Cleveland Co-operative Stove Co. v. Wilson

45 N.W. 897, 80 Iowa 697, 1890 Iowa Sup. LEXIS 302

• Court: Supreme Court of Iowa
• Decided: June 3, 1890
• Status: Published

Opinion

Beck, J.

— I. ■ The plaintiffs commenced separate actions by attachments against Charles Wilson, and caused Attwater Cook to be served with garnishee process. Judgments were entered in favor of plaintiff, and the garnishee answered, denying any indebtedness to defendant Wilson. The evidence discloses the following facts: Wilson, being indebted to Cook, executed a chattel mortgage to secure him, and on the same day assigned to him all of his property for the benefit of his creditors. Cook claims under both the mortgage and the assignment, and seeks to enforce both. Plaintiffs insist that the two instruments constitute but one transaction, and are in fact an assignment, and, as they give preference to the assignee, Cook, the assignment is void. Cook in his answer denies indebtedness to Wilson, and liability as a garnishee.

II. We find that Wilson was indebted to Cook in the sum of five hundred and twenty-five dollars, and owed other persons various sums. He was in mercantile business, and his indebtedness exceeded the value of his property. He was unable to meet his indebtedness, and made an effort to close his business by sale of his stock, in which he was not successful. Cook had pressed Mm for payment or security of his claim. He finally proposed to Cook that, if he would discount his claim by paying him cash, two hundred and fifty dollars, he would execute a chattel mortgage to secure the claim. He proposed at the same time to assign to him his property for the benefit of his creditors. These propositions were accepted, and the chattel mortgage and assignment were accordingly executed. We find that Wilson was insolvent, and that all his property (excepting, probably, some money) was transferred by the assignment to Cook for the benefit of Wilson’s creditors. His indebtedness to Cook existed in good faith. His transaction with Cook was neither payment in full nor security for the full amount of Cook’s claim. Cook paid about half the debts in cash, in order to acquire the security. Whatever was the motive of this strange transaction, it was not payment nor security in full to the prejudice of other creditors. Indeed, we infer from the evidence that the other creditors will recover larger proportions of their claims than Cook. We may assume, as plaintiffs claim, that the two instruments — the assignment and chattel mortgage — together constitute an assignment. But it was not in fact an assignment with preference against the other creditors. If there was any preference, it was in their favor. The person they allege was preferred received a smaller portion of his claim than the other creditors. They cannot complain. It is not the case of preference, which the law condemns, and will not uphold, but it is the case where the assignee consents to take a little less than fifty cents on the dollar while the creditors get more than sixty cents. Surely, there is no fraud here; certainly none to the prejudice of plaintiffs, and they cannot complain if what they allege to be a fraud is to their benefit. It must be confessed that Cook’s transactions with Wilson are strange, and may be irregular, but it is not shown that plaintiffs were prejudiced thereby. They are therefore not entitled ¡to any relief.

III. It is said that Wilson had money held by his daughter, and the money paid him by Cook, which is not covered by the assignment. Let this proposition of facts be admitted. It is not shown that Cook had anything to do with putting the money into the hapds of his daughter, and is not, therefore, to be defeated of any of his rights by reason thereof. The law does not defeat an assignment because it does not cover all the assignee’s property. Whatever is not assigned may be pursued by the creditors. But it cannot be pursued to the hands of Cook, for it never went therein. Cook cannot be made liable as a garnishee for money which he never had. Let it be assumed that Cook was guilty of fraud in the payment of the two hundred and fifty dollar to Wilson, and had a knowledge that Wilson had money which he did not transfer by the assignment, and that, in these matters he acted fraudulently. Why does this demand that the assignment be set aside? Plaintiffs insist that the assignment beset aside, when in fact Cook, under the assignment, receives less on his claim than they do on theirs. And if plaintiffs’ position in this case be sustained, and they recover against the garnishee, they will recover all the claim, and Cook and the other creditors must be content to divide between them what is left. It is simply the case of a clamor about preferences of creditors, where plaintiffs’ effort is to secure preference themselves. It is wholly unnecessary to consider propositions of law, clearly stated and ably supported by counsel. They are sound, but not applicable to the case. Affirmed.