Van Horn v. Smith

Day, J. On the 21st day of April, 1876, W. R Yan Horn was in the drug business in the city of Yinton, Iowa. He owed debts, secured by mortgages upon all his real estate, which was encumbered to about the full extent of its value, amounting to about $11,700. The defendant, S. IT. Watson, was the holder of this debt to the extent of $2,640 and interest, for which he held a third mortgage upon the real estate referred to. W. R Yan Horn also owed unsecured debts amounting to about $7,000, of which $440 was owing to defendant Watson. On the 21st day of April, 1876, W. R Yan Horn, for the expressed consideration of $7,000 executed to his wife, the plaintiff, an assignment of his entire stock of goods, wares and merchandise, whether in store or in transit, all books of account, and his personal property not exempt from execution. The plaintiff at that time had no property other than the store room in which the goods were kept, valued at about $3,500. She paid no cash consideration, and was fully aware of her husband’s financial condition. She claims that at the time of the assignment, and in consideration thereof, she agreed unconditionally to pay all her husband’s unsecured debts. The jury, however, found speei — 144 — ally, that the only agreement made by the plaintiff in consideration of the transfer to her, is contained in a chattel mortgage which she executed the next day, and this finding is abundantly supported by the evidence. This chattel mortgage embraces all the property included in the assignment to the plaintiff, and purports to be executed to certain persons named in the schedules “A”, “B” and “G”. Schedule “A” embraces thirty creditors, representing debts amounting to $4,545.94. Schedule “B” embraces only the defendant Watson, representing a debt of $440. Schedule “0” embraces other creditors, representing debts amounting to $2,159.76. In the chattel mortgage the plaintiff agrees to pay: First, to the creditors named in schedule “A” twenty-five per cent of their claims, on the first day of June, 1876, and a like per cent on the first day of each succeeding month. Second: To the creditors named in schedule “B” on the first day of the month after, fifty per cent of the debts named in schedule “A” shall be paid, ten per cent, and a like per cent on the ■first day of each succeeding month, with interest at ten per cent. Third: To the creditors named in schedule “C” on the first day of the month, after the debts referred to in schedule “B” shall be paid, ten per cent, and a like per cent on the first day of each succeeding month, with interest at seven per cent. The creditors named in schedule “0” are all relatives of the plaintiff, the bulk of the debts being held by her father and sister. On the 14th day of March, 1877, she executed a mortgage upon her real estate, before referred to, to secure these creditors. The chattel mortgage contains the following provision: “This transfer ■ and assignment is upon the further express condition and agreement, to-wit: That the creditors named in schedule “A” shall have the prior and paramount interest in, and lien upon, said property, until fifty per cent of their respective claims, hereby secured, are paid. Then they and the creditors in schedule “B” shall stand on an equality as to — 145 — the said property, but their interest in and lien upon it shall be paramount to the creditors named in schedule “C”. That the possession of all property herein described shall continue with the grantor until she is in default in some of the payments promised by her for forty days, and even then the owner of the payment so in default for said time shall be entitled hereunder only to the possession of so much of said property as is necessary to pay said payments so in default for said time * * * * *. Any creditor accepting or taking any benefit arising out of this instrument or the agreement between grantor and W. B. Yan Horn, agrees that he will not enforce or attempt to enforce payment of the indebtedness of said W. B. Yan Horn, until the same becomes due under the promise of the grantor to pay the same.” This chattel mortgage was left in the possession of the plaintiff’s legal adviser but was not recorded for some time. The defendant, Watson, never assented to, nor in any way recognized or accepted the provisions of this chattel mortgage. On April 28, 1876, S. H. Watson served notice of action, and on May 3d filed petition claiming of W. B. Yan Horn the several sums due from him. On May 18th Watson amended his petition alleging that Yan Horn had disposed of his property with intent to defraud his creditors, and asking an attachment, which was duly issued, and, on the same day levied upon the stock of goods embraced in the assignment to the plaintiff. Afterward, pursuant to finding of a sheriff’s jury that the property was of a perishable nature, it was duly sold by the sheriff. All the real estate of Yan Horn was absorbed by the mortgages, which were prior in time to that of defendant Watson. The evidence shows clearly that it was the expectation of the plaintiff to pay the debts referred to in her mortgage out of the proceeds of the sale of the property assigned to her. After the assignment, no visible change was made in the possession of the goods, and the