McCormick Harvesting Mach. Co. v. Caldwell
| Citation | 106 N.W. 122,15 N.D. 132 |
| Decision Date | 02 February 1906 |
| Court | United States State Supreme Court of North Dakota |
Appeal from District Court, Pembina county; Kneeshaw, J.
Action by the McCormick Harvester Machine Company against the Citizens' Bank of Drayton. Judgment for defendant, and plaintiff appeals.
Affirmed.
W. B Kellogg and Charles F. Templeton, for appellant.
A debtor cannot, as against other creditors, transfer his property to one creditor, by an instrument purporting to convey an absolute title, but in fact as security; such conveyance, irrespective of intent, is a fraud on creditors. First Nat. Bank v. Comfort, 4 Dak. 167, 28 N.W. 855; Lukins et al. v. Aird et al., 6 Wall. 78, 18 L.Ed 750; Switz v. Bruce, 20 N.W. 639; Chenery v Palmer, 6 Cal. 119; section 3849, Rev. Codes 1899; Coburn v. Pickering, 3 N.H. 415; Mitchell et al v. Sawyer et al., 5 N.E. 109; Smith v. Conkwright, 28 Minn. 23, 8 N.W. 876; Kissam v. Edmonston, 1 Ired. Eq. 180.
Where a secret trust is established, an intent to defraud need not be proved--it is a legal inference. Coburn v. Pickering, supra; Phelps v. Curts, 80 Ill. 112; Powers v. Alston, 93 Ill. 587; Emerson v. Bemis, 69 Ill. 537; Moore v. Wood, 100 Ill. 454; Chenery v. Palmer, supra.
A trust is attached to the proceeds of property when converted in money. Wait on Fraud Con., section 177; Ferguson v. Hillman, 12 N.W. 389.
Where property of defendant is shown to be in garnishee's hands, it is presumed to continue there until the contrary is shown. 22 Am. & Eng. Enc. Law, 1243; Farr v. Payne, 40 Vt. 615; Cardee v. Prim, 52 Mo.App. 102; Northrop v. Knott, 114 Cal. 612, 46 P. 599; Diel v. Stegner, 56 Mo.App. 535; Love v. Edmonston, 5 Ired. L. 354; Kidder v. Stevens, 60 Cal. 414; Smith v. Railroad Co., 43 Barb. 225; Laughlin v. C. & N.W. Railway Co., 28 Wis. 204; 1 Rice on Evid., section 42; Rev. Codes 1899, section 5413, subdivision 32.
Non-leviable assets can be reached by garnishment. 9 Enc. Pl. & Pr. 847; First Nat. Bank v. McDonald Mfg. Co. et al., 67 Wis. 373, 28 N.W. 225; LaCrosse Nat. Bank v. Wilson, 74 Wis. 391, 43 N.W. 153.
Change of possession does not purge the transaction of its fraudulent character. Blakeslee v. Rossman, 43 Wis. 116; Stein et al. v. Munch, 24 Minn. 390.
Robert Ferguson, for respondent. M. Brynjolfson and Jeff M. Myers, of counsel.
No intent to hinder, delay or defeat creditors being shown, the same must not be presumed. Allan et al. v. Smith et al., 129 U.S. 465, 9 S.Ct. 338, 32 L.Ed. 732; Smith v. Collins, 94 Ala. 394, 10 So. 334; Rochester v. Sullivan, 11 P. 58; Hempstead v. Johnston, 18 Ark. 123, 65 Am. Dec. 458; Schroeder v. Walsh, 120 Ill. 403, 11 N.E. 70; Prichard v. Hopkins, 52 Iowa 120, 2 N.W. 1028; Graig v. Fowler, 59 Iowa 200, 13 N.W. 116; Adams v. Ryan, 61 Iowa 733, 17 N.W. 159; Gleason et al. v. Wilson et al., 48 Kan. 500, 29 P. 698; McMillan v. Edfast, 50 Minn. 414, 52 N.W. 907; Landauer et al. v. Mack et al., 38 Neb. 8, 57 N.W. 555; Fisher v. Dickenson et al., 84 Va. 318, 4 S.E. 737; Rice v. Jerenson, 54 Wis. 248, 11 N.W. 549.
