214 Wis. 378 | Wis. | 1934
The stipulations in the applications for bonds define the rights of the parties thereto under that agreement. Such lien as these stipulations create, so long as unrecorded and unknown to other creditors, could affect only the rights of the parties to the agreement. A document intended to transfer title to property, real or personal,
The failure to advise the public by recording the agreements leaves the appellants subject to the rule recognized in Standard Paper Co. v. Guenther, 67 Wis. 101, 30 N. W. 298, and so far as the respondent is concerned the property must be treated as unincumbered at the time the credit was extended. Underwood Veneer Co. v. Lucia, supra. The result which follows the failure to record the instrument, in view of reliance by respondents upon equipment and machinery set out in the financial statement submitted by the principal defendants, disposes of all questions raised in the case unless some showing exists of a new transaction, or a supplemental one at least, in which the machinery was transferred to the bonding companies for an adequate consideration. Farmers Exchange Bank v. Oneida Mfg. Co. 202 Wis.
The appellants in their brief direct our attention to the evidence that the principal defendants did not object to or protest against the appellants’ taking possession of .the machinery. This evidence does no more than to show the principal defendants’ submission to the acts of appellants under the contract contained in the application for the bonds. We find nothing in the record tending to show an active consent on the part of the debtors to a transfer of the property to the bonding companies. Financial embarrassment was present, and by simply refusing to interfere the debtor did not give his property or transfer it to an aggressive creditor for a valuable consideration.
The bonding companies claimed their right to this property under the agreements made at the time when the bonds were executed. Those agreements were unrecorded. These creditors, as against others, took under such claim as they had, and when the necessity arose of matching the strength of their claim against the claim of the respondent, the appellants’ claims were the weaker. The respondent at that time was armed with process, and the appellants, as against respondent, with a mortgage limited by the fact that it was unrecorded. Standard Paper Co. v. Guenther, supra.
We agree that the evidence warranted the learned trial judge in concluding that “the plaintiff bank extended credit to the defendants on the basis of their financial Statements which included the plant, equipment, trucks, etc., involved in these actions. There is not the slightest suggestion in the evidence that the plaintiff at any time knew or had any information that might lead to information that the title of the defendants to the property was in any way incumbered at the time when the plaintiff was making loans to the defendants. No attempt was ever made to comply with the
By the Court. — Judgment affirmed.