McCown v. Russell

Cassoday, J. It will be observed from the foregoing statement that the bond and mortgage were given for future advances to be paid by the mortgagee and garnishee, Bussell, to the debtor and mortgagor, F. W. Smith, for the purposes therein mentioned. Such a mortgage is valid, even as against attaching or garnishing creditors of the mortgagor, to the extent that the advances are actually made or the liability actually incurred, but void, as to such attaching or garnishing creditors, in so far as the advances have not been made nor any liability incurred. Carter v. Rewey, 62 Wis. 556; First Nat. Bank v. Damm, 63 Wis. 256; Hobart v. Jouvett, 6 Cush. 105; Barnard v. Moore, 8 Allen, 273; Sullivan v. Lamb, 110 Mass. 167; Divver v. McLaughlin, 2 Wend. 596, 20 Am. Dec. 655, and note; Robinson v. Williams, 22 N. Y. 380; Brown v. Kiefer, 71 N. Y. 610; Davenport v. McChesney, 86 N. Y. 242; Preble v. Conger, 66 Ill. 370; In re O’Byrne's Estate, L. R. Ir. 15 Ch. Div. 373. Here the garnishee papers were served March 12,1888,— only a little over a month after the mortgage was given. The statute made the garnishee liable to the plaintiffs to the amount of the property, moneys, credits, and effects in his possession or under his control, belonging to the mortgagor, or in which he was then interested, to the extent of his right or interest therein, and of all debts due or to become due to him, except such as might by law be exempt from execution. Sec. 2768, E. S. The liability or nonlia-bility of the garnishee became fixed at the time of such service, and depends upon whether, at that time, the mortgagor had any right to, or interest in, such property, [128] money, credits, or effects, as against the garnishee. It appears that at that time Russell had paid out, for all purposes, $9,901.21, and had received from the sales of the goods $2,800, leaving a balance of $7,101.21, over and above receipts, as the amount actually advanced by him upon the bond and mortgage, prior to the time of the service of the garnishee papers upon him. ITe had at that time also incurred liabilities on the six garnishee suits then pending, amounting in the aggregate to $923.01, making the total amount of moneys which had then been so advanced and incurred $8,024.22. Russell then had on hand the great mass of the stock, upon which, after running the store over a year and a half, he finally realized in all $36,000. In realizing that amount, it is true that Russell purchased new goods to the amount of $6,392.90, and necessarily incurred liabilities and expended large sums of money in running the store and business; but all that occurred after the rights of the parties to this action became fixed by the service of the garnishee papers. At the time the rights of the parties thus became fixed, the mortgagor’s interest in the stock of goods then in the hands of Russell, over and above the $8,024.22 he had advanced and incurred, as mentioned, was very much more than sufficient to cover the claim of the plaintiffs, with interest and all costs; and hence this garnishment cannot be defeated merely because the garnishee subsequently paid out of such surplus $3,933 to certain of the mortgagor’s general creditors, and retained $3,000 of the same for his own services, which were mostly performed after the commencement of this action. In other words, no act performed nor liability incurred by Russell after the service of the garnishee papers upon him can defeat, or in any way impair, his liability to the plaintiffs in this action. The statute goes so far as to expressly make the right and interest of the mortgagor in the goods mortgaged liable to [129] sale on execution, subject to the mortgage (sec. 2988, R. S.), and of course Russell, as the holder of such right and interest, was legally answerable therefor as garnishee. If the bond and mortgage could be properly construed as claimed, to the effect that Russell was thereby bound to convert the goods into money and apply the same in payment of the debts of the mortgagor, then the transaction would have been, in effect, an assignment to him in trust for the benefit of creditors, and hence would come directly within the condemnation of the statute, as frequently declared by this court. Winner v. Hoyt, 66 Wis. 227; Maxwell v. Simonton, 81 Wis. 635, and cases there cited. But we do not think the transaction will properly bear such construction. On the contrary, by an express provision of the bond, Russett refused to bind himself in any manner, or to agree to advance sufficient money to pay such indebtedness. Besides, whatever money he thereby agreed to advance was to be advanced, to the debtor and mortgagor personally. For the reasons given, the judgment of the county court,, is affirmed. By the Court.— Judgment affirmed.