Steinart v. Deuster

Dixon, C. J. The verbal agreement between the mortgagor and mortgagee, that the mortgagor was to retain possession of the goods and sell them in the regular course of his business as if no mortgage had been executed, and apply the proceeds to his own use in the support of his family and otherwise, makes the mortgage fraudulent in law, and void as to creditors of the mortgagor, the same as if the agreement had been in writing and inserted in the mortgage itself. The case in this particular is not distinguishable from Place v. Langworthy, 13 Wis. 629. The agreement was sworn to by the mortgagor, and not denied by the mortgagee, both being examined as witnesses on the trial; and the mortgagee himself testifies that with full knowledge on his part, and without objection, .the business was carried on, the goods sold an'd the proceeds appropriated by the mortgagor, in the same manner after the execution of the mortgage as before. Under these circumstances, the court was in error in submitting it to the jury as a question of good faith on the part of the mortgagee at the time of loaning his money and receiving the mortgage. The jury should have been instructed that if they found such to have been the facts, the mortgage was fraudulent and void in law as against the creditors of the mortgagor. By the Cowt. — Judgment reversed, and a new trial awarded.