursuing his claim, acquires a preferable equity, which attaches and becomes a specific lien by the filing of his bill.” This is the general rule; and so, whether the lien of the interveners dates from the time, of their garnishment, or the time when they intervened in this suit, their lien is prior to the rights of the non-judgment creditors who had failed to take the necessary steps to maintain their suit and obtain a lien.
We have not overlooked the argument made on behalf of
The amount of the recovery allowed by the court in this case, and the character of the evidence upon which it is based, are questions which have caused us much trouble and perplexity. Much of the testimony on the question of the value of the goods, if not wholly incompetent, is of the most unsatisfactory .character. It must be conceded, we think, that the most satisfactory testimony as to value came from the witnesses Ferrin and Dickey, and this for the reasons, first, it is practically conceded that the inventory which accompanied the bill of sale made by the stove company to the bank was not made at the time, and does not state correctly the quantity or description of the goods delivered at the time. After the seizure of the goods upon the several attachments in behalf of certain of the creditors intervening in this action, certain of them were, by the sheriff, released from the levies, as not being the property of the attachment defendants, and the whole or part of the remainder were taken in replevin at the suit of the appellant, and the goods so taken are alone really in controversy in this suit. This was fully recognized by the trial court in his fourteenth finding of the fact. Ferrin and Dickey are the only witnesses who knew, or who attempted to tell, what the goods so taken were, or what was their value. There is in the record a document which is stipulated to be a “copy of the original wrrit of replevin” and which was received without objection; but this stipulation
A second reason for regarding the testimony of the above mentioned witnesses as the most satisfactory is that the remaining witnesses upon the subject, Packard, King and Roberts, confess their own, we will not say incompetency, but lack of satisfactory information or means of information on the question of value. It is conceded in the briefs of counsel that the finding of the trial court with respect to values was based mainly, if not exclusively, upon the testimony of Packard. The witness, prior to the break-up, had been secretary to the stove company, and previous to that time had been secretary and treasurer of another similar concern at Hannibal, Missouri, but he admits that the knowledge of the stove business which he acquired in his former situation was “superficial” because his duties required him to be in the office, and that his knowledge of the business which he acquired in the service of the stove company, “was principally gained from the invoices which all passed through my hands, and from which I arrived at the cost of the articles, and by reference to those invoices or the books, that I made from references to the invoices.” From this knowledge and from memoranda which he made from these sources and from comparing catalogues of Avholesale dealers, and Avithout any avowed or apparent familiarity Avith or knowledge of the goods themselves, or of their condition, he undertook to testify as to their value by reference to a list, and stating what he supposed to have been their cost price, and this, not withstanding that the business had been carried on for several years, and that it was not disputed that the goods were, to some extent, rusted, shop-worn, broken and deteriorated in value: In our opinion, the testimony of this witness was of little value in fixing the value of the goods taken on the writ of
It is a settled rule of this court that a judgment will not be reversed solely because the trial court, sitting without a jury, erred in admitting incompetent or immaterial evidence; but this rule has no application in an instance in which it is apparent that such evidence is the sole basis of the findings and judgment assailed. Such seems to be the present case. In the present condition of the case, as we are unable to determine with any certainty the value of the goods, we have concluded that the best interests of the parties will be subserved by remanding it for another trial, in which, Ave have no doubt, better and more satisfactory evidence of the value of the goods taken in replevin by the bank can be secured. When the amount is ascertained, it should be distributed among the parties, by first paying the three attaching creditors, whose suits were brought on the 24th and 27th days of April, the full amount of their claims; secondly, to distribute the remainder, so far as necessary, ratably among the creditors whose claims have been reduced to judgment prior to their intervention in this action; and, third, the remainder of the funds to be distributed ratably among the creditors of the company who are parties to this suit; and we so recommend.
Reversed and remanded.
March 19,1902, the following supplemental opinion was. filed:
Replevin: Attachment: Measure oe Damages. When goods are wrong-fully taken in replevin from a sheriff, who holds them' under levies for the satisfaction of attachments'in his hands, the measure of damages is the loss accruing to the attachment plaintiffs, because of being deprived of the right to have .tfieir writ executed; and in such case the ultimate inquiry is, what was the value of the goods in the only market and. manner in —hich the sheriff could have lawfully disposed o^th|m?
Rehearing
This is a motion for a rehearing. A-stock of stoves and kindred hardware were wrongfully taken upon a writ of replevin from a sheriff, who held them under attachment. The principal ground of complaint in the motion is that this court held that the inquiry of damages in an action by the sheriff against the plaintiff In replevin is the actual damage suffered by the plaintiffs in attachment, viz., what the latter could have obtained for the property in the only manner in which they couid lawfully have realized upon it, namely, by a public sale after due advertisement. It is argued that this, measure is too speculative, and is therefore incapable of accurate ascertainment. That it is to a degree subject to this criticism is conceded, but it has the merit of taking into account the actual situation of affairs. As much can not be said for the rule contended for by the appellees, which is, as interpreted by their argument, that the correct measure is the fair market value of the goods in Omaha, where they were situated. In the first place, this rule presupposes that there was in that city, in the
It is recommended that the motion for a rehearing be denied.
By the Court: For reasons stated in the foregoing opinion, it is ordered that the motion for rehearing be denied.
Rehearing denied.