Hartwig v. Rushing

• Citation: 182 P. 177,93 Or. 6
• Parties: HARTWIG v. RUSHING ET AL.
• Decision Date: 01 July 1919
• Court: Supreme Court of Oregon

182 P. 177

93 Or. 6

HARTWIG v. RUSHING ET AL.

Supreme Court of Oregon

July 1, 1919

Department 1.

Appeal from Circuit Court, Multnomah County; Robert Tucker, Judge.

Suit by William H. Hartwig against Johnie Gertrude Rushing personally and as administratrix of C. C. Rushing, deceased and another. Decree for plaintiff, and certain defendants appeal. Affirmed.

The plaintiff, William H. Hartwig, is endeavoring to impress a trust upon certain lands so that he can collect a money judgment which he obtained against George Hartwig, who sold a hardware store and stock of goods to C. C. Rushing without complying with the Bulk Sales Law. William H. Hartwig and George Hartwig are brothers; the former was a resident of Iowa, while the latter lived in Oregon. George Hartwig informed his brother that he wished to purchase a hardware store owned by Frank L. Miller in Aurora, Or. George Hartwig had $4,000 in cash and a tract of timber land in Idaho, but he needed more money to consummate the purchase. For the purpose of enabling George Hartwig to buy the store, the two Hartwigs borrowed $5,500 from the City National Bank of Tipton, Iowa, on February 19, 1910, and gave their promissory note to the bank for that amount payable one year after that date. In February, 1910, George Hartwig bought the store from Miller for $15,700. Miller received in payment for the store the $5,500 which had been borrowed from the Iowa bank, $3,300 of the $4,000 which George Hartwig already had, the Idaho timber land at $3,500, and a note for the balance of the purchase price.

William H. Hartwig paid the note which he and his brother had given to the Iowa bank; and, for the purpose of evidencing the resulting indebtedness, George Hartwig gave his note to William H. Hartwig for $5,500, payable, with interest, five years after February 18, 1911, its date.

George Hartwig took possession of the store and continued to operate it until September 11, 1911, when he transferred it to C. C Rushing. There is in evidence a writing which reads as follows:

"Aurora Or., Aug. 28, 1911.

"This agreement entered into the above day by and between Geo Hartwig, of Aurora, Or., party of the first part and C. C. Rushing of Portland, Or., party of the second part, witnesseth: Said first party has sold his stock of goods in Aurora to said second party and has taken as payment for said stock of goods a 31-acre prune ranch near Vancouver, Wash., at $31,000.

"Said first party is to take invoice of said stock of goods one day this week at invoice cost for all first class goods and others put in at value and the first party is to pay same as part payment on the prune ranch less an amt. owed for goods to become due amtg. to between $2,500 and $4,000, to be ascertained by the second part. The balance due on the prune ranch is to be paid by mortgage on same due in two, three and four yrs. 7% int., payable semiannually. The first party assumes $4,000 now against said prune ranch, due in 1 and 2 yrs.

"Witness our hands the day and year first above written.

Geo. Hartwig.

"C. C. Rushing."

The stock of goods was invoiced by George Hartwig and Rushing with the assistance of some representatives of certain wholesalers who were creditors of Hartwig. The parties are not agreed as to the total invoice price of the stock of goods sold to Rushing; the figures were between $13,000 and $18,500. George Hartwig claims that the stock of hardware invoiced $16,820, and with 10 per cent. added for freight amounted to $18,500. The uncontradicted evidence of George Hartwig is that he and Rushing agreed upon $300 as the price of the fixtures and furniture. It is conceded that George Hartwig gave a mortgage to C. C. Rushing for $17,274.54 on the 31-acre prune orchard; and hence this fact, considered in connection with the writing dated August 28, 1911, would indicate that the stock of goods, including the fixtures and furniture valued at $300, was invoiced at $13,725.46. Soon after the store was transferred to Rushing, he paid a total of $4,367.34 to certain wholesalers for goods which they had sold to Hartwig. After selling the store, Hartwig collected about $1,500 on book accounts due him and used the collections in making payments to some of his creditors.

Rushing carried on the hardware business until October 23, 1911, when he transferred the store to George and Lena Ehlen in exchange for about 79 acres of land in Marion county. Afterwards on November 28, 1911, C. C. Rushing deeded the Marion county land to Annie L. Kent in exchange for three lots in the First addition to Cherrydale in Portland and certain personal property "known as the furnishings of the Almira Apartments." The conveyance of the Cherrydale lots was made to "J. G. Rushing."

