66 Wis. 227 | Wis. | 1886
The statutes expressly .provide that “ all voluntary assignments or transfers whatever of any real estate, chattels real, goods, or. chattels, rights, credits, moneys, or effects for the benefit of or in trust for creditors, shall be void as against the creditors of the person making the same unless ” executed as therein required. Sec. 1694,
Was the whole transaction detailed above, when taken together, a voluntary assignment, within the meaning of the above statutes ? The six chattel mortgages and the five assignments were all made in pursuance of the same agreement, and substantially at the same time, and for the same common purpose, and in relation to the same subject matter, and must, therefore, upon well-settled principles, be construed together as constituting one paper in law. Norton v. Kearney, 10 Wis. 443; Gillmann v. Henry, 53 Wis. 468; Herbst v. Lowe, 65 Wis. 316; Backhaus v. Sleeper, ante, p. 68; Berry v. Cutts, 42 Me., 445; Burrows v. Lehndorff, 8 Iowa, 103; Van Patten v. Burr, 52 Iowa, 518.
It has often been held by this court that a conveyance or bill, of sale absolute in form may nevertheless be shown by parol evidence to be nothing more than a mortgage or security. Whether it be one or the other is very often a question depending wholly upon the intention. So whether a given written instrument constitutes a conditional sale, a conveyance, or mortgage, is very often a question of intention, to be determined by contemporaneous facts and circumstances. Rockwell v. Humphrey, 57 Wis. 410, and cases there cited. So we may resort to contemporaneous facts and circumstances to determine the intent with which the six chattql mortgages and five assignments in question were given.
The garnishee had no personal interest in the transaction except to the extent of his claim for $2,749.63. The note of $3,160, and the two mortgages, and the assignment to secure the same, were taken by him in his own name merely as a trustee of an express trust. Sec. 2607, R. S.; Water
Thus, in Norton v. Kearney, 10 Wis. 443, the surety for a firm of merchants took a bill of sale, from the firm, of their entire stock. Then he gave back to the firm a writing,' whereby he agreed to pay three of their notes, upon which he was liable as surety, and save the firm harmless therefrom ; and further agreed to dispose of the goods to the best advantage, and, if the proceeds exceeded in amount. the sums specified, he would “ faithfully pa,y such overplus to the other Iona, fide creditors ” of the firm pro rata. The two instruments were construed together, and held to be an assignment for the benefit of creditors, with a preference to those to whom the assignee stood in the relation of surety. Dixon, C. J., speaking for the court, there said: “No particular form of words or instrument are necessary to constitute a valid assignment of chattels or things in action. Any valid transfer by which the uses and trusts for which the property is assigned, and to which it is to be appropriated by the transferee, are intelligibly indicated and declared, is an assignment.” In Backhaus v. Sleeper, ante, p. 68, prior mortgages, given within sixty days before making an assignment, were held, by references to them therein, to be imported into the assignment, which was construed in connection with them as one transaction. Substantially the-same was held in Van Patten v. Burr, 52 Iowa, 518. In that case Burrows v. Lehndorff, 8 Iowa, 103, was approved and some of the intervening cases in that state
The mere fact that the transfer was effected by eleven different instruments, instead of one, did not prevent the
The statutes of Missouri concerning voluntary assignments are, if anything, less stringent than our own, but the conclusion reached in that state by Mr. Justice Mtt.t.wr and Judges McCeaey, Teeat, and Kkekel, of the federal courts (Judge Bbewbe reluctantly acquiescing), is to the effect that whenever an insolvent debtor, by any form of instrument or instruments, disposes of his entire property, not exempt, or substantially all of his property, for the benefit of a certain number of his creditors, then the transaction is in legal effect an assignment for the benefit of creditors, with a preference, and hence in violation of the statute, and void. Freund v. Yaegerman, 26 Fed. Rep. 814; Martin v. Hausman, 14 Fed. Rep. 160; Kellog v. Richardson, 19 Fed. Rep.
