Kells v. McClure
| Decision Date | 21 June 1897 |
| Docket Number | 10,614--(202) |
| Citation | 71 N.W. 827,69 Minn. 60 |
| Parties | LUCAS KELLS v. CLARENDON P. McCLURE |
| Court | Minnesota Supreme Court |
Appeal by defendant from an order of the district court for Stearns county, Baxter, J., denying his motion for a new trial. Affirmed.
Order affirmed.
David T. Calhoun, Myron D. Taylor, and George W. Stewart, for appellant.
D. W Bruckart, Miner & Barto, and Hale, Morgan & Montgomery, for respondent.
On April 24, 1895, N. P. Clarke executed a bill of sale to the defendant McClure of 8,565,323 feet of pine logs then owned by him and of the value of six dollars per thousand feet. McClure paid no money for the logs, but gave his notes, 135 in all, to Clarke for the aggregate amount of $ 51,000, in sums from $ 50 to $ 1,000, covering a period before due from July 5, 1895, to October, 1897, and secured their payment by a chattel mortgage on the logs. At the time of the making of this bill of sale, N. P. Clarke was, and for some years prior thereto had been, engaged individually in the banking business and other enterprises. He was also during the same time, in connection with Frederick H. Clarke under the firm name of N. P. Clarke & Co., engaged in the business of manufacturing and selling lumber. Ten days after the making of the bill of sale, and on May 4, 1895, N. P Clarke and Frederick H. Clarke, individually and as such co-partners, made a general assignment under the insolvency laws of this state for the benefit of creditors to the plaintiff.
The assignee brought this action to set aside such transfer of the logs on the alleged ground that it was made for the purpose of delaying and defrauding creditors, and for the recovery of the logs and the lumber manufactured therefrom, in the hands of the defendant. The trial court found as a fact that the sale was made for the purpose of hindering, delaying, and defrauding creditors, and directed judgment for the plaintiff setting aside the transfer, and for the recovery of the logs and lumber. The defendant appealed from an order denying his motion for a new trial.
1. The defendant, by his assignments of error 1 to 11, inclusive, challenges the correctness of the rulings of the trial court in receiving against his objection and exceptions certain documentary evidence consisting of account books, records, and schedules, duly verified, relating to the business of N. P. Clarke and that of the firm. The evidence was material for the purpose of showing that N. P. Clarke was insolvent at the time he executed the bill of sale. But two specific objections to this evidence were urged by defendant on the argument:
(a) That so much of the evidence as related to the affairs of N. P. Clarke & Co. was immaterial, because it is not alleged in the complaint that the firm was insolvent. But it was alleged that N. P. Clarke was insolvent at the time he made the bill of sale, and it was competent to prove his insolvency, whether alleged or not, as a fact in the chain of evidence tending to establish the alleged ultimate fact that the sale was fraudulent as to creditors; and in order to show his insolvency it was proper and necessary to show the financial condition of the firm.
(b) That "it was not claimed that N. P. Clarke had not paid or secured adequately his individual creditors in full; and, besides, the bank was but a small part of his business, and its assets but nominal when compared with his entire assets; and the bank's books, standing alone, were misleading, and had no tendency to sustain any of the issues in the case." But there is no pretense that his creditors were thus secured at the time the bill of sale was made.
If, as claimed, such creditors subsequently accepted McClure's notes in payment of their claims, such fact would not conclusively rebut the fraudulent character of the sale, if it was prima facie established to be such, for the creditors may have accepted the notes because, after the sale of the logs, it was the only practical thing they could do. It is true, the bank was only a part of Clarke's individual business, but it was an important part, and the evidence shows that its assets were slight compared with the amount due depositors, which was some $ 110,000, and that Clarke was anxious to secure an extension of the time of payment of these claims. The evidence objected to was competent, not only as tending to show insolvency, but also the probable motive of Clarke in making the bill of sale.
Assignment 12 relates to the admission in evidence, over defendant's objection, of a list of lands sold by Clarke to McClure the January previous to the making of the bill of sale. When this list was offered, it already appeared in the evidence that Clarke, on January 12, 1895, conveyed to the defendant $ 80,000 worth of land, who paid nothing for it except to give back his notes for the purchase price, secured by a mortgage on the land. The deed for this land was not recorded until after the bill of sale in question was made. The list here referred to was offered and received as a part of the cross-examination of the defendant, simply to identify the lands, as to which the defendant had already testified. It was properly received for this purpose, as the objection was that the list was not relevant or material.
Assignments of error 13 and 14 do not seem to be relied upon by the plaintiff, as they were not discussed by counsel, either in the brief or on the oral argument. In any event, the alleged error, if it were such, was harmless, as the trial court found in favor of the defendant as to the amount of logs which passed by the bill of sale. The purpose of the evidence which was received over the objection of the defendant, which ruling of the court is the basis of these assignments of error, was to furnish a basis for ascertaining the quantity of logs actually sold to defendant.
2. The defendant, by his assignments of error 15 to 19, inclusive, raises the question that the findings of fact by the trial court, to the effect that Clarke made the transfer of logs with intent to hinder, delay, and defraud his creditors, and that the defendant had notice of such intent, are not sustained by the evidence.
The evidence reasonably tends to support the findings of fact in this respect. The evidence...
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