C. C. Rushing died on January 6, 1912, and on January 27, following, his widow, Johnie Gertrude Rushing, was appointed administratrix of his estate; and she was also appointed the guardian of the estate and person of the six year old daughter, Maxine C. Rushing. On October 8, 1912, Johnie Gertrude Rushing, as administratrix, traded the "furnishings of the Almira Apartments" for a lot in Overlook addition in Portland and took a deed in the name of John C. Shillock as trustee of the C. C. Rushing estate; and subsequently on June 14, 1916, the trustee conveyed the Overlook lot to Maxine C. Rushing pursuant to an order made by the county court in the settlement of the C. C. Rushing estate.

The 31-acre orchard was conveyed to George Hartwig, subject to a mortgage of $4,000 held by George W. Seward; and Hartwig then gave a second mortgage to C. C. Rushing for $17,274.54 to cover the difference between the value of the hardware store and $31,000, the agreed value of the prune orchard. The Sew90ard mortgage which was assumed by Hartwig was offset by George Hartwig's indebtedness to wholesalers whom Rushing agreed to pay. The Seward mortgage was foreclosed in 1913, and the prune orchard was acquired through foreclosure proceedings by O. W. Olson, as trustee for Johnie Gertrude Rushing, who furnished the necessary funds out of life insurance paid to her on account of the death of her husband.

It is not necessary to determine whether George Hartwig was mentally incapacitated to transact business when he sold the store; but it is sufficient to say that the evidence shows clearly that he was not in good physical or mental health.

George Hartwig claims that C. C. Rushing knew about the former's indebtedness to his brother, and that Rushing agreed to pay William H. Hartwig; and in this connection we quote as follows from the testimony of George Hartwig:

"Why, I agreed with him that I would not let my brother know; wait a little while until he could get the cash to pay that note; that the note wasn't due yet. It ran for five years."

George Hartwig insisted that C. C. Rushing agreed to pay the note which the former had given to William H. Hartwig, but the writing signed by C. C. Rushing and George Hartwig contradicts the contention made by the latter.

It is true that George Hartwig explains that the writing was not signed until after he had completed the sale to Rushing, and that he attached his signature to some writing without reading it and for the purpose of accommodating Rushing. However, the admitted fact of the amount of the mortgage given by Hartwig on the prune orchard, taken together with other evidence in the record, points to the conclusion that Rushing did not agree to pay the note held by William H. Hartwig.

The uncontradicted evidence is that William H. Hartwig did not learn of the sale of the hardware store to Rushing until 1915, and that upon learning of the sale he came from Iowa to Oregon in July, 1915, and placed the matter in the hands of attorneys. On May 16, 1916, William H. Hartwig obtained a judgment on the promissory note against George Hartwig for $7,626.52 in the circuit court of Multnomah county; and on the following day, May 17, 1916, William H. Hartwig commenced this suit against George Hartwig, Johnie Gertrude Rushing, as an individual and as administratrix of the estate of C. C. Rushing, deceased, and against Maxine C. Rushing, praying in his complaint that the court decree that Johnie Gertrude Rushing holds the Cherrydale lots and that Maxine C. Rushing holds the Overlook lot "merely in trust" on account of being the proceeds derived from the sale of the hardware store without first complying with the Bulk Sales Law. There was a decree in accordance with the prayer of the complaint, and all the defendants, except George Hartwig, appealed.

Jay Bowerman, of Portland (Emmons & Webster, of Portland, on the briefs), for appellants.

Loyal H. McCarthy and J. Le Roy Smith, both of Portland, for respondent.

HARRIS, J. (after stating the facts as above).

When Rushing bought the store with its stock of hardware, he did not receive or demand from the seller a written statement under oath, containing the names and addresses of the creditors, or a statement showing the indebtedness due or to become due from the seller. Some of the merchant creditors had actual notice and assisted in invoicing the stock of goods; and it may fairly be inferred that nearly all, if not all, the merchant creditors acquired a knowledge of what Rushing and Hartwig were doing before the invoice was completed and the stock transferred to Rushing.

It is proper to note, also, that after Rushing paid $4,367.34 to the merchant creditors of George Hartwig, and after the latter turned over to his creditors the $1,500 collected by him, his remaining indebtedness consisted of the Miller note, the note to his brother, and only $300 or $400 presumably due merchant creditors.

It is not necessary to enumerate in detail all the obstacles which contributed...