Geneser v. Telgman ( 1890 )

Watermab, J.

On the 15tli of June, 1889, appellant, Geneser, entered against Gustav E. Mathews a judgment by confession for $1,563.12, and upon the same day one Frederick Aye had judgment by confession entered against said Mathews for §199.55; executions were issued at once upon these judgments, and the stock in trade of said Mathews seized thereon.

On the 17th of June, Mathews made a general assignment to Charles W. Peters.

In the month of June, during which those things were done, appellees, Carl and Elsie Telgman, had pending in the Circuit Court of Cook County a suit against Mathews, upon which, on the 13th of June, they had obtained a verdict for §757.57, upon which, on the 17th of June, judgment was rendered.

On the 19th of June the Telgmans filed their bill, alleging, inter alia, that the judgments in favor of Geneser and Aye were entered by arrangement with Mathews in contemplation of his assignment, and were really a part thereof; also that they were without consideration, and fraudulent as to complainants, and asking that they be set aside.

The court found that the Geneser judgment was entered in pursuance of an arrangement between Mathews and Geneser that it should be done, and that execution should be at once levied thereon, and Mathews’ goods taken thereunder, after which he should make the assignment he did. The court also found that Aye obtained his judgment note with knowledge that Mathews was insolvent, and intended to cease business and to make a voluntary assignment under the statute; and that both judgments were part and parcel of the assignment made by Mathews; that Peters, as assignee, refused to take any steps to set aside said judgments; they were therefore decreed to be part and parcel of the voluntary assignment of Mathews, and preferential and void a.s against complainants and the other creditors of Mathews. Prom this decree Geneser appeals.

Upon the hearing it appeared that Mathews had been for some years a tinsmith, doing a small business on Milwaukee Ave., in the city of Chicago. Being called by the complainants, he testified that when he started in business Geneser loaned him from March till June, 1879, small amounts, aggregating $500; that at various times thereafter he let him have other amounts, and so the matter ran on until in May, 1889, he owed him $1,391; Geneser then gave him $109, and he gave him the judgment note for $1,500; that Geneser and Aye were witnesses for him, Mathews, in the suit with the Telgmans; that Geneser came to him the day the case was tried, and asked him for money, and he had none to give him. That he, Mathews, was down in attendance upon the Telgman case about four weeks, and thinks Geneser was in court when the verdict was rendered.

Upon cross-examination he testified that he did not know that Geneser was going to enter judgment against him; that on Saturday, the 15th of June, he was up to Geneser’s house for money; that the following Sunday was the first time he thought about an assignment; that this was then suggested to him by some one whom he met in a beer saloon, and told that he was in trouble, and Mr. Peters was then recommended to him to make out an assignment for him; that he did not know what an assignment was until Mr. Hohn told him.

Geneser testified that the judgment note was actually made May llth, and was dated May 1st, because it took the place of one that fell due upon the fiist. That before the judgment was entered, he liad not had any talk with anybody about an assignment, or any talk about an arrangement of Mathews’ affairs; nor did he in any way let Mathews know that he was going to enter judgment against him. There was testimony that the day prior to the rendering of judgment in the Telgman suit, Geneser and Mr. Jones called upon one of Telgman’s attorneys, and asked what he, Ashcraft, would take to settle the Telgman judgment. Ashcraft declined to throw off 8125 from the verdict, and one of them asked if it would not be better to do that than to get nothing.

Ashcraft said, paying cash for everything as Telgman did, and worth so much money, it was unreasonable to ask a discount, or to intimate that he was unable to pay the claim.

The only question in this case is: Did Geneser cause his judgment to be entered, in pursuance of an arrangement that thereafter Mathews was to make an assignment, or under such circumstances as to make it a fraudulent preference as an attempted evasion of the law as to assignments, or was it entered for the purpose of enabling Mathews to hinder, delay or defraud his creditors?

It is quite true that the evidence to sustain these propositions need not be direct; such conclusion may be arrived at by inference merely, and fraud may be found to exist against the positive testimony of those who have, and who alone have, positive knowledge of what was done; but not only must there be some evidence of fraudulent practice by the party to be charged therewith, but the fraud being charged, the evidence to sustain the allegation must preponderate. The inference drawn must be legitimate. Chicago Stamping Co. v. Hanchett, 25 Ill. App. 198-204; Schroeder v. Walsh, 120 Ill. 403; Mey v. Gulliman, 105 Ill. 272-285.