The question presented is not whether an insolvent debtor may secure a creditor, but whether insolvent debtors may by way of chattel mortgages and assignments to certain creditors, as in the case before us, assign and transfer their entire property for the benefit of such creditors, with the intent of having one of such creditors, for himself and as agent and trustee for the others, take immediate possession, and convert the same into money, a,nd then to, divide the samq pro roto among such favored creditors. In other words, may such insolvent debtors, by means of such chattel mortgages, assignments, and verbal understanding, accomplish the very object they would have sought to attain had they in form made a general assignment to the garnishee with the same preferences to the same favored creditors, without bringing the transaction under tie same condemnation of the statutes? If we look to the substance and purpose of the whole transaction, instead of mere forms, there seems to be no escape from the conclusion that it was in legal effect a voluntary assignment or transfer of all the property of the debtors for the benefit of the particular creditors named, and hence With a preference. 'Such being the substance of the transaction, it was in direct violation of the statutes. It is ño answer to say that to sustain an attachment or garnishment, in such a case, would simply substitute another creditor to be favored, .instead of those selected by the debtors. "We are not legislating. The statute may be incomplete to perfectly secure the object intended. If the system devised is incomplete, it is for the legislature to complete it. We can do no more than to determine whether the transaction comes within the condemnation of the statute. We are clearly of the opinion that it does.
The facts in this case are very plain, and there is no dispute as to them. The appellant, a creditor of
That on and before the 16th of April, 1885, the said Ebenezer Hoyt and Wesley Kinney were partners in business in the city of Milwaukee, and were on that day indebted in large sums of money to divers persons, which they were unable to pay in full. Among such creditors were Frank M. Hoyt, to whom they were indebted upon two promissory notes, one dated February 20, 1884, for the sum of $2,749.63, and one dated April 13,1885, for the sum of $3,160; to Ephraim Mariner, $1,535.05; to Alice McLeod,( $4,000; Marine & Fire Insurance Company Bank, $5,000. On the 13th of April, 1885, the said Hoyt & Kinney gave five chattel mortgages upon all the property of said firm: two to said Frank M. Hoyt, the one to secure the payment of the said sum of $3,160, and the other to secure the payment of the said sum of $2,749.63; one to Ephraim Mariner to secure the payment of said sum of $1,535.05; one to Alice McLeod to secure the sum of $4,000; and one to the Fire Insurance Company Bank to secure the payment of $5,000. Thére was also another chattel mortgage given to the bank, to secure the payment of the same debt of $5,000, upon one horse, delivery wagon, and one harness. These mortgages covered the same stock of goods in the possession of and owned by the said firm of Hoyt & Kinney, exceptthe second one given to the bank on the horse, delivery wagon, and harness. In addition to these several mortgages the said firm, for the purpose of further securing said debts, made
“ For a valuable consideration to us in hand paid, we, E. S. Hoyt & Oo., do hereby sell, assign, transfer, and set Over to Frank M. Hoyt all the accounts described in the schedule hereto attached marked £ A,’ and all claims and demands, of every nature, due or owing to us from the persons and linns named in said schedule, and from each and every of them, as collateral security to two certain promissory notes executed by us to said Frank M. Hoyt, one for the sum of $2,749.63, dated February 20, 1884, and the other for the sum of $3,160, dated April 13, 1885.
“ "Witness our hands, this 16th day of April, 1885. '
' “E. S. IToyt & Oo.”
To this assignment was attached a schedule of the notes and accounts assigned and referred to in the body of the assignment. The other assignments were in the same form, except as to the name of the assignee and property assigned, and for the purpose of further securing the payment of the said debts due the other parties, each assignment being for specific notes and accounts mentioned in the schedules attached to such assignments.
