Dunphy v. Kleinsmith and Duer

• Decision Date: 01 December 1870
• Citation: 11 Wall. 610,20 L.Ed. 223,78 U.S. 610
• Parties: DUNPHY v. KLEINSMITH AND DUER
• Court: U.S. Supreme Court

78 U.S. 610

20 L.Ed. 223

11 Wall. 610

DUNPHY v. KLEINSMITH AND DUER.

December Term, 1870

APPEAL from the Supreme Court of the Territory of Montana.

The case was that of a creditor's bill filed by Kleinsmith, one appellee, against E. M. Dunphy, the appellant, and one Benajah Morse, surviving partner of Elkanah Morse, on behalf of himself and all other judgment creditors, to obtain satisfaction of a judgment recovered by Kleinsmith on the 12th of March, 1868, for $16,957. The bill alleged that an execution issued on the judgment was returned wholly unsatisfied, and that no part of the judgment had been paid. It then charged that on the 31st of October, 1867, Morse and his brother Elkanah (then living) executed to Dunphy a mortgage to secure the payment of $30,000 in one year from date, covering property to the amount of $70,000, including a ranch in the county of Gallatin, containing 640 acres of land, with two-thirds of the crops and all the stock thereon, embracing 225 head of cattle, and all the goods in their store at Gallatin, together with the lot and storehouse and all the book accounts and evidences of debt of E. & B. Morse. The bill stated that at the time of executing this mortgage the Morses were largely indebted to different persons, and charged that it was made to hinder, delay, and defraud the creditors of the firm, and was not accompanied by change of possession; but that the Morses continued in possession for several months, selling and disposing of the goods for their own benefit. It further charged that the Morses did not owe Dunphy any such amount as $30,000; did not, in fact, owe him more than $6000 or $7000, the balance being fictitious; and that both Dunphy and the Morses had acknowledged as much to different persons. The bill further charged that, by means of this fraudulent mortgage and fictitious debt, Dunphy had prevented the plaintiff and other judgment creditors of E. & B. Morse from collecting their just demands; that Dunphy had claimed title to the property under the mortgage, and had forbidden the sheriff to levy upon it, and that consequently the sheriff had refused to do so, and that Morse and Dunphy were engaged in disposing of the property, and that Dunphy had already got more than $30,000 therefrom. The bill prayed that the mortgage might be declared fraudulent and void; that a receiver should be appointed to hold the property, and that if what was left should not be sufficient to satisfy the complainant and other judgment creditors, Dunphy might be made personally liable for the deficiency. By an amended bill the complainant alleged that, on the 3d of January, 1868, Morse executed to Dunphy an assignment of all the property embraced in the mortgage, and authorized him to sell and dispose of it with due regard to his own interests and the interests of the creditors of E. & B. Morse; but that, notwithstanding the assignment, Morse still continued in possession and control of the property for several months, and to sell the same and collect the proceeds thereof; and that the assignment was fraudulent and void.

To this bill Dunphy filed an answer, insisting on the bona fides of his debt, and setting forth that it consisted of $12,500 for a stock of goods sold to the Morses, and $10,000 for money lent to them at the date of the mortgage, the balance being for interest to accrue during the year the mortgage had to run, namely, one per cent. a month on the former sum, and five per cent. a month on the latter, which was allowed by the laws of the Territory. The appellee, Duer, recovered a judgment against Morse on the same day that Kleinsmith's was entered, failed to obtain satisfaction, and filed a petition to intervene as a co-complainant in the suit, and was admitted to intervene accordingly. The cause was put at issue and came on for trial in March, 1869.

It appeared that by an act of the Territorial legislature of Montana, passed in December, 1867, it was declared:

'SEC. 1. That there shall be in this Territory but one form of civil action for the enforcement or protection of private rights and the redress or prevention of private wrongs.'

And,

'SEC. 155. That an issue of fact shall be tried by a jury, unless a jury trial is waived, or a reference be ordered as provided in this act.'

By another act, passed in January, 1869, it was provided:

'That in all civil cases, if three-fourths of the jurors agree upon a verdict, it shall stand and have the same force and effect as if agreed upon by the whole of the jurors.'

The cause was tried in pursuance of these provisions of the Territorial law. In order to present distinct issues for trial the court framed a series of questions (twenty-two in number), and submitted them to the jury: as

'1st. Did E. & B. Morse retain possession and control and continue to dispose of the property mortgaged after the execution of their mortgage to E. M. Dunphy on the 31st day of October, 1867?

'2d. State whether B. Morse, after the 3d day of January, 1868, continued to remain in possession of the property assigned to Dunphy, and also to exercise control over it, and to sell and dispose of it?

'4th. Did E. & B. Morse owe E. M. Dunphy $30,000 at the time of the...