What evidence is there in this case that Geneser procured his note or entered his judgment to help Mathews about anything, or in pursuance of an arrangement with Mathews as to an assignment, or anything else?

That the judgment note was written out by one Wangreiski, and signed by Mathews and his wife on the 11th of May, seems to be indisputable; that this was but a renewal of another note of a like character, can hardly be questioned. ■ There is no evidence whatever that on May 11th, when this note was given, Mathews contemplated making an assignment, and the rule announced in Field v. Geohegan, 125 Ill. 68-71, that in such case, where the debtor had nothing to do with the entry of the judgment, it will not be held invalid, seems applicable here.

Where the creditor has in his possession valid judgment notes, made before the debtor contemplated making an assignment, if judgment is entered thereon and priority thereby obtained without unlawful collusion with the debtor, such judgment will not be set aside. Home Nat. Bank v. Sanchez, 131 Ill. 330; Hier v. Kaufman, 25 N. E. Rep. 517.

What evidence is there that the entry of judgment by Geneser was at the procuration of, or by collusion with Mathews?

So soon as the verdict in the Telgman case had been rendered, every principle of self-interest prompted Geneser to enter judgment, and there is no evidence that he did this by reason of any arrangement or collusion with Mathews; on the contrary, the testimony that Mathews had no notice of Geneser’s intention to do so, is uncontradicted.

Holding this note given for borrowed money for an amount, it would seem, equal, at least, to all that could be realized on Mathews’ stock at a forced sale, having no other security, it could hardly be expected of him, that when he knew that the Telgmans had recovered a verdict against Mathews for $757.57, and in all probability would within a brief time have a judgment thereon, he would, under such circumstances, before availing himself of his security, wait to let Mathews’ stock be carried off under an execution issued upon Telgman’s judgment.

Suppose Geneser, instead of holding this:judgment note for his own benefit, had held it as trustee, guardian of some minor, or administrator of an estate, and, familiar with Mathews’ condition, as he was, and knowing of the rendition of the verdict in favor of the Telgmans, as he' did, he had folded his hands and let the Telgman execution be levied ere he moved. Would he not have justly been charged with gross neglect of duty? Can the diligence he would have been bound to use for another, be esteemed a badge of fraud because exercised in his own behalf?

It is immaterial what Mathews may have thought or intended on the 13th, 14th, 15th, 16th or 17th of June, unless Geneser was in some way a party to the scheme, if any there was, of Mathews, to hinder his creditors, or the entry of judgment and making of the assignment were, as to one or both, a concerted arrangement.

As a matter of fact the making of the assignment by Mathews in no way aided Geneser, nor did the entry of the judgment by Geneser assist Mathews. Geneser’s judgment was entered in the Superior Court June 15tli; execution was at once issued and levy made. The complainants obtained their judgment in the Circuit Court on the 17th. Had Mathews not made an assignment, Geneser’s execution would have had precedence over that of Telgman’s. So far as Geneser was concerned, the only effect of the assignment was to increase the grounds upon which an attempt to overthrow his judgment could be made. That Geneser may have been willing to have still further assisted Mathews, by buying or paying, if he could at a discount, the Te’gman claim, does not tend to show that he entered his judgjnent in pursuance of an arrangement for Mathews to make an assignment. Mor does it appear that complainants have actually been hindered or delayed in the collection of their judgment by the assignment. It is admitted that the entire stock of Mathews did not sell for enough to satisfy the executions issued upon the Geneser and Aye judgments.

It therefore appears that had the assignment never been made the Geneser and Aye executions would have swallowed all seized thereon, and left nothing for the Telgman execution. It what manner, therefore, have complainants lost anything by virtue of the Geneser and Aye judgments? It is insisted that just before this judgment was entered Mathews was making payments to favored creditors, and that Geneser knew it. Even if this were the case, would Geneser thereby have been deprived of his right to enter judgment? Is a creditor’s right to enforce his security taken away because he sees the debtor disposing of his effects to favorites ?

The fact that a creditor knows that his debtor contemplates making an assignment, will not render invalid the judgment he, under such circumstances, causes to be entered. Home Nat. Bank v. Sanchez, supra.

We are of the opinion that this judgment note was bona fide taken in the usual course of business, when no assignment was contemplated, and that judgment thereon was entered without any collusion or arrangement with Mathews, in such diligent protection of his own interests as its holder, Greneser, had a right to insist upon.

The decree in this case is therefore reversed and the cause remanded to the Superior Court, with directions to dismiss the bill.

Reversed and remanded with directions.