Excelsior Mill Co. v. Hanover

Dodge, J. There were vigorously argued in this case several important questions relating to the rights of the firm creditors against partnership assets when attempted to he applied to private debts of the partners, which, however, it is wholly unnecessary- to consider. Here, the partnership property had all been sold to bona fide purchasers for value before the garnishment, and the money proceeds thereof had, with consent of both partners, been applied in part payment of the bona fide private debt secured by the mortgage, and had been mingled with other moneys. The cases of Spitz v. Tripp, 86 Wis. 25, 28; Jones v. Kosing, 92 Wis. 55; and Salter v. Bank of Eau Claire, 97 Wis. 84, have fully settled the rule for this court, that whether or not a transfer of property be fraudulent, if that property has been entirely disposed of, and the proceeds are not in any way held in trust for the debtor, but have been applied under his direction or to his debts, garnishment cannot be sustained against even the fraudulent transferee of such property. In Spitz v. Tripp, supra, the court, speaking by Cassodat, J., said: “ Under this statute, Tripp cannot be held liable, as garnishee, for any property, moneys, credits, or effects belonging to the principal debtor, which had passed out of his possession or control more than three months prior to the service of the garnishee summons upon him. Had Tripp been garnished by the plaintiffs at any time between July 26, 1892, and September 10, 1892, then the validity of the mortgage, and Tripp’s right to hold possession of the goods, would have been involved, and might have been determined. La Crosse Nat. Bank v. Wilson, 74 Wis. 398; Edwards v. Roepke, 74 Wis. 575. But, upon the facts of this case, it is [312] immaterial whether the mortgage was valid or invalid, or such possession lawful or unlawful, as against J. L. Tabor’s other creditors, since none of them during that time proceeded against the property or Tripp as garnishee.” In Jones v. Kosing, supra, the court, speaking by Marshall, J., said: “ Kosing having sold his interest in the property, and parted with possession and control of it, and applied the proceeds in the payment of Adolph Keller’s debt to him, before service of the garnishee summons, he cannot be held as garnishee, whether the mortgage and bill of sale were valid or invalid, or his possession was lawful or unlawful, as against the other creditors of Adolph Keller.” The distinction between levying upon the property itself, and attempting to reach the proceeds after the property has. been disposed of, is also pointed out in Powers v. Large, 69 Wis. 621, and Coover's Appeal, 29 Pa. St. 9. Garnishment, while in many respects serving the purpose of a creditor’s bill, is nevertheless limited by the statute. It reaches only property or effects belonging to the debtor in the hands of the garnishee, or indebtedness from the latter to the former, neither of which existed at the time of the garnishment in this case, and as a result the appellant could not be held liable on that process. By the GowL — Judgment reversed, and cause remanded with directions to enter judgment in favor of the garnishee defendant. Rardeeet, J., took no part.