Kleinschmidt v. Dunphy

• Decision Date: 31 August 1869
• Parties: KLEINSCHMIDT et al., respondents, v. DUNPHY, appellant.
• Court: Montana Supreme Court

1 Mont. 118

KLEINSCHMIDT et al., respondents,

v.DUNPHY, appellant.

Supreme Court of the Territory of Montana.

August Term, 1869.

Appeal from the Third District, Lewis and Clarke County.

IN April, 1868, Kleinschmidt commenced this action in behalf of himself and other judgment creditors of B. Morse, surviving partner of the late firm of E. & B. Morse, against said B. Morse and Dunphy, in the district court in Gallatin county. The complaint alleged that Kleinschmidt recovered a judgment against said Morse, as said partner, on March 12, 1868, for $16,957.50; that an execution was issued upon said judgment, and returned by the sheriff on April 2, 1868, wholly unsatisfied; that said judgment had not been paid; that said E. & B. Morse, on October 31, 1867, executed to Dunphy a mortgage upon their real and personal property, to secure the payment of $30,000; that the property was worth $70,000; that the Morses, at the time the mortgage was executed, were indebted to their creditors in the sum of $39,000; that the mortgage was made with the intent to hinder, delay and defraud their creditors by the Morses, who continued in the possession of the property several months after the execution of the mortgage; that the indebtedness described in the mortgage was fictitious, and that the Morses and Dunphy had so stated to divers persons; that the Morses, in October, 1867, owed Dunphy about $6,000, which was to be paid in Helena in flour, under an agreement of the parties; that Dunphy, by means of this mortgage and fictitious indebtedness, had prevented plaintiff, and other judgment creditors of the Morses, from collecting their demands; that Dunphy had forbidden the sheriff to levy upon said property, and the sheriff had returned unsatisfied the executions of creditors of the Morses to the amount of $35,000; that B. Morse, in conjunction with Dunphy, was disposing of the mortgaged property, and had realized over $30,000; that B. Morse and the firm of E. & B. Morse, and Dunphy, had nothing, except this property; and that plaintiff's judgment would remain unpaid if this mortgaged property was not applied to its payment.

The complaint prayed that the mortgage be adjudged fraudulent; that a receiver be appointed; that defendants be enjoined from disposing of the mortgaged property, and that plaintiff have judgment against Dunphy for the remainder due upon his judgment against the Morses.

On June 8, 1868, an amended complaint was filed, which contained the following additional allegations: That B. Morse, partner as aforesaid, on January 3, 1868, executed an assignment to Dunphy of the mortgaged property, and authorized him to dispose thereof, and that this assignment was fraudulent.

On June 22, 1868, Dunphy answered, and denied that the judgment in favor of Kleinschmidt, and against the Morses, was legally obtained. He alleged that the Morses made the mortgage on October 31, 1867, in good faith, to secure their indebtedness to him; that this indebtedness, with interest, was $30,000, and that he had received on account of the mortgage about $16,000. The material allegations of the complaint were denied.

The answer of B. Morse, which was substantially the same as that of Dunphy, was filed on June 22, 1868. The replication denying the new matter, set forth in the answers of Morse and Dunphy, was filed on the same day.

On June 23, 1868, C. E. Duer was made a party plaintiff upon his petition, which set forth that he was a judgment creditor of B. Morse, as surviving partner, in the sum of $15,410.05. The complaint contained the same allegations as that of Kleinschmidt, and admitted a payment on the judgment of $250.98. Dunphy's answer to this complaint, and Duer's reply to the same, stated no new matter.

The appearance of B. Morse was withdrawn on June 27, 1868. The parties changed the place of trial to Lewis and Clarke county by agreement, and the case was tried by a jury in March, 1869.

During the trial Kleinschmidt testified as follows: “I had a conversation with Elkanah Morse, one of the firm of E. & B. Morse, in latter part of October, 1867; Elk. Morse showed me an agreement between E. M. Dunphy and E. & B. Morse, in which Dunphy agreed to cancel a certain mortgage made by him, whenever E. & B. Morse wanted Dunphy to do so; the paper was signed E. M. Dunphy; I recognized the handwriting as Dunphy's; I think the amount of the mortgage was stated, but don't recollect; I think the body of the instrument was in the handwriting of Elkanah Morse.”

Dunphy denied that any such agreement was ever executed, and excepted to the ruling of the court, KNOWLES, J., in allowing the testimony to be introduced.

Kleinschmidt also testified that E. Morse told him he had executed a mortgage on all his property to Dunphy; that he did not intend that Hamilton and Herron should make any thing out of him, but the mortgage was not intended to affect his other creditors; that the agreement he showed him would protect him against Dunphy; that he had purchased $6,000 or $7,000 worth of goods from Dunphy, which he was to pay in flour; that he would keep the mortgage and agreement in his possession and be safe; that his property was worth $45,000; that all of his indebtedness would be paid; and that the suit of Hamilton and Herron would probably go against him, and he would not put the mortgage on record unless in case of emergency.