Frank M. Hoyt took possession of the property mentioned in the several chattel mortgages and assignments on-the day the same were made, for the benefit of all the parties interested, and afterwards the said mortgagees and assignees made and executed-the following agreement:
££ This agreement, made this 23d day of April, 1885, by and between the Wisconsin Marine & Fire Insurance Company Bank of the first part, Ephraim Mariner of the second part, Alice McLeod of the third part, and Frmik M. Hoyt of the fourth part, witnesseth:
•£ Whereas, heretofore, to wit, on the 16th day of April, the*242 firm of E. S. Hoyt & Go. were indebted to the said bank in the sum of $5,000, and to the said Ephraim'Mariner in the sum of $1,565, and to the said Alice McLeod in the sum of $4,000, and to said Frarnlt M. Hoyt in the sum of $5,909.63, and
“ Whereas, on said 16th day of April, E. S. Hoyt & Go. executed and delivered to the parties hereto, respectively, for the purpose of securing said debts, five certain chattel mortgages, bearing date of that day, on the stock of wines, liquors, and other property contained in the store formerly occupied by said E. S. Hoyt & Co., known as 102 West Water street, and the parties hereto have taken possession of said stock and property under and by virtue of the authority in them vested by said chattel mortgages, and are about to sell the same at public auction. ■
“Now, therefore, it is agreed by and between the parties hereto that when said stock and property is offered for sale under said chattel mortgages, if a bid shall not be made for the same for such amount as to the said FranJc M. Hoyt, or to such person as he shall’designate to represent him at such sale, shall be deemed a fair price for such stock and property, then and in that- event the property may be bid in at such sale by said Hoyt or his representative, for the account and benefit of all parties hereto, and that stock and property, when so bid in, shall be sold thereafter for the benefit of all parties concerned herein in such manner as to said Hoyt shall seem desirable. The proceeds therefrom, after paying all costs, charges, and expenses of making such sale as shall seem necessary to said Hoyt to dispose of said stock and property to advantage, to be divided among the parties •hereto in the proportion of their several debts hereinbefore mentioned.
“In testimony whereof,'the said Wisconsin Marine & Eire Insurance Company Bank have caused these presents to be*243 subscribed on tbe day and year above written, and the other parties hereto have hereunto set their hands and seals.
“ D. Ferguson, Cash. [Seal.]
“Feank M. Hoyt. [Seal.]
“ Alice McLeod. [Seal.]
“E. Mariner.” [Seal.]
The court found that this agreement was made and executed on the 23d of April, 1885, and I find nothing in the evidence which tends to show that his finding on this point is not supported by the evidence. .
I think that it must be taken as sufficiently established by the evidence that all the property of the members of the firm, both firm and individual property, was mortgaged and assigned to the parties mentioned. It must also be admitted that the property so mortgaged and assigned to said creditors was not more than sufficient to satisfy their claims against the firm, and that this fact was known to both the creditors and debtors at the time the mortgages were executed. It must also be admitted that it was expected by all parties that the business of the firm would be immediately suspended and possession taken by the mortgagees. It must also -be admitted that the firm intended to prefer the claims of these creditors over their other creditors, and that these creditors knew that their claims were to be preferred, and they intended to get a preference of their claims over the claims of the other creditors.
On the part of the learned couusel for the appellant it is insisted that these mortgages and assignments are void as to them, not because there was any fraudulent attempt in fact to secure the payment of their debts, which are admitted to be just debts due from the firm of Hoyt & Co. to them, nor because the giving of the mortgages and assignments of the accounts and notes to them was any evidence of an intent to hinder and delay the other creditors, but upon the sole ground that the giving of such mortgages and
There are some questions in relation to assignments which must be considered settled, so far at least as this court is concerned; and the first and most material of these questions is that, until the statute of 1883 was passed, a person making a voluntary assignment under the statute might prefer some of his creditors over others in the distribution of his assets; second, that he might, before making a general assignment, by any proper and lawfully executed instrument secure the payment of one or more of his creditors in preference to his other creditors, and that when such security was given to secure an honest debt, and not intended to hinder or delay the other creditors, it must be held valid, notwithstanding the debtor afterwards made a general assignment for the benefit of all his creditors. Since the passage of ch. 349, Laws of 1883, the insolvent debtor is not prevented from giving a security to one or more of his creditors to secure the payment of his or their debts, and such security so given is valid as between the debtor and the other creditors, even though followed by an assignment within sixty days after the same is given, and can only be avoided by the assignee as prescribed by the statute.
