Carter, Rittenberg & Hainlin Co. v. McDonald ( 1896 )

Cassoday, C. J.

It appears from the record that for several years prior to July 15, 1893, the principal, defendant, Jennie A. Eichardson, was engaged in the millinery business at Stevens Point; that during that time the garnishee, McDonald, was engaged in the business of real estate and loaning money at the same place; that at that time Eich-ardson was indebted to McDonald in the sum of .$972, and to secure the same she, at that time, gave him two notes, one due in January and the other in April, 1894, secured by a chattel mortgage on all her goods, 'wares, and merchandise; that September 1, 1893, both of these suits were commenced against Eichardson; that September 5, 1893, McDonald filed his chattel mortgage; that September 14,1893, Eichardson, being indebted to the plaintiffs and others to the amount of $3,000, besides the notes and mortgage to McDonald, and being grossly insolvent, executed and delivered to McDonald a bill of sale, absolute in form, reciting a- consideration of $1,162, of her stock of goods, consisting of the millinery stock in said store at Stevens Point; that such bill of sale was drawn by a lawyer residing some twenty miles from Stevens Point; that at the time of receiving that bill of sale McDonald gave Eichardson $200; that the stock of goods covered by the chattel mortgage was then inventoried to McDonald at $2,043.32; that that bill of sale was filed in' the city clerk’s office at Stevens Point, September 16, 1893; that the property so included in the bill of sale comprised all the property then owned by Eichardson; that McDonald thereupon ostensibly took possession, and put his daughter in charge, but Eichardson (except when sick) in fact continued to conduct the business under the same sign, and accounted to McDonald for the proceeds of the sales; that September 19, 1893, the garnishee papers were served in both actions upon McDonald and Eichardson at the same time; that McDonald answered and denied all liability; that the plaintiffs, respectively, took issue with such answer; that upon the trial of such issues the court found, in effect, such of the facts stated as were disputed, and also, in effect, that McDonald took such bill of sale with actual knowledge of facts sufficient to put an ordinarily prudent and cautious man upon inquiry as to Richardson’s insolvency at the time; that the bill of sale was intended by the parties thereto to be an absolute conveyance of the property therein mentioned, and was not given as mere security; that prior to the trial McDonald had realized from the sales of such stock more than $2,043.52. As conclusions of law the court found, in effect, that the bill of sale was executed with the intent and purpose to hinder and delay the creditors of Richardson in the collection of their just claims; that the said indebtedness of Richardson to McDonald was, at the time of giving the bill of sale, a Iona fide indebtedness, incurred in good faith, and that McDonald was entitled to retain the same out of the proceeds of such sales; that McDonald had converted the property to his own use, and was liable to account for the value thereof, to wit, $2,043.52, less the amount of his claim of $1,184.96; that the. Garter, Rittenberg <& Hainlin Company having recovered judgment against Richardson for $540.46, and Lydia G. Fish et al. having recovered judgment against her for $447.12, and the funds in the hands of McDonald, liable to garnishment, being insufficient to pay both judgments in full, they should share in said funds pro rata, according to the amount of their several judgments; that judgment was thereupon ordered against McDonald, as garnishee, according to such finding and conclusions. From such judgment McDonald, as such garnishee, brings these appeals.

The evidence clearly supports the findings of the trial court. The. manifest purpose of surrendering the mortgage and taking back the bill of sale was to hinder, delay, and defraud the other creditors of the mortgagor. Sutton v. Hasey, 58 Wis. 556; Baum v. Bosworth, 68 Wis. 196. This being so, the garnishee is in no position to complain because, under the statute, he'was held liable for the proceeds of the sales in his hands in excess of the debt due himself. S. & B. Ann. Stats, sec. 2768; La Crosse Nat. Bank v. Wilson, 74 Wis. 398; McCown v. Russell, 84 Wis. 122; Gore v. Brucker, ante, p. 65. Ve find no error in the record.

By the Court.— The judgment of the circuit court is affirmed.