J. & H. Clasgens Co. v. Silber

It is claimed by the appellants that there was no sufficient proof upon the trial showing 'that the plaintiff was a creditor of the Hymans at the time of the transfer of the book accounts to the Silbers on the 19th day of September, 1891. Substantially all the testimony upon this point is that contained in the judgment roll in the principal action, which was introduced and received in evidence. It is said that this roll, as against the garnishees, is proof only of the fact of the entry of the judgment. With this contention we cannot agree. While there has been some difference of opinion among the courts as to the evidential effect of a judgment in such a case, it seems now quite well settled by the weight of authority that in an action by a creditor to set aside as fraudulent a conveyance of property made by his debtor the judgment in favor of the creditor and against his debtor is evidence establishing the relationship of debtor and creditor between the parties and the amount of the indebtedness, and is conclusive evidence unless impeached for fraud or collusion, or lack of jurisdiction in the court, or illegality in its entry. Bump, Eraud. Oonv. (4th ed.), § 587; 2 Freeman, Judg. (4th ed.), § 418, and cases cited in note. Especially should this be the case as against the garnishees in the present case, who had by statute the right to appear in the principal action and defend it. R. S. sec. 2765. The record introduced in evidence showed that judgment was entered in favor of the *585plaintiff against tbe Hymans in March, 1893, upon a firm liability contracted prior to September 1, 1891, and consequently prior to tbe alleged fraudulent conveyance.

There are errors in the case, however, which necessitate reversal. It is settled law in this state, as in many others, that when an incoming partner, in consideration of being received into the firm and becoming part owner of the firm property, agrees to assume with the old partner or partners the existing debts of the business, such agreement is valid and binding, though it be by parol, and that such promise is enforceable by the creditors whose debts are thus assumed. Hoile v. Bailey, 58 Wis. 434. In the present case there was-direct evidence on the part of the two Hymans showing that when Joseph 0. was received into partnership he agreed to assume as partner his share of the'existing debts of Henry; and that they should be paid by the new firm; and there was no direct evidence in the case to the contrary. If this evidence was true, then it is very clear, under the rule above stated, that Henry’s debts contracted in the business became obligations of the new firm, which could be at any time enforced by the creditors. While this testimony seems to have been all received, the record shows that it was all taken under the objection that it tended to vary the terms of a written contract, namely, the contract of indorsement made by J. 0. Hyman when he wrote his name upon the back of the Silber notes. In receiving this evidence the court ruled,, in effect, that he would hear it, but that it would not be permitted to vary the terms of the written contract of indorsement. This ruling was announced in different phraseology several times during the progress of the case, and there ÍS' nothing to show that the trial judge at any time abandoned that position. It is quite apparent, also* from Careful study of the findings, that this same principle was acted upon in the decision of the case. Nowhere in the findings is it determined as matter of fact (1) whether the amount repre*586sented. by the Silber notes was in fact a debt of the business justly owing by Henry Hyman at the time of the formation of the firm; nor is it found (2) whether the new firm in fact assumed the business debts at the time J. C. Hyman came into the firm. It is true that among the conclusions of law it is stated that no assumption of the indebtedness arising upon the Silber notes, if any, was ever made by the firm, but this is plainly not a statement of fact, but merely a legal conclusion arising from the ruling to the effect that oral testimony would not be received to show such an assumption. In fine, it is entirely plain from the whole record that the case was decided upon the theory that no such assumption of liability was of any validity, because it contradicted the written contract of indorsement of the note, and that, such being the case, there could be no liability on the part of the firm to the Silbers, but simply such several liability as might arise from the notes and indorsements alone; hence that the transfer of firm assets made to the Silbers September 19,1891, was not to pay firm debts, but individual debts, if any, and was, on this account, fraudulent as to creditors.

We regard the premise upon which this conclusion is based as erroneous. There might be a valid assumption of the business debts of Henry Hyman by the new firm by parol, which, though made between the Hymans alone, would be valid and binding as to creditors who chose to accept or enforce it. Hoile v. Bailey, 58 Wis. 434. It is probably true that acceptance by the creditor is necessary to make the assumption a complete contract as between the firm and the meditor, but, in the absence of such acceptance, we can entertain no doubt that the contract of assumption is so far an obligation of the firm that it would be a perfectly good consideration for the transfer of firm property to pay it, and that, if such transfer was made in good faith, and free from fraud in other respects, it would be valid. If such an agreement was in fact made, it would be none the less valid be*587cause J. 0. Hyman at another time, on the solicitation of the Sillers, wrote his individual name upon the backs of their past-due notes. If this latter act amounted to a contract of itself, it was an additional contract, and it did not prevent the creditor from accepting the obligation made by the assumption of debts by the firm, nor would it prevent the firm from making a transfer of firm property in good faith to the creditor in consideration of the discharge of the assumed debt.

It is evident from these considerations that there has not been a complete trial of the case. Two facts absolutely necessary to a correct decision of the case have not been determined by the trial court, namely: (1) Whether the Siller notes represented an actual business debt of Henry Hyman; and (2) whether the new firm assumed such debt when J. 0. Hyman was admitted into the firm as a part of the consideration of such an admission. When these questions are decided, there may also arise the question whether the transfer was made with intent to hinder, delay, or defraud other creditors of the firm. We do not regard it as our duty to decide these questions upon the record before us. Such questions should primarily be passed upon by the trial court, and we think that the ends of justice will be best subserved by a new trial of the case.

By the Court.— Judgment reversed, and action remanded for a new trial.