Erdall v. Atwood

Cassoday, J.

The foregoing statement sufficiently indicates the nature of the case and the result of the trial. The principal questions presented are questions of fact. The record is voluminous. The complaint alleges, in effect, that the mortgages on the farm held by the defendant Hitchcock had in fact been paid, and ceased to be a lien thereon; and that the chattel mortgages held by Hates and Babcock, respectively, were given without consideration, and to hinder and delay the creditors of Ereeman Atwood, and hence were null and void. The court found, however, that they were each and all valid, subsisting mortgages, and accordingly dismissed the complaint with costs as to each of those defendants. This removes entirely from the case all question as to each of those mortgages, and the property taken from Freeman Atwood thereon. Exception is taken because the court found, in effect, that the notes, accounts, and personal property of the nominal value of $2,609.56, obtained by Ereeman Atwood on the foreclosure of the chattel mortgage given to him by Lyntz & Atwood, had been by him transferred and assigned to Thomas J. Atwood, in consideration of $1,200; and that such transfer and assignment were so made for the purpose of hindering and delaying the creditors of Ereeman Atwood, and were received by Thomas J. Atwood to aid and abet him in such purpose, and were therefore fraudulent and void as to such creditors. The particular ground of this exception is that none *6 of tbe facts thus found were alleged in tbe complaint, or in any manner put in issue. Certainly tbe complaint contains no reference whatever to any sucb chattel mortgage, transfer, or assignment. Tbe learned counsel for tbe plaintiff contends, in effect, that because tbe complaint alleges tbe recovery of judgment, supplementary proceedings thereon, tbe appointment and qualification of tbe plaintiff as receiver, and bis authority to sue, it sufficiently raises tbe question of tbe invalidity of sucb chattel mortgage, transfer, and assignment. If sucb were tbe rule, it would obviate tbe necessity of any allegation of an intent to binder, delay, or defraud creditor’s, as to any specific conveyance, assignment, or transfer. Obviously such is not tbe rule. Whoever seeks to set aside a conveyance, assignment, or transfer, upon sucb ground, should allege and prove sucb intent. Counsel further contends that tbe appellant has waived sucb objection by allowing tbe evidence thereon to be taken without any objection. Rut it is undisputed that sucb transfer and assignment were made about tbe time of tbe conveyance of tbe land and tbe execution of the Dates and Babcock mortgages; and hence tbe evidence was pertinent upon the issues actually made by tbe pleadings. Since sucb evidence was admissible upon issues thus made by tbe pleadings, it cannot be reasonably claimed that tbe failure to object to tbe same gives it tbe effect of proving an independent cause of action not alleged in tbe complaint, nor in issue in tbe case. Hiles v. Hanover F. Ins. Co. 65 Wis. 585 ; Cayon v. Dwelling House Ins. Co. 65 Wis. 517 . We must bold that tbe findings to tbe effect that sucb assignment and transfer of notes, accounts, and personal property were made with intent to binder and delay creditors, were foreign to tbe issues tried and tbe allegations of tbe complaint, and hence do not support that part of tbe judgment based thereon.

We are unable to perceive any valid reason for tbe *7 learned trial judge holding, in effect, that the deed from Freeman to Thomas J. Atwood was executed and delivered with the intent to hinder and .delay the creditors of Freeman. The trial judge found that the value of the land thereby conveyed was, at the time of making the deed, $8,000, which was $2,000 in excess of such value as alleged in the complaint. He also found, in effect, that such deed was given in satisfaction of $2,400 indebtedness justly due and owing from Freeman to Thomas J. Atwood, and $500 in money paid at the time to Freeman by Thomas J. Atwood, and that the latter took such conveyance subject to the mortgages thereon held and owned by the defendant Hitchcock in good faith, and to secure a bona fide and actual indebtedness which at the time amounted to $5,525; so that the court, in effect, found that the amount actually paid and assumed by Thomas J. Atwood for the land was $425 in excess of its actual value. It is true that these several amounts were controverted by the plaintiff, but the findings of the court in these regards are conclusive against him, and those whom he represents. An actual purchase from an insolvent debtor for a valuable consideration may be found to have been made with an intent to hinder, delay, and defraud creditors, but in such cases there is generally an inadequacy of price, or an intent to put the consideration paid beyond the .reach of the vendor’s creditors; but nothing of the kind here appears. This court has repeatedly held, in effect, that an insolvent debtor is at perfect liberty to pay in good faith some of his creditors in full or in part, and others not at all, and that this can be done without any intent to hinder, delay, or defraud creditors, within the meaning of the statutes. Secs. 2320, 2323, R. S.; Hoey v. Pierron, 67 Wis. 262 ; Landauer v. Vietor, 69 Wis. 434 ; Ingram v. Osborn, 70 Wis. 184 ; Greene & Button Co. v. Remington, 72 Wis. 654 . True the payment in good faith by an insolvent debtor of one or more of his creditors *8 in. full may result in defeating others, but snob result is the mere incident to the preferring of one creditor to another; and hence does not come under the condemnation of the statutes. The object to be attained in such a case is to pay in good faith an honest debt, even though it leaves the debtor in no condition to pay any other debts. It is only when the object sought to be attained is itself vicious that the statutes condemn the transaction. These views are in harmony with the repeated decisions of this court. Gage v. Chesebro, 49 Wis. 486 ; Mehlhop v. Pettibone, 54 Wis. 652 ; Norwegian Plow Co. v. Hanthorn, 71 Wis. 529, 536; Mendelson v. Paschen, 71 Wis. 591 . The mere fact that Thomas J. Atwood knew that his brother was indebted to the other parties named, or even was insolvent, did not deprive him of the right to collect the debts honestly due him from his brother, nor to apply the same in part paymeát of the purchase price of the farm. Ibid. While such knowledge was competent evidence on the subject of such intent, it cannot of itself be regarded as sufficient evidence to establish such intent. Ibid. And yet such knowledge is the only evidence in the record entitled to any weight upon which the finding: of such intent is based.

Counsel for the respondent suggests that the certificate' of the trial judge does not state that the bill of exceptions contains all the evidence; but the bill of exceptions states, at the close of the testimony, that “ the foregoing was all the evidence offered and received on the trial of said cause, and the issues therein.” Such statement we have frequently held to be equivalent to such certificate.

By the Court.— The judgment of the circuit court is reversed, and the cause is remanded with direction to dismiss the complaint.