Hecker v. Commercial State Bank of Carrington
| Decision Date | 01 August 1916 |
| Docket Number | 1915 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Foster County, Coffey, J.
Action by trustee in bankruptcy to recover money claimed to have been paid under an unlawful preference. Judgment for defendant. Plaintiff appeals.
Affirmed.
George H. Stillman, for appellant.
It is the law, and the courts of this jurisdiction have adopted it that choses in action cannot be pledged orally, but such pledge must be by a written instrument duly executed. Sykes v. Hannewalt, 5 N.D. 335, 65 N.W. 682; Wright v. Ross, 36 Cal. 414; Brewster v Hartley, 37 Cal. 15, 99 Am. Dec. 237; American Exch Nat. Bank v. Federal Nat. Bank, 226 Pa. 483, 27 L.R.A (N.S.) 666, 134 Am. St. Rep. 1071, 75 A. 683, 18 Ann. Cas. 444; St. Paul F. & M. Ins. Co. v. Brunswick Grocery Co. 113 Ga. 786, 39 S.E. 483.
An interest in property, to be an insurable interest, must be either ownership of the property or of some lien upon or interest in same. This interest and the ownership of the insurance must unite in one person or there is no insurance. Rev. Codes 1905, § 5904, Comp. Laws 1913, § 6471.
Neither public policy, the law, nor our courts will permit of an oral pledge of a fire insurance policy. New York v. Louisiana, 108 U.S. 91, 27 L.Ed. 662, 2 S.Ct. 176; McCarter v. Firemen's Ins. Co. 74 N.J.Eq. 372, 29 L.R.A. (N.S.) 1195, 135 Am. St. Rep. 708, 73 A. 80, 414, 18 Ann. Cas. 1048; Foss v. Petterson, 20 S.D. 93, 104 N.W. 915.
"A mortgage or transfer of his property by an insolvent debtor within four months of the filing of a petition in bankruptcy against him, which otherwise constitutes a voidable preference, is not deprived of that character or made valid by the fact that it was executed in performance of a covenant to do so made more than four months before the filing of the petition." Wilson Bros. v. Nelson, 183 U.S. 191, 198, 46 L.Ed. 147, 151, 22 S.Ct. 74; Re Sheridan, 98 F. 406; Re Dismal Swamp Contracting Co. 135 F. 417; Re Ronk, 111 F. 154; Pollock v. Jones, 61 C. C. A. 555, 124 F. 163; Johnston v. Huff, A. & M. Co. 66 C. C. A. 534, 133 F. 704; Re Mandel, 127 F. 863; Ragan v. Donovan, 189 F. 138; Page v. Rogers, 211 U.S. 575, 53 L.Ed. 332, 29 S.Ct. 159.
T. F. McCue, for respondent.
The appellant here only challenges the conclusions of law made by the trial court. Therefore, it is only for this court to say whether or not the judgment appealed from is valid, and the one which, under the findings of fact, the court should have entered. Sargent v. Kindred, 5 N.D. 8, 63 N.W. 151; Tribune Printing & Binding Co. v. Barnes, 7 N.D. 591, 75 N.W. 904.
The policy of insurance here involved was formally assigned in writing; but this was not a new contract. It was merely carrying out an agreement that had long before been made by the parties.
"One by doing or undertaking to do what the law or a previous agreement requires him to do merits nothing, and it is not a consideration for anything." Bishop, Contr. § 48; Chilson v. Bank of Fairmount, 9 N.D. 99, 81 N.W. 33; Roberts v. First Nat. Bank, 8 N.D. 474, 79 N.W. 993.
A court will treat an agreement for pledge or bonds or other property as binding, and will give it effect according to the intention of the contracting parties. White Water Valley Canal Co. v. Vallette, 21 How. 414, 16 L.Ed. 154; Calhoun v. Memphis & P. R. Co. 2 Flipp. 442, Fed. Cas. No. 2,309; Spence v. Mobile & M. R. Co. 9 Ala. 586; Howard v. Iron & Land Co. 62 Minn. 298, 64 N.W. 896; Hamilton Trust Co. v. Clemes, 163 N.Y. 429, 57 N.E. 614; Harrigan v. Gilchrist, 121 Wis. 361, 99 N.W. 909.
An insurance policy is not incorporeal property. It is corporeal property, and capable of delivery the same as a promissory note. A mortgage may be pledged without a written assignment. Runyan v. Mersereau, 11 Johns. 534, 6 Am. Dec. 393; Fryer v. Rockefeller, 63 N.Y. 276; Williams v. Norton, 3 Kan. 295.
Where the debt is evidenced by writing, a mere delivery of the evidence of the debt to the pledgee without any writing is sufficient. Dickey v. Pocomoke City Nat. Bank, 89 Md. 280, 43 A. 33; Roberts v. First Nat. Bank, supra.
A fire insurance policy may be assigned orally. Howe v. Jones, 57 Iowa 130, 8 N.W. 451, 10 N.W. 299; Moore v. Lowrey, 25 Iowa 336, 95 Am. Dec. 790; Perkins v. Peterson, 2 Colo.App. 242, 29 P. 1135; Hight v. Sackett, 34 N.Y. 447; State v. Millner, 131 Mo. 432, 33 S.W. 15; Hoag v. Mendenhall, 19 Minn. 335, Gil. 289.
