Krause v. Krause
| Decision Date | 08 March 1915 |
| Docket Number | 1905 |
| Citation | 151 N.W. 991,30 N.D. 54 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Richland County, Allen, J.
Action to have a trust relation with reference to real property declared and to require a reconveyance of such property to plaintiff, and to have a decree by which a mortgage shall be adjudged not a lien.
Reversed.
W. S Lauder and Purcell, Divet, & Perkins, for appellant.
It is an elementary principle of law that a conveyance will be deemed fraudulent as to creditors only when it in some way operates to hinder, delay, or defraud such creditors.
Fraud consists of some unlawful conduct that operates prejudicially upon the rights of others. Bump, Fraud. Conv. p. 19; Bates v. Callender, 3 Dakota 259, 16 N.W. 506; First Nat. Bank v. North, 2 S.D. 480, 51 N.W. 96; Kvello v. Taylor, 5 N.D. 76, 63 N.W. 889; Dalrymple v. Security Improv. Co., 11 N.D. 65, 88 N.W. 1033; Kettleschlager v. Ferrick, 12 S.D. 455 76 Am. St. Rep. 623, 81 N.W. 889; Commercial State Bank v Kendall, 20 S.D. 314, 129 Am. St. Rep. 936, 106 N.W. 53.
Plaintiff's interest in the property was assigned to Herman, to be held by him merely in trust, and not as his own. The assignment, therefore would not and could not in law be fraudulent. Bump, Fraud. Conv. p. 453; Wait, Fraud. Conv. p. 404; Teal v. Scandinavian-American Bank, 114 Minn. 435, 131 N.W. 486; Livingston v. Ives, 35 Minn. 55, 27 N.W. 74; Over v. Carolus, 171 Ill. 552, 49 N.E. 514; Halloran v. Halloran, 137 Ill. 100, 27 N.E. 82; Dyer v. Homer, 22 Pick. 253; Clemens v. Clemens, 28 Wis. 637, 9 Am. Rep. 520; Harvey v. Varney, 98 Mass. 118; Fairbanks v. Plackington, 9 Pick. 96; Drinkwater v. Drinkwater, 4 Mass. 354; Oriental Bank v. Haskins, 3 Met. 332, 37 Am. Dec. 140; Crowninshield v. Kittridge, 7 Met. 520; Nichols v. Patten, 18 Me. 231, 36 Am. Dec. 713; Andrews v. Marshall, 43 Me. 272; Moore v. Meek, 20 Ind. 484; Springer v. Drosch, 32 Ind. 486, 2 Am. Rep. 356; Hoeser v. Kraeka, 29 Tex. 450; Davis v. Ranson, 26 Ill. 105; Lawton v. Gordon, 34 Cal. 36, 91 Am. Dec. 670; Jones v. Rahilly, 16 Minn. 320, Gil. 283; Gowan v. Gowan, 30 Mo. 472; Smith v. 49 & 56 Quartz Min. Co., 14 Cal. 242; Brooks v. Martin, 2 Wall. 70, 17 L. ed. 732; Taylor v. Weld, 5 Mass. 109; Dale v. Harrison, 4 Bibb, 65; Clapp v. Tirrell, 20 Pick. 249; Gillespie v. Gillespie, 2 Bibb, 89; Sherk v. Endress, 3 Watts & S. 255; Thompson v. Moore, 36 Me. 47; Burgett v. Burgett, 1 Ohio 469, 13 Am. Dec. 634; Chapin v. Peace, 10 Conn. 69, 25 Am. Dec. 56; Randall v. Phillips, 3 Mason, 378, Fed. Cas. No. 11,555; Byrd v. Curlin, 1 Humph. 466; Crawford v. Osmun, 70 Mich. 561, 38 N.W. 573; Irwin v. Longsworth, 20 Ohio 581; Ballard v. Jones, 6 Humph. 455; Still v. Buzzell, 60 Vt. 478, 12 A. 209.