In the case of Wachter v. Famachon, 62 Wis. 123, Justice OetoN in his opinion says: “ There is nothing difficult in the meaning and proper construction of that act. Before it was passed creditors might be preferred even in assignments. This is prohibited by the first section, and renders the assignment void. The act does not pretend to
Under these decisions we think it clear that the right of the insolvent debtor to pay or secure the payment of one or more of his creditors, to the prejudice of his other creditors, when such security given is not followed by a general assignment within-sixty days after giving such security, is just as ample and untrammeled as it was before the passage of ch. 349, Laws of 1883; and that, when followed by such assignment within the limited sixty days, the preferences are held void, not for the benefit of any one or more creditors, but for the benefit of all the creditors. The statute simply gives the debtor the right, if* he' chooses to avail himself of such right, to revoke the preferences given, within sixty days after giving them, by making a general assignment for the benefit of all his creditors. Rut the statute does not give the other creditors the right to revoke such preferences in any case. There is therefore no greater or other reason for holding the mortgages and transfers of the choses in action in this case to the creditors intended to be secured in the payment of their claims an assignment under the statute than there would be if the statute of 1883 had not been passed.
Do those additional facts, if they are facts, change the securities given into an assignment under the statute, and so make it void? To my mind, it is clear that they cannot and do not make that an assignment which is not substantially such in the absence of these facts. In the first place, to give them such an effect is to give them a construction which it is evident was not intended by the parties making them. The creditors taking such securities acted by their attorneys, who cannot be supposed to have been ignorant of the fact that an assignment under the statute was void if not executed as required by such statute; and also that an assignment giving preferences was also void under ch. 349, Laws of 1883. It is evident, therefore, that it was not the intent of the parties to make an assignment when they took these securities but studiously avoided the making of such an assignment.
Does the fact that the mortgages cover all the property of the debtors make them an assignment? It seems to me that that fact has no force in converting the mortgages into an assignment. The amount of the property covered by a mortgage cannot in. any.way change the nature of the instrument. If the property covei-ed is very much greater in
In the case of U. S. v. McLellan, Justice Stoey says: “ I take the naked question, then, stripped of all unimportant circumstances, to be whether a conveyance by a debtor, known to be insolvent, of all his property to one or more creditors in discharge of their own liabilities, not exceeding the amount due to and payable by them, and not for the benefit of the creditors at large, or of any other creditors than the immediate grantees, is such a voluntary'assignment as is within the purview of the section of the act of 1799. . . . I do not feel warranted in saying that such conveyances as the present are voluntary assignments for the benefit of creditors, within the meaning of the act, unless, indeed, it should be shown that they were made with the intent to evade the priority given by the aet.” This ease presented a much stronger case for holding the. conveyances an assignment than the present case. The act referred to was an act for the protection of the United States in the distribution of the estates of insolvent persons. The act reads: “ In all cases of insolvency, or when any estate in the hand of the executors, administrators, or as
Before the decision in the ease above cited the United States courts had held that the preference secured to the; United States attached when there had been a general assignment for the benefit of Ms creditors by the insolvent debtor', and did not apply to a case where the debtor was insolvent but no assignment had been in fact made. In the case considered the United States had a right which depended upon the fact of a voluntary assignment. It might well have been urged that the right could not have been defeated by another conveyance which in fact transferred all his property for the benefit of a part of his creditor's, to the exclusion of all others.
