Horstmann v. LaFargue

215 S.W. 729, 140 Ark. 558, 1919 Ark. LEXIS 161
CourtSupreme Court of Arkansas
DecidedNovember 17, 1919
StatusPublished
Cited by22 cases

This text of 215 S.W. 729 (Horstmann v. LaFargue) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Horstmann v. LaFargue, 215 S.W. 729, 140 Ark. 558, 1919 Ark. LEXIS 161 (Ark. 1919).

Opinion

SMITH, J.

This suit was filed by appellee, E. B. LaFargue, on March 12, 1917, in the Arkansas Chancery Court against Henry Horstmann, Sr., Henry Horstmann, Jr., and Annie Horstmann, the wife of Henry Horstmann, Jr., to recover damages for personal injuries and to uncover certain real estate alleged to have been mortgaged by Henry Horstmann, Jr., in fraud of his creditors. Horstmann, Sr., who lived with his son as a member of his family, died before the rendition of the final decree, but the cause was properly revived against his administrator and judgment was rendered against all the defendants for the amount sued for and the conveyances attacked by appellee were canceled as having been executed in fraud of creditors.

This appeal raises no question that the damages recovered were excessive or that the testimony did not support the finding of liability, but a reversal is asked upon two grounds, first, that the evidence is not sufficient to sustain the finding that the mortgagor was insolvent at the time the mortgages were executed, and, second, that the chancery court did not have jurisdiction to hear and determine the personal injury case involved here.

(1) Upon the question of insolvency, it may be said that the answer contained no denial of that allegation, and it was therefore unnecessary to prove it. Slayden-Kirksey Woolen Mills v. Anderson, 66 Ark. 419. However, the chancellor found that allegation was supported by the testimony, and we can not say that the finding to that effect was clearly against the preponderance of the evidence.

The personal injury for which compensation was asked grew out of the shooting of appellee in May, 1916, by one Peters as the result of a conspiracy to which the Horstmanns were shown to have been parties. The Horstmann who was the mortgagor in the conveyances attacked had been cast in a suit in replevin for the costs of the suit and was much aggrieved at that judgment and announced his purpose never to pay these costs. Appellee was at the time the sheriff of the county, and after failing in his efforts to induce Horstmann to pay these costs, undertook to make a levy under a fee-bill on a horse belonging to Horstmann and was shot while attempting to do so.

The two mortgage conveyances here attacked were each dated December 28, 1914. One recited a consideration of $3,960 and the other $10,800. The- mortgagee was Fritz Horstmann, a brother of the mortgagor and a nonresident of this State. The attorney appointed to represent the nonresident mortgagee applied to the mortgagor for the postoffice address of his brother and this information was refused, the statement being made at the time that counsel had been employed by the mortgagor to defend the suit.

It appears to be reasonably certain that there was no consideration for the execution of these mortgages, yet the consideration recited was much greater than the value of the land. Horstmann, the mortgagor, encumbered his personal property with a chattel mortgage on September 28, 1914, and with a second chattel mortgage on the same property on January 1, 1915. A mortgage on a portion of the lands in question securing $1,200 was executed on June 14,1912, to the New England Securities Company, and the validity of that mortgage was not questioned.- The debt there secured was not paid, and there was a decree of foreclosure, and at the sale thereunder the lands sold for a sum in excess of the mortgage debt and that excess has been impounded by the decree here appealed from. Six days before these mortgages were executed a suit was brought against Horstmann by the "Weber Implement Company for a debt of $1,600 due upon a sale of machinery, and a decree for that sum was finally rendered and the machinery ordered sold, and at its sale brought $625, which was credited.on the decree of sale. The balance has not yet been collected. On November 17, 1914, C. W. Waters brought suit against Horstmann for a settlement of their partnership farming operations, and witnesses speak of other suits, the particulars of which are not given. Horstmann admitted that he had no property out of which creditors could secure satisfaction except the- lands conveyed by the mortgages.

(2) We think this testimony warranted the. finding made by the court below that Horstmann was insolvent at the time of the execution of the mortgages and that they were executed for the purpose of defrauding his creditors.

We are thus brought to the decision of the question of the jurisdiction of the court to render a decree for damages. Authority for this suit is said to be found in section 6297 of Kirby’s Digest, which reads as follows:

‘ ‘ Section 6297. In suits to set aside fraudulent conveyances and to obtain equitable garnishments, it shall not be necessary for the plaintiff to obtain judgment at law in order to prove insolvency, but in such cases insolvency may be proved by any competent testimony, so that only one suit shall be necessary in order to obtain the proper relief.”

(3) From what has been said it appears that this is a suit to set aside fraudulent conveyances and to obtain an equitable garnishment of the sum remaining in the hands of the commissioner upon a sale under the decree of foreclosure of the mortgage in favor of the New England Securities Company, and it will be noted that the statute says that in such suits “it shall not be necessary for the plaintiff to obtain judgment at law in order to prove insolvency, * * *” etc., thus indicating that the character of the suit in which the relief is asked is immateral, and the words, “the plaintiff,”'must be interpreted as if they read any- plaintiff. The benefits of the statute are conferred upon any one who, before the statute, would have had the right, after his cause of action had been reduced to judgment, to sue to set aside the fraudulent conveyances.

In the case of Davis v. Arkansas Fire Insurance Company, 63 Ark. 412, Mr. Justice Riddick, in construing the statute, said:

“Formerly, the rule was that the creditor must first recover judgment at law, and have execution issued and returned nulla bona, before he could come into equity to ask that a transfer of property made by his debtor should be set aside as fraudulent. The courts of equity required the creditor to show in this way that the ordinary legal remedies were inadequate. The statute of 1887 dispenses with the necessity of obtaining a judgment before commencing a suit to set aside a fraudulent conveyance, and provides that in such cases ‘insolvency may be proved by any other method.’ Sections 3134 and 5919, Sandels & Hill’s Digest. The former decisions requiring judgment, execution and return of execution unsatisfied were based on the rule that equity will not lend its aid when the remedy at law is full and adequate. It would therefore seem that, following the same reason, it is still necessary to show that the remedy at law was inadequate, by showing that the debtor has not other sufficient means from which the claims of the creditor may be satisfied, or showing other facts sufficient to call for the interference of a court of equity. ’ ’

Again interpreting this statute in the case of Euclid Avenue National Bank v. Judkins, 66 Ark. 486, the court said:

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Bluebook (online)
215 S.W. 729, 140 Ark. 558, 1919 Ark. LEXIS 161, Counsel Stack Legal Research, https://law.counselstack.com/opinion/horstmann-v-lafargue-ark-1919.