Charles Baumbach Co. v. Hobkirk

"WiNslow, J. The fact that the plaintiff was a creditor of the main defendant and had obtained judgment on its claim before trial of the garnishee action was established without dispute. The evidence also showed beyond controversy that there'was an honest debt, amounting to $2,700, owing from the main defendant to the assignor of tho garnishees when the first chattel mortgage was given, and that such debt was thereafter transferred to the garnishees, and remained their . property, save for certain small payments, up to the time of the seizure of the mortgaged property, and the only serious question necessary for consideration is whether the evidence shows conclusively that the last mortgage, which was given about a month before the seizure, was fraudulent as to creditors of'the main defendant, of whom the plaintiff was one. Upon well-established principles this question must be answered in the affirmative. The evidence shows that all of the successive mortgages covered a stock of goods consisting of drugs and wall paper, of which the main defendant was' in possession all of .the time up to the time of the seizure of the stock by the garnishees on the 19th day of July, 1897. During all of this time the main defendant conducted the business, using the proceeds of the sales as he pleased. The main defendant testified, in substance, that the stock of goods constituted his entire property except a homestead, and that during the entire time and until July 19, 1897, he conducted the business, sold the goods, used the proceeds as he pleased for the support of himself and family, the running expenses of the store, and the payment of private debts; that his brothers, Frank and Will (the garnishees) knew that he was selling the goods and using the proceeds for his own use; that they were in the store frequently, and that he thinks it was understood by him with them, when the later mortgages were given, that he should continue in the same way. Later, however, he denied that it was agreed that he should use any of the proceeds of sales for his own [492] benefit or the support of his family, and claims that necvrly his entire living expenses were derived from the profits of a news stand which he ran in connection with the drug business, and which was not included in the mortgages. The garnishee defendant William does not deny that he was frequently about the store, and, after much questioning, admitted that he supposed during the existence of all the mortgages that the main defendant would have to use a part of the proceeds of the business for the' support of his family and to pay his private debts. The garnishee defendant Frank denies generally that there was any agreement that the main defendant might use any of the proceeds of sales to pay his family expenses, but does not deny that he was frequently in the store and knew the manner of conducting the business. These facts are substantially identical 'with the facts appearing in the case of Bank of Kaukauna v. Joannes, 98 Wis. 321, where it was held that the conclusive inference from such facts is “ that there was an implied or tacit agreement or understanding that the mortgagor was to be at liberty to use, sell, and dispose of the mortgaged property, and apply the proceeds to his own use, in like manner as before and as if they had not been mortgaged to the bank.” Such an implied agreement renders the mortgage fraudulent and void as to creditors. It is as effective for that purpose as if it were express. A claim seems to have been made upon the trial that the stock was turned over by the main defendant and received by the garnishees in payment of the debt, and an amendment of the garnishees’ answer to this effect was allowed by the court at the close of the trial. As to this claim it is sufficient to say that there is absolutely no evidence to sustain it. All the evidence on-the subject shows that the mortgagees took the property under the terms of their mortgage, and not in payment or extinguishment of the debt. The case was tried as though it,were an equitable action. [493] A jury was present and rendered an advisory verdict, but the court finally made findings and rendered judgment thereon, without objection or exception to that mode of trial, and in fact apparently with the consent of both parties, neither of whom demanded a jury trial. If the action was in fact one in which a jury trial is guaranteed under the constitution (a point which is not decided), still, having been tried without objection, either in the trial court or this court, as an equitable action, the right of trial by jury must be held to have been waived. Leonard v. Rogan, 20 Wis. 540. By the Ooiurt.— Judgment reversed, and action remanded with directions to render judgment for the plaintiff in accordance with this opinion.