Open, notorious and adverse possession of real property is notice to the world of every right or interest owned or held by the person in possession--legal or equitable--or whether such right is an interest in the land itself, or a mere right of possession or to rents and profits. Hedlin v. Lee, 2 N.D. 495, 131 N.W. 390; O'Toole v. Omile, 8 N.D. 444, 79 N.W. 849; 48 Century Dig. p. 775, § 540.
Dan R. Jones and Wolfe & Schneller, for respondents.
The original transfer of title to the land involved, to Herman Krause, was in fraud of the creditors of the plaintiff and her husband, John Krause. They transferred the land to Herman Krause with the expectation and the hope that he could and would settle certain claims against them for a less or reduced amount. This, in itself; was a fraud. Rev. Codes 1905, § 6637, Comp. Laws 1913, § 7220.
Latze's claim, the one they were trying to get settled at a reduced amount, was in judgment, and that judgment was conclusive of the amount of the debt and of its validity. Salemonson v. Thompson, 13 N.D. 182, 101 N.W. 320; Soly v. Aasen, 10 N.D. 108, 86 N.W. 108; Greer v. Wright, 52 Am. Dec. 111 and note, 6 Gratt. 154; Minnesota Thresher Mfg. Co. v. Schaack, 10 S.D. 511, 74 N.W. 445; Ferguson v. Kumler, 11 Minn. 104, Gil. 62; Pabst Brewing Co. v. Jensen, 68 Minn. 293, 71 N.W. 384; Burgess v. Simonson, 45 N.Y. 225; Goodnow v. Smith, 97 Mass. 69; Mosgrove v. Harris, 94 Cal. 162, 29 P. 490.
It is immaterial that a grantee in a voluntary deed knew nothing of the fraud on the part of a grantor. Peek v. Peek, 77 Cal. 106, 1 L.R.A. 185, 11 Am. St. Rep. 244, 19 P. 227; Lee v. Figg, 37 Cal. 328, 99 Am. Dec. 271.
A conveyance with intent to defraud creditors is void though there may have been full and valuable consideration paid therefor. Swinford v. Rogers, 23 Cal. 233; Ridell v. Shirley, 5 Cal. 488; Salemonson v. Thompson, 13 N.D. 182, 101 N.W. 320; Salisbury v. Burr, 114 Cal. 451, 46 P. 270; Lockren v. Rustan, 9 N.D. 43, 81 N.W. 60.
A conveyance, though void as to creditors, vests the legal title in the grantee, and a judgment against such grantee is a lien upon the land so conveyed. Faber v. Wagner, 10 N.D. 287, 86 N.W. 963; Kerr's Code (Cal.) § 3439, note 2; First Nat. Bank v. Eastman, 144 Cal. 487, 103 Am. St. Rep. 95, 77 P. 1043, 1 Ann. Cas. 626; Jones v. Jones, 20 S.D. 632, 108 N.W. 23; Sickman v. Lapsley, 15 Am. Dec. 599, note; Carll v. Emery, 1 L. R. A. 618, note; Bigby v. Warnock, 115 Ga. 385, 57 L.R.A. 754, 41 S.E. 622; Gilliland v. Fenn, 9 L.R.A. 415, note; Lawton v. Gordon, 34 Cal. 36, 91 Am. Dec. 670; McMinn v. Whelan, 27 Cal. 300; Robinson v. Blood, 64 Kan. 290, 67 P. 842; Durand v. Higgins, 67 Kan. 110, 72 P. 567; Poppe v. Poppe, 114 Mich. 649, 68 Am. St. Rep. 503, 72 N.W. 612; Massi v. Lavine, 139 Mich. 140, 102 N.W. 665; Ratliff v. Ratliff, 102 Va. 880, 47 S.E. 1007; Flannery v. Coleman, 112 Ga. 648, 37 S.E. 878.
