Coe, Adm'r, etc. vs. Manseau.

corded or filed, subsequent and bound by the proceedings the same as if parties thereto) gives effect to sec. 2241, by making a senior mortgage unrecorded subordinate and subject to a junior one first recorded; but the right of such junior mortgagee in this respect depends upon his good faith. These two sections are consistent with each other, and the construction contended for, that the element of bad faith cannot be made an exception in sec. 3187 because not expressed in it, would make them directly contradictory, and lead to this absurdity. A junior mortgage has no priority over a senior one unrecorded, unless made in good faith; but, in the foreclosure of such junior mortgage, it is given a priority over such unrecorded senior mortgage, whether made in good faith or not. Again, the foreclosure may go on to judgment, making the holder of a prior mortgage or title unrecorded, a party; but the purchaser at the sale will be governed by sec. 2241, and if he had notice of such prior interest by possession, or otherwise, his title is subject to it, for he is not a purchaser in good faith. Hodson v. Treat, 7 Wis. 263; Hoppin v. Doty, 25 Wis. 573.

In both sections registration is made constructive notice only. Where a mortgagee has actual notice of a prior or subsequent mortgage or title, he must make the holder of such mortgage or title a party to the foreclosure of his mortgage, or he will be guilty of a fraud, or an act of bad faith. at least, and the statute was not made to shield him from its consequences. Suppose that A. was the agent of B. to draw and have executed to B. a deed in fee simple to certain land, and afterwards has the custody of such deed, and it is unrecorded, and A. takes a subsequent mortgage to himself from the grantor of B., and has it recorded, and, when due, commences a suit for its foreclosure, and files a lis pendens when B. is out of the country and has no actual notice whatever of the suit; may A. avail himself of sec. 3187 and not make B. a party, and yet foreclose his equity of redemption and

Coe, Adm'r, etc. vs. Manseau.

sell the land to an innocent purchaser under his judgment? This would be an astounding fraud on the part of A., and a court of equity would not sanction it, it may be said, and fraud vitiates everything. So it may be said when a mortgagee has actual notice of a prior unrecorded incumbrance or title in any case, and ignores it in a suit of foreclosure for the purpose of defeating it.

The possession of Dier was the possession of the plaintiff, and upon inquiry of him the defendant would have known of the plaintiff's title, and was therefore charged with such knowledge. The defendant did visit Dier in possession, and asked him only his name, and was careful to make no further inquiry. This was such a notice and a fraud as cured the non-registration of the plaintiff's deed, by the weight of authority sanctioned by the decisions of this court. Knox v. Thompson, 13 Am. Dec. 250, and note; Baynard v. Norris, 46 Am. Dec. 647; Hodson v. Treat, 7 Wis. 263; Green v. Dixon, 9 Wis. 532; Zægel v. Kuster, 51 Wis. 31. The statute makes the foreclosure of tax certificates like unto the foreclosure of a mortgage, as to parties, etc. But there is no analogy between a tax certificate and a mortgage as to prior and subsequent incumbrances and titles. The tax certificate imports an absolute and paramount right against every body, subject only to redemption, and it would seem that, in order to foreclose an equity of redemption of which the plaintiff had notice, the person having such equity should be made a party, notwithstanding the statutes relating to registration. But it is sufficient for this case that the defendant had notice, by the possession of Dier, of the plaintiff's title, and he should have been made a party.

The special findings of the court have not been particularly considered. The real matters in controversy have been disposed of by the application of principles and the construction of the statutes applicable thereto. Judgment was rendered for the relief demanded in the complaint; but as a

Batten vs. Smith and another.

conclusion of law the court found that the defendant had notice of the plaintiff's interest by the proceedings of his foreclosure and the lis pendens. We think that such a conclusion is not supported, because of the merger of the plaintiff's mortgage interest in his legal title; but we are compelled to think, from the evidence and authorities, that the defendant had ample notice by the possession of Dier.

By the Court.-The judgment of the circuit court is affirmed.

LYON, J., took no part.

BATTEN VS. SMITH and another.

December 18, 1884 — January 13, 1885.

VOLUNTARY ASSIGNMENT.

