Heldebrand v. Tarbell

Winslow, J. The appellant claims that the general finding of fact by which the circuit court exculpated all the defendants from the charges of fraud or collusion contained in the complaint is contrary to the uncontradicted evidence. He claims that three facts appear by the evidence of the de [455] fendant Tarbell himself which conclusively establish legal fraud in the transactions in question in this action, and render the attempted transfers and assignments void. These three facts are: (1) That the assignment of accounts was made by the firm in part to secure an individual indebtedness of $6,700 owing by E. A. Lappen alone to Tarbell; (2) that said assignment was made in part to secure payment of a note of $5,000 given without consideration; (3) that $7,000 worth of chattel mortgages or leases were transferred to Tarbell upon tlje secret understanding that they were to be returned to Lappen & Co. if they wanted to use them, and that they were in fact returned upon the same or the following day, and turned over to Ooleman and Planhinton. It may be admitted for the purposes of this branch of th« discussion that these facts were established, and it may be further admitted that they constitute legal fraud, and would entitle a judgment creditor' whose execution had been returned unsatisfied to maintain a creditor’s bill to set aside the transfers thus tainted with legal fraud, and still the plaintiff in this case may not be able to take advantage of the situation. It seems quite true that the plaintiff’s complaint, as amended in May, 1896, just as the trial of the action began, is in fact a creditor’s bill attacking all of the transfers, mortgages, assignments, and other securities secured by Tarbell on the 13th of May, 1894, as frauds upon creditors of Lappen & Co., and seeking to set them aside, and to apply the property so fraudulently conveyed to the payment of the plaintiff’s judgments. Had he filed this complaint in July, 1893, when he commenced his action, he would certainly be in position to make with great force the claims which he now makes. But the difficulty is that he had no such idea in 1893, when he commenced his action, and evidently did not bring it for any such purpose. His original complaint is not, and cannot be made, a creditor’s bill. It is in substance an action in equity [456] to enforce the assignments made by Lappen. & Co., as well as certain representations with reference thereto made by Tarbell, and to marshal assets between the parties, first charging Tarbell with the proceeds of certain other securities, before allowing him to share in the proceeds of the accounts. The original complaint did not attack the assignments made by Lappen & Co. to Tarbell at all, but rather affirmed and insisted on them. It is true that the plaintiff claimed he was induced to believe that there was but one assignment, in which all stood equally, but he learned in a lew days that there were in fact three, and he did not seek to set aside the three assignments so f&r as Lappen & Co. was concerned, but rather insisted upon them as conveying the accounts, and also insisted that as between Tarbell and himself he was entitled to share on equal terms with Tarbell. The assignments were not attacked, but the plaintiff’s rights under the assignments were claimed to be different from what appeared upon their face. Now, the plaintiff, when informed of the assignments and transfers, had his option of two courses: He could assent to them, and insist on his rights under them, or he could disavow them, and attack them, and bring action to have them set aside, if he deemed them fraudulent; but he could not take both courses at once, because the remedies are inconsistent. If, knowing all the material facts, he chose by some decisive act to affirm the transactions and take advantage of them, he cannot afterwards change his position, and seek to set aside the-same transactions, because he thinks he has-mistaken his remedy. The bringing of an action is generally held to be such a decisive act. Cannihan v. Thompson, 111 Mass. 270; Sanger v. Wood, 3 Johns. Ch. 416; Morris v. Rexford, 18 N. Y. 552. The only serious question, therefore, is whether the plaintiff knew the material facts when he elected to bring his [457] action to affirm the assignments. It is certain that he knew that Tarbell had procured the execution of the $5,000 note-nominally for services, but in fact without consideration, and the notes for Frank A. Lappen’s individual debt, and that Tarbell claimed that both of these claims were secured by the assignments, because these'facts are set forth at large in the original complaint made in July, 1893. It is also charged in that complaint that Tarbell had turned over the chattel mortgages or leases to J. G. Ooleman and the Plankinton Bank in fraud of the plaintiff’s rights. So that in fact there are none of the three elements of fraud now claimed by the-plaintiff as ground for avoiding the assignments and transfers in tolo which were not known to the plaintiff when he filed his bill in equity, unless it be the fact that there was a secret understanding between Tarbell and Lappen that Tarbell was to return the chattel mortgages or leases to Lappen if he wanted them. This fact, however, the plaintiff learned fully in May, 1894, when he examined Mr. Tarbell under sec. 4096, E. S., and he made no change of position after that examination, but allowed his complaint to stand for two years-without amendment or intimation of a desire to change his position in any regard. Conceding that the additional facts learned upon Mr. TarbeWs examination would have entitled the plaintiff to make an entire change of front, and disaffirm the transactions which he before affirmed, he was certainly obliged to make that change seasonably and with diligence, and this he did not do. W"e conclude that he remained bound by his first election, and cannot now turn his action into a creditor’s bill, seeking to disaffirm and avoid transfers which for nearly three years he had vigorously affirmed. His position is analogous to that of a creditor who proves his claim under a void voluntary assignment. By that act, if done with knowledge or means of knowledge of the facts, he assents to the assignment, and ratifies it so far as he is concerned, and cannot afterwards question its validity. Lawson v. Stacy, 82 Wis. 303. [458] It is very evident, also, that he cannot recover upon his first theory. Conceding that he could now return to the -cause of action set forth in his original complaint, the material facts upon which it was based are either unsupported by the evidence or have been found against him upon sufficient evidence, and hence the judgment cannot be disturbed. By the Court.— Judgment affirmed.