Feil v. Wishek

Decision Date16 December 1971
Docket NumberNo. 8750,8750
PartiesReinhold FEIL and Kathryn Feil, Plaintiffs and Respondents, v. Max A. WISHEK, Defendant and Appellant. Civ.
CourtNorth Dakota Supreme Court

Syllabus by the Court

1. For reasons stated in the opinion, it is held that the demand for trial de novo was adequately made.

2. A North Dakota attorney is held in the performance of his professional services to that degree of care, skill, diligence, and knowledge as is commonly possessed and exercised by reasonable, careful, and prudent lawyers of this State.

3. In not advising clients, who had no knowledge of the necessity therefor, that an agreement for the sale and purchase of personal property should be filed in the office of the register of deeds so that the seller would be protected from the buyer's creditors, the lawyer failed to exercise that degree of care commonly possessed and exercised by reasonable, careful, and prudent lawyers of this State.

4. For reasons stated in the opinion, it is held that the conduct of the lawyer's clients did not constitute contributory negligence.

Hjellum, Weiss, Nerison, Jukkala & Vinje, Jamestown, for defendant and appellant.

Gerald G. Glaser, Bismarck, for plaintiffs and respondents.

ERICKSTAD, Judge.

The defendant Max A. Wishek appeals from a judgment entered on March 16, 1971, in favor of the plaintiffs Reinhold Feil and Kathryn Feil in the District Court for the County of McIntosh. The judgment awards the Feils the sum of $6,083.22, which includes costs and interest. Wishek demands a trial de novo in this court.

Although the Feils did not raise this issue in their brief, at the time of the oral argument they contended that a demand for trial de novo was not properly made.

This argument is a highly technical one. The record on appeal discloses that attached to the inside cover of the transcript is a demand for trial de novo dated the 8th of June 1971, signed by counsel for the defendant. The record also contains an affidavit of service by mail, disclosing that counsel for the plaintiffs was served a copy of the transcript, demand for trial de novo, and a brief, as of August 31, 1971.

The trial judge has signed two certificates in this case. The first certificate is dated June 11, 1971, and is entitled 'Judge's Certificate Identifying Exhibits and Settling and Allowing the Statement of the Case'. That certificate includes a statement that the attached transcript is a true and correct transcript of the testimony. The original transcript in this case has attached to it the demand for trial de novo hereinbefore referred to.

The second certificate signed by the trial judge is dated August 31, 1971, and is entitled 'Certificate of Judge of District Court Re Judgment Roll and Record on Appeal'. That certificate asserts, '(T)hat there is hereto attached the records and files constituting the judgment roll and record on appeal . . . to wit:'; thereafter 29 items are described. Items 27 and 28 read:

'27. Transcript of Proceedings & Demand for Trial De Novo and Review of Entire Case.

'28. Affidavit of Service by Mail upon Gerald G. Glaser of Transcript, Demand for Trial De Novo & Review of Entire Case, and Brief of Defendant-Appellant.'

The Feils do not deny that they received a copy of the transcript, nor do they assert that their copy of the transcript failed to contain a demand for trial de novo. Accordingly, we think that the argument that the case is not before us de novo is without merit.

On June 19, 1965, Mr. Wishek prepared an agreement wherein the Feils agreed to sell the furniture and fixtures and stock of merchandise of their grocery store, and Calvin Mayer agreed to buy the same.

This case arises out of a claim on the part of the Feils that because Mr. Wishek as their attorney failed to advise them to file the agreement with the register of deeds of their county upon its execution, and as a result it was filed too late to constitute a lien, they were treated as general creditors of Mr. Mayer in his bankruptcy proceedings, when, had they been properly advised, they would have properly filed their agreement and then would have been preferred creditors.

The trial court concluded that the agreement was in substance a conditional sales contract. With this conclusion even Mr. Wishek seems to agree. He can hardly disagree, for if it does not qualify as a security agreement reserving title to the furniture and fixtures in the sellers until full payment is made, Mr. Wishek has prepared a defective instrument. The preparation of an instrument so defective as not to qualify for filing as a security agreement could in itself be considered malpractice.

Under our law as it existed at the time of the preparation and execution of the agreement, the vendors in a conditional sales contract were protected from the vendee's creditors only if the agreement reserving title in the personal property was in writing and only if filed in the same manner as a mortgage of personal property. Sec. 51--07--10, N.D.C.C.

