Sonnentheil v. Christian Moerlein Brewing Company

This was an action at law, brought y Sonnentheil, trustee under a deed of trust executed December 16, 1892, by Freiberg, Klein & Co., of Galveston, Tex., against the Christian Moerlein Brewing Company, an attaching creditor, and one Dickerson, whose Christian name is unknown, marshal of the United States for the Eastern district of Texas, to recover the value of a stock of goods seized by the marshal under writs of attachment in favor of the brewing company.

Prior to December 16, 1892, Moses Freiberg, Sam Klein, and Joseph Seinsheimer were, under the firm name of Freiberg, Klein & Co., conducting a wholesale liquor and cigar business at Galveston, Tex. Having become embarrassed and unable to meet their liabilities, upon the date above named, they conveyed by deed of trust, to the plaintiff, Sonnentheil, their stock of goods, together with their other property and the debts due them, authorizing him to take immediate possession thereof, to sell the property, and collect the debts, and apply the proceeds to the payment of certain creditors named in the deed of trust. This deed was filed as a chattel mortgage with the county clerk of Galveston county, Tex., on the day it was executed; and the plaintiff in error, as trustee, took immediate possession of the property therein conveyed.

Another deed of trust, dated December 17th, was executed by the same parties to the same trustee, to secure the same debts. This deed differed from the first only in inserting some words which had been erased from the first deed, in giving the trustee the power to compromise or sell the debts due the firm, and in binding the grantors, and each of them, in the name of the firm, to make such further assurances as to the property conveyed as would speed the execution of the trust.

Sonnentheil was holding the property in question under both of these deeds when, on December 23, 1892, a United States deputy marshal seized and took it from his possession against his protest. This seizure and dispossession were made by virtue of a writ of attachment from the circuit court for the Eastern district of Texas, in a suit for debt by the brewing company against Freiberg, Klein & Co., and the seizure was directed by an agent of the company. The brewing company was not secured in the deeds of trust. This suit was brought by Sonnentheil, the trustee, against the marshal and the brewing company, to recover the value of the goods thus seized and taken from him.

The defendants demurred to the jurisdiction of the court, pleaded a general denial, and attacked the deeds of trust as void on their face, and as not having been accepted by the trustee or preferred creditors, and as having been made with the intent to defraud the unpreferred creditors of the firm, of which fraud they alleged the trustee and preferred creditors had knowledge. The specific objections urged to the deeds were that a provision allowing the trustee to compound and compromise doubtful debts due the makers was erased from the first deed before filing, as well as one authorizing each of the makers to make further assurances of title and transfer with the same effect as if made by each in person; that the makers of the first deed had, a short time prior to its execution, represented to two commercial agencies that they were solvent, and had thereby deceived the defendant company into selling them a large amount of goods on credit; that the deeds conveyed property exceeding in value the debts secured; that the claims provided for in the deeds were also secured by solvent indorsers; that the makers had, not long before the execution of the first deed, conveyed to L. Fellman a large amount of real estate for a feigned consideration, and in secret trust for themselves, and for the purpose of removing the same from the reach of their creditors, and had conveyed to others a large amount of assets to hold for their benefit; that they had made to H. Kempner a deed of trust to secure a pretended debt; that the makers of the deeds had, long prior to their execution, and while insolven, entered into a conspiracy with L. Fellman, who was indorser on a large amount of Freiberg, Klein & Co.'s paper, and with other persons, to remove the then present embarrassments of the firm, and to continue business, and then, after enlarging their stock by purchases to a sufficient amount, to fail and secure Fellman and other home creditors; and that the deeds of trust were the result of this conspiracy.

The plaintiff replied, denying the allegations of the answer, and alleging acceptance of the deed of trust before levy of the attachment. Upon the trial it was shown that the deeds of trust under which Sonnentheil claimed were duly executed; that the first was duly filed for record, and that Sonnentheil was in possession of the property as trustee at the time the second deed was executed; that the debts preferred in the deeds amounted to about $140,000, all of which, except $10,000, were secured by the accommodation indorsement of Fellman & Grumbach, and none was secured otherwise; that several of the creditors had accepted the deed of trust before the levy of the attachment, and some of the secured debts were paid thereafter.

The jury returned a verdict for the defendants, whereupon the case was taken by the plaintiff to the circuit court of appeals, and the judgment of the court below was there affirmed. 21 C. C. A. 390, 75 Fed. 350. Thereupon the plaintiff sued out a writ of error from this court.

A. H. Willie and J. M. Wilson, for plaintiff in error.

F. Charles Hume, for defendants in error.

Mr. Justice BROWN, after stating the facts in the foregoing language, delivered the opinion of the court.