H. B. Claflin Co. v. Grashorn

Winslow, J. The verdict in this case was rightly directed. It is not denied that Brown & Frost justly owed the plaintiff the entire amount, named in the mortgage, when the mortgage was given and possession of the stock taken. It was a mortgage given to secure a pre-existing bona fide indebtedness. In such a case there must be actual participation by the creditor in the fraudulent purpose of his debtor, in order to avoid the mortgage. Mere knowledge by the creditor of his debtor’s fraudulent purpose will not be sufficient, so long as the creditor’s purpose is simply to secure his debt. Bleiler v. Moore, 94 Wis. 385. We have examined the evidence, and have found nothing tending to ..show participation by the plaintiff in any intended fraud, even if it be conceded that fraud was intended by the firm of Brown & Frost. It seems to have acted with the simple purpose of securing its just debt. The fact that the notes held by it were guaranteed by a third party is certainly no evidence of fraud. It had the same right to take security from the principal debtors which it would have had in the absence of such guaranty. By the Gourt.— Judgment affirmed.