Livingston v. Ives

• Decision Date: 04 March 1886
• Citation: 27 N.W. 74,35 Minn. 55
• Parties: LIVINGSTON AND OTHERS v IVES AND OTHERS.
• Court: Minnesota Supreme Court

35 Minn. 55

27 N.W. 74

LIVINGSTON AND OTHERSvIVES AND OTHERS.

Supreme Court of Minnesota.

Filed March 4, 1886.

Appeal from an order of the district court, Ramsey county, denying defendants' motion to vacate decision and new trial.

J. B. & W. H. Sanborn, for respondents, Harriet L. Livingston and others.

Cole & Bramhall, for appellants, Mary E. Ives and others.

BERRY, J.

The main controversy in this case is as to whether a certain deed of real estate executed by John B. Livingston to Ruth L. Swift was an absolute conveyance, as it purported to be on its face, or in legal effect a mortgage. The complaint alleges that it was given to secure an indebtedness, and is therefore a mortgage, from which it is the object of this action to redeem. The answer (1) denies the allegations of the complaint to the effect that the deed was a mortgage, and (2) avers that it was given in payment of, and not as security for, an indebtedness.

In the course of the trial evidence came out tending, as defendants claim, to show that the deed was made, in part at least, for the purpose of hindering and delaying Livingston's creditors. The court by which the action was tried having made no finding with reference to this evidence, the defendants' counsel moved for an additional finding as to whether or not such hindering and delaying of creditors was “one of the motives or objects of Livingston in executing such absolute deed instead of a mortgage, *** he then being in embarrassed circumstances and insolvent, by creating the impression that he *** had no remaining interest in said property.” Defendants insisted (1) that the finding was material to the issues involved in the action, and (2) that a finding in the affirmative was justified by the evidence; but the court refused to make the additional finding.

For at least two reasons we are satisfied that the refusal was right:

1. Because no intent (in making the deed) fraudulent as respects Livingston's creditors is set up or suggested in the answer, which, on the contrary, is confined to the defenses already mentioned. In fact the defense shadowed forth in the request for an additional finding is not only not embraced in the issues of the pleadings, but it is inconsistent with the denial (in defendants answer) that the deed was a mortgage at all, and the further averments that it was given as payment, not as security. But irrespective of this latter consideration,the settled rules of pleading (especially under the Code) require that matters in confession and avoidance, like the defense in question, must be affirmatively and specially pleaded. A mere denial does not cover them. Finley v. Quirk. 9 Minn. 194, (Gil. 179;)Brown v. Eaton, 21 Minn. 409;Gunderman v. Gunnison, 39 Mich. 313;Adams v. Adams, 25 Minn. 72, 76; Haigh v. Kaye, 7 Ch. App. 469.

The defendants rely upon an exception to this rule of pleading, viz., that where evidence not relevant to the issues in the pleadings is admitted without objection, it is sometimes allowed all the force which it would have had if properly pleaded. That exception is not applicable to a case like the present, where evidence is received which is pertinent to the issues therein, and which would also be pertinent to another issue which might have been but is not made by the pleadings, in which case its reception is not a waiver of an objection to the considerations of such other issue. City of Winona v. Minnesota Const. Co., 27 Minn. 415;S. C. 6 N. W. Rep. 795, and 8 N. W. Rep. 148;Williams v. Mechanics' & T. F. I. Co., 54 N. Y. 577;O'Neil v. Railroad Co., 33 Minn. 489;S. C. 24 N. W. Rep. 192. Neither would its introduction be such waiver when introducing evidence pertinent to the issues made by the pleadings. The party could not avoid also introducing the evidence not thus pertinent, as where, as in some instances upon the trial in this case, both kinds of evidence were found in the same instrument of evidence, e.g., a letter; and it may be added that upon the record this is not a case in which (as is sometimes said) the course and conduct of the trial have any tendency to show that it was had upon any theory expressed or acquiesced in that the matter of fraud upon creditors was in fact at issue or involved in the action.

With reference to a class of authorities cited by counsel, we note a distinction between evidence coming into a case, but not pertinent to the issues, which shows moral or criminal turpitude or a clear violation of settled public policy, and such evidence when only showing a private fraud. This distinction is adverted to in Harvey v. Varney, 98 Mass. 118, and Oscanyan v. Arms Co., 103 U.S. 261, and seems to rest upon the ground that to overlook or disregard evidence of the first kind mentioned would be to lend a disgraceful countenance and sanction to violations of law. From the memorandum filed by the trial court it appears that the additional finding was refused upon the ground that it was “immaterial.” Strictly speaking, so far as it was proper to refuse the finding on the ground that the fraudulent intent towards creditors was not pleaded, it would be because such finding would be irrelevant, (i. e., to the issues,) rather than immaterial, though these words are used more or less interchangeably. However, if the refusal was proper, the precise reason given for it is not important.

2. We are further of opinion that the refusal to make the additional finding was right because it would have been strictly immaterial. That is to say, a finding that the hindering and delaying of his creditors was one of Livingston's motives or objects in executing the deed in question would not affect his right to have the deed absolute in form declared a mortgage so as to entitle him to redeem. There are cases which hold that in respect to a transfer of property made wholly or partly for the purpose of defrauding creditors no relief whatever will be afforded to the party making the transfer, and that as between themselves the parties to the transfer will be left exactly where they are, and to extricate themselves as they may without any aid from the courts of justice; so that in an instance like this at bar, where a deed absolute in form was in fact given and taken as security, and would therefore ordinarily be treated as a mortgage, as has been often held in this court, still if one of the grantor's motives in executing it was to hinder and delay his creditors, he would not be heard to claim that his deed was a mortgage, and that he be permitted to redeem, but would be held strictly and irremediably to the naked and literal terms of his deed. Such are the cases of May v. May's Adm'r, 33 Ala. 203; Weir v. Day, 57 Iowa, 84; and many other adjudications.

Other courts treat a transaction of the kind mentioned as entirely valid between the parties, and as between them enforceable in all its terms. Their reasoning is that not only the parent statute of 13 Eliz., but the statutes since passed in this country, make such transactions voidable only in favor of defrauded creditors, leaving them in all other respects as if no such statute had been enacted; and that the fraud, if one there be, is a strictly private fraud, with which neither the public, nor the courts as guardians of public policy, have any concern, and which is available only to those injured by it. Such is the view taken by Chief Justice PARSONS in Drinkwater v. Drinkwater, 4 Mass. 353; by Chief Justice SHAW in Dyer v. Homer, 22 Pick. 253; and in Harvey v. Varney, 98 Mass. 118;...