The pertinent part of our statute providing for the filing of a chattel mortgage as of the date of the preparation and execution of the agreement reads:

'35--04--06. Mortgage void as to creditors unless filed--Chattel mortgage on motor vehicle must be shown on certificate of title.--Mortgage of personal property is void as against creditors of the mortgagor and subsequent purchasers and encumbrancers of the property in good faith for value, unless the original or an authenticated copy thereof is filed by depositing it in the office of the register of deeds of the county where the property mortgaged, or any part thereof, is situated at the time of filing.

Although the agreement was signed on June 19, 1965, by the parties, it was not filed in the register of deeds' office of McIntosh County until March 7, 1968, when Mr. Feil, by a long-distance telephone call from Colorado, requested Mr. Wishek to do so.

On April 4, 1968, Calvin Mayer filed a petition in bankruptcy.

On May 17, 1968, Mr. Wishek filed with the bankruptcy court a claim of ownership for the Feils, a copy of the agreement, a payment schedule, and proof of statement of claim. Hearing was held on July 12, 1968.

The referee in bankruptcy, by order dated April 8, 1969, held that, '(T)he failure to file the conditional sales agreement until less than a month before the petition in bankruptcy was filed was a preference under Section 60 of the Bankruptcy Act'. He concluded that the late filing constituted a preference and was thus void against the trustee and that therefore the Feils were merely unsecured creditors. The decision of the referee, relying upon Glessner v. Massey-Ferguson, Inc., 9 Cir., 353 F.2d 986 (1966), is not disputed by the parties in this case. We accept it as the law of this case.

It is agreed that the document entitled 'Plaintiff's Exhibit No. 1', otherwise described by the trial court as a conditional sales contract, was prepared under Mr. Wishek's direction in his law office in Ashley, North Dakota, on June 19, 1965. It was signed by Reinhold Feil and Calvin Mayer on the same date, before Mr. Wishek as notary public, and before two witnesses, namely Gust Mayer and Calford Mayer, the latter-named person being Mr. Wishek's secretary.

Pertinent parts of the agreement follow:

'AGREEMENT

'This agreement made and entered into this 19th day of June, 1965, by and between Reinhold Feil and Kathryn Feil, husband and wife, Ashley, North Dakota, parties of the first part, and Calvin Mayer, of Jamestown, North Dakota, party of the second part;

'Witnesseth: It is hereby contracted and agreed that the parties of the first part agree to sell and transfer to the party of the second part all of the furniture and fixtures of Reinie's Red Owl agency located in the City of Ashley, North Dakota, as set out on the attached list, for the sum of $27,000.00, payable as follows:

'$2,000.00 cash at the time of the execution of this agreement,

'$2,500.00 due and payable September 1, 1965,

'$2,500.00 due and payable January 2, 1966, and the balance of $20,000.00 payable in amortized monthly installments with interest at six per cent per annum to be fully paid by January 2, 1976, which payments are to be set up in a schedule and attached to and made a part of this contract.

'Second party reserves the privilege of making additional payments or paying the entire balance at any time prior to the due date with interest computed only to the date of payment, after 5 years.

'First parties do further hereby sell unto second party all groceries in said store for the retail price thereof, less 16 per cent, with the exception of all supplies. Produce items are to be listed separately and priced at cost. Fresh meats are to be listed separately and priced at cost. Second party shall pay cash for said merchandise and supplies. The inventory of said merchandise shall be taken on July 5, 1965.

'It is further agreed that upon completion of this agreement first parties will execute to second party a bill of sale with clear title covering all of the furniture and fixtures herein described and sold.

'First parties further agree to fully comply with the North Dakota bulk sales law.

The original and two copies of the agreement were signed at that time and when Reinhold Feil and Calvin Mayer left the law office, one had the original and the other had an executed copy in his possession. The other executed copy was retained in the law office.

The parties never again returned to the law office together.

The $2000 cash payment called for in the agreement was made in the plaintiff's store later that same day; the amortization schedule called for in the agreement was not returned to the law office, but was delivered by Mr. Feil to Mr. Calvin Mayer directly.

It was understood at the time the parties left the law office on the day of the signing of the agreement that an old mortgage, which contained a list of the...

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