The deposit or pledging or transferring of the policy of insurance with respondent did not transfer the title to the policy, nor to the goods covered or insured. The question of "insurable interest in property is not involved in this case." Collins v. Dawley, 4 Colo. 138, 34 Am. Rep. 72; Pomeroy v. Manhattan L. Ins. Co. 40 Ill. 398; Rev. Codes 1905, §§ 4950, 6194, Comp. Laws 1913, §§ 5493, 6771; Roberts v. First Nat. Bank, 8 N.D. 474, 79 N.W. 993; Van Cise v. Merchants' Nat. Bank, 4 Dak. 485, 33 N.W. 897.
The point of distinction as to what constitutes a preference right where property is transferred, pledged, or given as security within the limit of time preceding the bankruptcy proceedings, is that it is not in violation of the law if done pursuant to an agreement entered into prior to such time limit, but is regarded as having been done as of the date of such prior agreement,--a mere consummation of the former agreement. Sabin v. Camp, 98 F. 974; Broughton v. Vasquez, 73 Cal. 325, 11 P. 806, 14 P. 885; Williams v. Clark, 47 Minn. 53, 49 N.W. 398; Bush v. Boutelle, 156 Mass. 167, 32 Am. St. Rep. 442, 30 N.E. 607; Chilson v. Bank of Fairmount, 9 N.D. 99, 81 N.W. 33.
There being no proof here that the assets of the bankrupt were insufficient to pay her debts in full at the time of the commencement of this action, or that the money in controversy was required to pay such debts, the complaint is insufficient. Prescott v. Galluccio, 164 F. 618; Jordan v. Stephenson, 17 Iowa 514; Fox v. Dyer, 3 Cal. Unrep. 139, 22 P. 257; Bruker v. Kelsey, 72 Ind. 51.
A complaint in an action to set aside a conveyance as fraudulent must allege that plaintiff is a creditor, or represents creditors. Sawyer v. Harrison, 43 Minn. 297, 45 N.W. 434; Eller v. Lacy, 137 Ind. 436, 36 N.E. 1088; Ferguson v. Bobo, 54 Miss. 121.
A trustee in bankruptcy must allege and prove that the estate is insufficient to pay the debts against the bankrupt. Brumbaugh v. Richcreek, 127 Ind. 240, 22 Am. St. Rep. 647, 26 N.E. 664; Roney v. Conable, 125 Iowa 664, 101 N.W. 505; Seager v. Armstrong, 95 Minn. 414, 104 N.W. 480; Schreyer v. Citizens' Nat. Bank, 74 A.D. 478, 77 N.Y.S. 494; Lesser v. Bradford Realty Co. 47 Misc. 463, 95 N.Y.S. 933; Mueller v. Bruss, 112 Wis. 406, 88 N.W. 229; Level Land Co. v. Sivyer, 112 Wis. 442, 88 N.W. 317.
This is an action brought by A. E. Hecker, the trustee in bankruptcy of Rose M. Geiger, bankrupt, to recover from the Commercial State Bank of Carrington, North Dakota, the proceeds of an insurance policy which was collected by the bank and applied to the payment of debts owing to it by the bankrupt. The case was tried to the court without a jury, and from a judgment in favor of the defendant and dismissing the action, the plaintiff appeals.
According to the findings of fact, which are in no way controverted by the appellant, on or about the 21st of September, 1911, and continuously thereafter until on or about January 3d, 1913 the defendant, Rose M. Geiger, conducted and operated a retail millinery business in the city of Carrington, North Dakota. On or about September 21st, 1911, she procured through the defendant, The Commercial State Bank of Carrington, a policy of fire insurance in the standard form on her stock and store fixtures, and which policy remained in the possession of the defendant bank, which paid the premium thereon and charged the same against her account. Later, and on or about March 12th, 1912, the said Rose M. Geiger borrowed from the defendant bank the sum of $ 190, and gave her promissory note therefor. This note was signed by other persons as security. From that date and until September, 1912, the said Rose M. Geiger borrowed from the defendant bank additional sums of money, amounting in all to the sum of $ 650. At the time of making the first loan of $ 190, before mentioned, the said Rose M. Geiger deposited the policy of insurance before mentioned with the defendant bank under an oral agreement that it should be held as collateral security for the payment of the indebtedness due from her to the defendant, as evidenced by said promissory notes, and that in the event of the loss by fire of the property insured by such policy, the defendant bank should collect from the insurance company the amount of such policy and deduct therefrom the amount of the indebtedness to it. Later, and on or about September 21st, 1912, the policy above set forth expired, but there was issued to the said Rose M. Geiger a renewal policy in the same form, and which policy was deposited by the said Rose M. Geiger with the defendant bank under the same terms and conditions as the prior one, and which policy was retained in the possession of the defendant bank in accordance with the said agreement, Later, and on or about January 3d, 1913, the property insured was destroyed by fire. Later, and on or about January 3d, 1913, and immediately following the loss, the said Rose M. Geiger executed and delivered to the defendant bank an assignment of said policy of insurance for the purpose of enabling such bank to collect the proceeds thereof, but such assignment was merely formal, and was given by the said Rose M....
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