In such a case the title passes absolutely to the grantee or vendee, or to an innocent purchaser from such vendee. Robb v. Robb, Tex. Civ. App. , 41 S.W. 92; Shields v. Ord, Tex. Civ. App. , 51 S.W. 298; 9 Decen. Dig. Fraud. Conv. p. 1661, § 172; Brady v. Huber, 197 Ill. 291, 90 Am. St. Rep. 161, 64 N.E. 264; Edgell v. Smith, 50 W.Va. 349, 40 S.E. 402.
Where performance was impossible at the time of the suit, and plaintiff knew or was informed at that time of such impossibility, the court, on denying the equitable relief, will not retain the case for the purpose of awarding damages, but will leave him to his legal remedy. 36 Cyc. 747, and note 91; Knudtson v. Robinson, 18 N.D. 12, 118 N.W. 1051.
A grantee accepting a conveyance of land by a deed describing certain mortgages thereon, and expressly declaring that the conveyance was made subject thereto, is estopped thereby to question the validity of the mortgage. American Waterworks Co. v. Farmers Loan & T. Co., 20 C.C.A. 133, 36 U.S. App. 563, 73 F. 956; Freeman v. Auld, 44 N.Y. 50; De Wolf v. Johnson, 10 Wheat. 367, 6 L. ed. 343; Calkins v. Copley, 29 Minn. 471, 13 N.W. 904; Jones, Mortg. §§ 744, 1491, and cases cited; 35 Century Dig. title, Mortgages, col. 1310, § 773; 14 Decen. Dig. title Mortgages, p. 272, § 278.
A principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency. Rev. Codes 1905, Sec. 5788, Comp. Laws 1913, § 6356; Anderson v. First Nat. Bank, 4 N.D. 182, 59 N.W. 1029; Mechem Agency, §§ 314, 315, 484; National Bank v. Merchants' Nat. Bank, 91 U.S. 92, 23 L. ed. 208; 16 Decen. Dig. § 145 (2) p. 1093, notes a, e,--i, and r; 40 Century Dig. Principal & Agent, 159, note e; Firestone v. Firestone, 49 Ala. 128.
POLLOCK, District Judge. GOSS, J., did not sit, nor did he take part in this decision, Honorable Chas. A. Pollock, Judge District Court Third Judicial District, sitting in his stead.
Statement by
This appeal brings up the entire record of the court below. It was tried under the so-called "Newman act," and a new trial in this court is asked. The record covers 311 pages. The facts are many. Having read the entire record and made a grouping of the facts, it is found that but few are in dispute. The mortgages, judgments, liens, deeds, contracts, and other written documents speak for themselves. Disputes which have arisen are more concerning inferences and conclusions to be drawn from conceded or proved facts, rather than with reference to the facts themselves. Certain evidence was offered to which timely and proper objections were interposed. For example, evidence with reference to judgments given long after the transaction in question occurred, and which could have no bearing upon the case, has not been considered. The material facts are as follows: For the purpose of convenience reference hereafter will be made to Herman Krause, the defendant, as Herman; John R. Jones, as Jones; Albertina Krause's husband, as John. On October 16, 1899, one Kinney entered into a contract with the plaintiff and her husband whereby he agreed to sell for $ 1,800, to them, the southwest quarter of 32--130--49. Possession was delivered to plaintiff and John April, 1, 1900. January 1, 1901, plaintiff and her husband Kinney all accrued interest and $ 30.65 on principal. Subsequently Kinney transferred the land to one Hankinson. A new contract was thereupon made between Hankinson, plaintiff and her husband. It was practically a continuation of the Kinney contract. This contract was not introduced in evidence, and cannot be found. Subsequently, and after a part of the purchase price had been paid to Hankinson, plaintiff and her husband assigned the contract to the defendant Herman, a brother of plaintiff's husband. Prior to the time this assignment was made, certain judgments had been taken against plaintiff and her husband, in the following order:
One dated October 11, 1899, in favor of August Brummund for $ 103.70; one dated December 3, 1899, in favor of August Bublits for $...
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