Under our statute no creditor of an insolvent debtor has any preference over another, nor has he any right to demand that the debtor shall not prefer Ms other creditors to him, unless he voluntarily chooses to make an assignment for the benefit of all his creditor’s. The creditor has no power to compel a voluntary assignment or an equal distribution of the assets of Ms debtor in any case. The following and many other cases fully sustain the doctrine of the cases above cited: Lampson v. Arnold, 19 Iowa, 479; Hutchinson v. Watkins, 17 Iowa, 475; Farwell v. Howard, 26 Iowa, 384; Carson v. Byers, 25 N. W. Rep. 826; Cad-well's Bank v. Crittenden, 66 Iowa, 237; Jaffray v. Greenbaum, 64 Iowa, 492; Johnson’s Appeal, 103 Pa. St. 373; Hewitt v. Huling, 11 Pa. St. 27; Ridgway v. Stewart, 4 Watts & S. 383; Manufacturers' & M. Bank v. Bank of
It seems to me that when it is once admitted that the debtor, although insolvent, may prefer the debt of one creditor over another, except when he makes a voluntary assignment in favor of all his creditors, there is no ground for holding that he may prefer such creditors by giving security on a part of his assets, and that he may not secure such creditors upon the whole of his assets; and if the instrument executed to secure such creditor or creditors is not in fact in the nature of an assignment, it cannot be construed into an assignment because it in fact turns over all the assets to secure one or more creditors. If a mortgage of a part of the assets cannot be construed as an assignment under the statute, a mortgage of the whole assets cannot be so-construed.
The object of our statutes on the subject of voluntary assignments was not, as this court has repeatedly held, to prevent an insolvent debtor from preferring the debt of one creditor to the debt of another, nor to compel or encourage the making of voluntary assignments, but simply to protect the creditors from injury, so far as possible, when the debtor resorted to that method of placing his assets beyond the reach of the ordinary remedies of the creditor to subject his property to the payment of his debts. The object of the statute is well stated by the learned counsel for the respondent, in their brief: “ Prior to the passage of the law regulating voluntary assignments, an insolvent usually assigned his estate to some one who, on account of previous relations, was inclined to favor the debtor,- — very often his
If security given to one or more creditors to secure the payment of his or their debts upon all the property of the debtor is in effect an assignment under the statute, it must be held so upon the ground that it conveys all the property to such creditors, or upon the ground that it is an unlawful preference, or upon both grounds combined. As we have shown, the fact that a preference has been given cannot change the security into an assignment, and the reason for holding it an assignment must rest solely on the ground that the instrument or instruments convey all the assets of the debtor to the particular creditors named. The right of preference being conceded, this fact does not seem sufficient, in my mind, to justify a court in construing the contract between the parties contrary to their express intention, and in complete contradiction of the language of the written
If the writings in this case are an assignment in substance, it is so simply because the debtor has given all his assets to the preferred creditors. If, therefore, he permits such thing to be done in any other way, there would be the same reason for holding the transaction an assignment. Had he given judgment notes, or permitted the creditors whom he desired to prefer to take judgment upon confession, or in any other way, the same result would follow, and consequently the same construction should be given to such transaction. And why should not the same result follow if the debtor suffers an execution upon a judgment obtained by one creditor in the ordinary course of proceeding of sufficient amount to sweep away all the assets to be levied? Eor myself I do not see any half-way ground at which the court can stop and say this amounts to an assignment and this does not. As I think the whole ground of the ruling in this case must and does rest on the fact that the debtor has voluntarily transferred all his assets to secure a part of his debts, not by any instrument which is in form or substance an assignment within the meaning of the statute, or with any intent in fact to make such an assignment, why, then, if he suffers the same thing to be brought about in any other way which he might prevent by making a voluntary assignment, should not that also be considered an assignment?
I am unable to appreciate the force of the argument in favor of holding the transaction between the debtor and a part of his creditors; as disclosed in this record, an assignment, and think the judgment of the county court ought to be affirmed.
Bij the Court.— The judgment of the county court is reversed, and the cause is remanded for further proceedings according to law.