(1, 4) Inventory: Omissions by mistake. (2) Proof of fraudulent intent. (3) Previous fraudulent transfers of property.

1. The statute (sec. 1697, R. S.) providing that no mistake in the inventory and list of creditors shall invalidate a voluntary assignment, applies to mistakes of omission.

2. Since the enactment of the laws (ch. 170, Laws of 1882, and ch. 349, Laws of 1883) designed to prevent preferences, direct and indirect, and making the assignee a representative of creditors with power to avoid illegal transfers by the debtor, more conclusive proof of fraudulent intent in a general assignment may properly be required before the same is held void as to creditors subsequently attaching the property.

3. Fraudulent transfers of property by a debtor just previous to a general assignment do not avoid such assignment but are themselves avoidable under it.

4. Nor would the omission of the property so fraudulently transferred invalidate the assignment under sec. 1697, R. S. As against the assignor (though not as against the assignee) the title would pass by the transfer and he would have no power to assign such property and hence no right to include it in the inventory.

Batten vs. Smith and another.

APPEAL from the Circuit Court for Iowa County. January 9, 1884, the defendants, composing the firm of R. S. Smith & Co., made an assignment under ch. 80, R. S., to Richard T. Richards, of all their property and effects of every kind and description, real, personal, and mixed, belonging to them, or in which they, or either of them, had any right or interest, or which were held by any person or persons for them, or in trust for them, or either of them (except such as were exempt from levy and sale on execution under the laws of the state of Wisconsin), the same being more fully and particularly enumerated and described in a verified inventory to be filed, in the office of the clerk within ten days thereafter. Such verified inventory and list of creditors were certified and filed within the time designated.

January 22, 1884, the plaintiff commenced this action against the defendants by summons. On the same day the plaintiff made an affidavit to the effect that the defendants were indebted to him in the sum of $1,200, over and above all legal setoffs, and that the same was due upon express contracts, and that the plaintiff had reason to believe, and did believe, that the defendants had assigned, conveyed, and disposed of their property, or a part of it, with the intent to defraud their creditors. The plaintiff gave the requisite bond; writs of attachment were issued; and on January 24 and 25, 1884, the sheriff returned that he had attached all the interest the defendants had in two certain judgments, and certain pieces of real estate described, and filed an inventory thereof accordingly.

January 26, 1884, a supplemental inventory, embracing two parcels of land and the two judgments which had been attached, was filed, together with an affidavit that they had been omitted from the first inventory by mistake, and a statement explaining how such mistake had occurred.

February 2, 1884, the defendants served their special answer, verified by them respectively, in which they denied

Batten vs. Smith and another.

and traversed each and every material statement contained in the plaintiff's said affidavit for an attachment, except as to their liability for the debt, and pleaded said general assignment.

March 6, 1884, the plaintiff made and filed a new affidavit, as a substitute for the original, stating, in effect, that the defendants had assigned, conveyed, disposed of, or concealed, or were about to assign, convey, dispose of, or conceal, their property, or some part thereof, with intent to defraud their creditors; and that the defendants fraudulently contracted one of the debts for which this action was brought. Thereupon the defendants, by way of special answer to said substituted affidavit, admitted their liability for the debt, but denied each and every other allegation therein contained.

March 12, 1884, the defendants applied for an order permitting them still further to amend their inventory by including in it a certain safe. This motion was based upon an affidavit stating that the defendants sold the safe to one William Heathcock, January 8, 1884, and at the time of making the inventory believed such sale to be legal, but had since been informed that it was invalid; that said Heathcock, finding that there were doubts as to the validity of the sale, had released his interest in the safe to the defendants on March 10, 1884; and that the safe was omitted from the inventory by mistake. It does not appear from the printed case whether this motion was granted or not. William Heathcock was the father-in-law of one of the defendants, and was a creditor of the firm to a large amount.

Upon the trial of the issue formed by the special answer to the substituted affidavit, the court found that when the writs of attachment were issued the defendants had not assigned, conveyed, disposed of, or concealed, nor were they about to assign, convey, dispose of, or conceal, their property, or any part thereof, with intent to defraud their creditors; and held, as a conclusion of law, that they were entitled to an