Dunphy objected to the introduction of these declarations of E. Morse, made in the foregoing conversation in his absence. The objection was overruled, and defendant excepted.

Other witnesses testified regarding the declarations of E. Morse or B. Morse, concerning the mortgage in controversy, its amount, the manner of its payment, and the amount of the indebtedness due from the Morses to Dunphy on account of the mortgage, all of which were made in the absence of Dunphy. The defendant objected to the introduction of this testimony, and excepted to the ruling of the court in admitting it.

The court submitted to the jury twenty-one issues of fact, and instructed them that three-fourths of their number could find a verdict. The jury returned the findings upon these issues, in most of which nine jurors concurred and three dissented. The defendant objected to the entry of the verdict, because it was found by nine jurors. This objection was overruled, and defendant excepted.

On April 2, 1869, the court, KNOWLES, J., signed a decree in favor of plaintiff for $35,737, and $7,149 costs, in accordance with the findings. The motion of defendant for a new trial was denied, and defendant appealed.

Elkanah Morse, of the firm of E. & B. Morse, died on December 4, 1867. The judgment in favor of Kleinschmidt against Morse, which is referred to in the pleadings, was the subject of an appeal to this court in December, 1868; 1 Mont. 100.

CHUMASERO & CHADWICK, SHOBER & LOWRY, WORD & SPRATT and W. F. SANDERS, for appellant.

No lawful verdict was found by the jury, as twelve jurors did not agree in finding it. U. S. Const., Amend. 5 and 7; Organic Act, § 6; 1 Story's Eq., §§ 60, 72, 76; 3 Bl. Com. 431; 432; Sedgw. Stat. and Const. Law, 545, 546; 10 Bacon's Abr. 306, 315; 9 Id. 564; 2 Bouv. Law Dict. 622; Id. 113, 584; 3 Greenl. Ev., §§ 260, 264; 2 Sto. Const., § 1763; Smith v. Pollock, 2 Cal. 94; Whit. N. Y. Prac. 391; 2 Lead. Cr. Cas. 327; Kruger v. Hudson R. R. R. Co., 12 N. Y. Ap. 198.

Oral evidence cannot be substituted for any written instrument, the existence of which is in dispute, and the production of which is material to the issues between the parties or the credit of the witnesses. 1 Greenl. Ev., § 88; 1 Phil. Ev., § 475; 2 Phil. Ev., § 422.

The respondent was enabled, by this improper testimony, to establish a false foundation for introducing evidence of the declarations of E. & B. Morse. There was no evidence that Dunphy or B. Morse ever had this instrument. Dunphy was the only party defending this suit, and the statutory rule, to produce papers, does not apply. Acts 1867, 220, § 422. Dunphy and B. Morse swear that no such instrument was ever executed. There was no evidence that Dunphy ever had any control over said instrument. How could Dunphy produce an instrument which he did not possess or control, and the existence of which he had denied under oath?

DAVIS & THOROUGHMAN and WOOLFOLK & TOOLE, for respondent.

Kleinschmidt could testify as to the contents of the writing executed by Dunphy to E. & B. Morse, after notice to produce the original had been served, and after B. Morse had been interrogated concerning its execution. Every means to obtain the original had been exhausted, and parol evidence of its contents was proper. 1 Greenl. Ev., §§ 82 to 91; Prac. Act 1867, §§ 380, 421, 422; Gordon v. Searing, 8 Cal. 49;Hayden v. Palmer, 2 Hill, 205.

The declarations of the Morses were not proved until evidence had been introduced showing collusion between them and Dunphy to defraud creditors, and that the Morses remained in the possession of the mortgaged property and exercised acts of ownership over it, after they claimed to have delivered it to Dunphy. The question as to the foundation for the admission of this evidence was for the discretion of the chancellor below. In this case that discretion was properly exercised. 2 Phil. Ev. 177, 602; Adams v. Davidson, 6 Seld. 309;Landecker v. Houghtaling, 7 Cal. 392;Ellis v. Janes, 10 Id. 456;Visher v. Webster, 8 Id. 113;Swartz v. Hazlett, Id. 128;Seligman v. Kalkman, Id. 213.

The verdict of nine jurors was lawful. Acts 1869, 66, § 15.

Appellant took no valid exception to the charge of the court, directing that nine jurors should return a verdict. Exceptions to the whole charge, without pointing out the specific part excepted to, will not be regarded by this court if any portion of the charge is correct. Acts 1867, §§ 188, 189; Hicks v. Coleman, 25 Cal. 146;More v. Del Valle, 28 Id. 174;Jones v. Osgood, 2 Seld. 234; Hunt v. Maybee, 3 Id. 266.

All the authorities are clear that a...