Clerihew v. W. Side Bank

• Decision Date: 15 July 1892
• Citation: 52 N.W. 967,50 Minn. 538
• Parties: CLERIHEW v WEST SIDE BANK.
• Court: Minnesota Supreme Court

50 Minn. 538

52 N.W. 967

CLERIHEWvWEST SIDE BANK.

Supreme Court of Minnesota.

July 15, 1892.

(Syllabus by the Court.)

1. In an action by the assignee of an insolvent debtor against a creditor to recover a preferential payment alleged to have been made by the debtor to the defendant, the defendant, (bank,) denying the payment of any money to it, sought to show by parol that the transaction was really a conveyance of certain land by the debtor pursuant to agreement in satisfaction of his debt to the bank, the conveyance being made to a third party, who took and held the title for the benefit of the bank, so that other creditors of the insolvent might not discover the fact. The bank tendered to the assignee a reconveyance of the land from the party who had thus taken the legal title. Held, that such evidence was competent.

2. The remedy being available to the assignee to recover back the property (land) conveyed by the insolvent debtor as a preference, that is the proper remedy, and he cannot refuse to take back the property, and elect to recover its value.

3. Only as between the parties to written instruments and their privies are such instruments conclusive evidence of the transactions to which they relate.

Appeal from district court, Ramsey county; KELLY, Judge.

Action by Alexander M. Clerihew, as assignee, plaintiff, against the West Side Bank, defendant, to recover a payment alleged to have been made to the bank by plaintiff's assignor in preference of creditors. The defendant, answering, alleged that the transaction consisted of a transfer of real estate by the assignor, Mues, to one Marti, who held same in trust for the bank, and tendered a reconveyance of the property from Marti to plaintiff. Upon the trial before the court, a jury being waived, evidence offered by defendant explaining the transaction was received, subject to plaintiff's objection, and subsequently stricken out. Judgment was ordered against defendant for the repayment of the money as prayed in the complaint. From an order denying a new trial, defendant appeals. Reversed.

C. E. Holman and J. M. Hawthorne, for appellant.

Edward P. Sanborn, for respondent.

DICKINSON, J.

In February, 1891, Mues, an insolvent debtor, made an assignment to the plaintiff for the benefit of creditors. This action relates to a transaction which took place three days prior to the assignment. Mues was then indebted to the defendant bank, which indebtedness was in part evidenced by several promissory notes of Mues held by the bank amounting to $2,500, with some accrued interest. In the complaint in this action it is alleged that at that time, with the view of preferring the defendant, Mues paid $2,500 to the bank in payment of such notes, and that the bank received the same and delivered up the notes. This action is prosecuted to recover that amount of money because of such alleged preferential payment to the defendant, which, if made, was confessedly, under the circumstances, invalid under the insolvent law. At the trial the plaintiff produced evidence going to show that Mues, owning a certain lot of land, agreed with one of the officers of the bank (Lawton) that the latter might sell the lot for $2,500, and that the proceeds should be paid to the bank on such indebtedness; that Lawton procured a purchaser, one Marti, at that price, to whom Mues conveyed the land by deed; that Marti executed to the defendant bank his promissory note for the same amount, which the bank discounted and credited to him; that he gave to Mues his check on the same bank for the purchase price, $2,500, which Mues deposited to his own credit in this bank, and gave his own check to the bank for $2,529, and took up his notes to that amount. More briefly stated, this evidence may be deemed to have shown that Mues sold the land to Marti, received the price, and therewith paid his indebtedness to the bank to the extent before stated. The defendant alleged that the transaction was of a different nature, it being an agreement carried into effect for a sale of the lot to the bank in satisfaction of the notes, the title being conveyed to and held by Marti in trust for the bank. The defendant also averred a tender by it of a reconveyance of the land from Marti to the plaintiff, and that it still held the deed of conveyance for delivery to the plaintiff. It is claimed that a restoration to the assignee of the specific property conveyed by the debtor to his creditor in payment of the debt would satisfy the requirements of the law. Evidence was presented on the part of the defendant, which, however, the court refused to consider, going to show, by parol, that the agreement and intention of the parties to the transaction were substantially as alleged by the defendant; that it was really a purchase of the land by the bank from Mues in satisfaction of his notes, the title, however, being taken by Marti for the...