business was conducted, apparently, as before. — 146 — I. The appellant complains of certain instructions to the effect that the bill of sale, by placing the property of Yan Horn beyond the reach of the ordinary process of the law, and driving his creditors to the necessity of bringing an action to determine the validity of plaintiff’s title, hindered the creditors of Yan Horn, and that if it was the intention of Yan Horn and the plaintiff to so hinder and delay the defendant Watson, the bill of sale was fraudulent, and that if the so called mortgage was a part of the original transaction, the transaction was invalid and void, as the mortgage evinces purpose to hinder the collection of his debt. We do not deem it necessary to determine the validity of these, and like instructions, as in the view which we take of the case, under the established facts of this case, the transaction is void as to the defendant Watson for a different reason. 1. ASSIGNHENTforijen.fit of creditors: tfngS-v°oiciíor" partiaiity. The conveyance by Yan Horn to his wife embraced all his available property. The jury have found specially that the mortgage contains the true understanding and ° ° ° agreement of the parties to the bill of sale as to ° r ^he ^me and manner in which to pay the indebtedness assumed by plaintiff, and that such understanding and agreement form the only consideration paid or agreed to be paid by plaintiff for the goods mentioned in the bill of sale, and that at the date of the bill of sale in question plaintiff did not have, and both parties thereto knew she did not have, the means to pay the debts of Yan Horn, assumed by her, as the same came due. The bill of sale, and the mortgage, under the findings of the jury, constitute parts of the same transaction, and, in legal contemplation they amount simply to a general assignment for the benefit of creditors. As a general assignment for the benefit of creditors it is void because it gives a preference to creditors. It provides that the creditors named in schedule, “A” shall bo paid fifty per cent of their debts before Watson, who is embraced in schedule “B” shall be paid any thing; and that the creditors named in schedule “A” shall have a prior and paramount — 147 — interest in and lien upon the property until fifty per cent .of their respective claims are paid. That a general assignment for the benefit of creditors, which prefers some is void, see Burrows v. Lehndorf, 8 Iowa, 96; Cole v. Dealham, 13 Iowa, 551; Van Patten & Marks v. Burr, 52 Iowa, 518. As the transfer of the property in question was invalid, it was subject to seizure as the property of W. B. Yan Horn, for the satisfaction of the debt of the defendant. 2. PRACTICE : errorUcSeas: hy judgment. II. The plaintiff complains of the failure of the court to submit to the jury the claim of the plaintiff for rent of the premises. The evidence shows that defendants occupied the plaintiff’s premise's from the 18th 0£ j^gy -¿0 27th of June, two and one-third months, when they tendered the keys to the plaintiff. The highest rental value placed upon the premises by any witness is $50 per month. By consent of defendants, judgment was rendered in favor of the plaintiff on account of the rent for $125. If there was error in neglecting to instruct upon this issue it has been cured by the action of the defendants. _ d discretion'oV court. III. Upon the conclusion of the testimony the court granted to the defendants the right to open and close the argument. This action of the court is assigned as error- The defendants admitted the taking of the goods, but denied that the plaintiff was the owner thereof, and denied the other material allegations of the petition. The bill of sale, upon its face, vested the legal title to the goods in plaintiff The defen se of the defendants consisted in showing the invalidity of this title. This was the principal issue in the case and the burden of proof, as to it, was upon the defendants. . Under the circumstances of this case, the order of argument rested largely in the discretion of the court, and does not justify a reversal unless there is clearly an abuse of discretion and prejudice. See Smith, Toogood & Co. v. Clarke, 9 Iowa, 376; Woodward v. Laverty, 14 Iowa, 381; Viele v. Germania Ins. Co., 26 Iowa, 9 (44); Ashworth v. — 148 — Grubbs, 47 Iowa, 353; Delaware Co. Bank v. Dumont, 48 Iowa, 493. 4. evidence: reading part only-IY. Tbe defendants took a deposition of tbe plaintiff, and were allowed, against tbe objection of tbe plaintiff, to lead a part of it to tbe jury. Tbis action is assigned as x j j ' ° error< portion of tbe deposition of plaintiff was admissible as containing an admission. Tbe case differs from Kilbourne, Jenkins & Co. v. Jennings Co., 40 Iowa, 473, cited by appellant, in which, the deposition was that of a party in whose favor it was introduced and was not offered to establish an admission. Besides tbe plaintiff introduced other portions of her deposition and might have introduced it all if she bad been so advised. Tbe argument of tbe appellant is general, without division or specific reference to the errors assigned. What we have said substantially disposes of tbe case. We discover in tbe record no error which could have operated to tbe prejudice of tbe plaintiff. Affirmed.