Fraudulent intent must be shown by direct evidence or circumstances which the law says are conclusive evidence of it. Rochester v. Sullivan, 11 P. 58; Riethmann et al. v. Dodsman, 23 Colo. 202, 46 P. 684; Mathews v. Reinhardt, 149 Ill. 635, 37 N.E. 85; Allen v. Wegstein, 69 Iowa 598, 29 N.W. 625; Pidock v. Voorhies, 84 Iowa 705, 42 N.W. 646, 49 N.W. 1038; Long v. West, 31 Kan. 298, 1 P. 545; Gleason v. Wilson, supra; Hasie v. Connor, 53 Kan. 713, 37 P. 128; Foster v. Hall, 12 Pick. 89, 22 Am. Dec. 400; Kipp v. Lamoreaux, 81 Mich. 299, 45 N.W. 1002; McMillan v. Edfast, 50 Minn. 414, 52 N.W. 907; Landauer v. Mack, supra; Columbus Watch Co. v. Hodenpyl et al., 135 N.Y. 430, 32 N.E. 239; Evans v. Rugee, 57 Wis. 623, 16 N.W. 49; Shores v. Doherty, 65 Wis. 153, 26 N.W. 577.
If circumstances point equally to honesty of purpose and fraudulent design, the former construction must be given. Gregg v. Sayre, 8 Pet. 244, 8 L.Ed. 932; Alabama L. Ins. Co. v. Pettway, 24 Ala. 544; Stiles v. Lightfoot, 26 Ala. 443; Thames v. Rembert, 63 Ala. 561; Dardenne v. Rardwick, 9 Ark. 482; Erb v. Cole, 31 Ark. 554; Bowden v. Bowden, 75 Ill. 143; May v. Gulliman, 105 Ill. 272; Lyman v. Cessford, 15 Iowa 229; Burleigh v. White, 64 Me. 23; Whitfield et al. v. Stiles et al., 57 Mich. 410, 24 N.W. 119; Bear's Estate, 60 Pa. 430; Norton v. Kearney et al., 10 Wis. 443.
Bills of sale given as security are not per se void as to creditors. Chickering v. Hatch, 3 Sumn. 474; McClure et al. v. Smith et al., 14 Colo. 297, 23 P. 786; Ross v. Duggan, 5 Colo. 100; Cathcart v. Grieve et al., 104 Iowa 330, 73 N.W. 835; Fuller v. Griffith et al., 91 Iowa 632, 60 N.W. 247; First National Bank of Peoria v. Jaffray et al., 41 Kan. 694, 21 P. 242; Emmons v. Bradley, 56 Me. 333; Stevens v. Hinckley, 43 Me. 440; Rawson v. Plaisted, 151 Mass. 71, 23 N.E. 722; Muchmore v. Budd, 53 N.J.L. 369, 22 A. 518; Moore v. Roe, 35 N.J.Eq. 90; Rigney v. Talmadge, 17 How. Pr. 556; Haseltine et al. v. Espey et al., 10 P. 423; Gibson v. Seymour, 4 Vt. 518; Parker v. French, 18 Vt. 460; Bigelow v. Topliff, 25 Vt. 273; Samuel v. Kittenger et al., 6 Wash. 261, 33 P. 509; McFarlane v. Louden, 99 Wis. 620, 75 N.W. 394; Rock v. Collins, 99 Wis. 630, 75 N.W. 426; Bump Fraud Con. (3d Ed.) 41; Waite Fraud. Cov. 238.
The indebtedness to the bank, made up of its original claim, with others assumed by it, though constituting an antecedent indebtedness, affiorded a sufficient consideration for the sale. Nat. Bank v. Dickinson, 107 Ala. 265, 18 So. 144; Boston Marine Ins. Co. v. Proctor et al., 168 Mass. 489, 47 N.E. 414; Dick v. Jackman, 37 S.W. 344; Davenek v. Kutzer, 43 S.W. 541; Rickman v. Miller, 18 P. 304.
That the transaction operated to prefer certain creditors to the exclusion of others does not invalidate the sale. Rev. Codes 1899, section 5050; Cutter v. Pollock et al., 4 N.D. 205, 59 N.W. 1062.
The plaintiff brought an action against defendant Caldwell to recover upon a promissory note given by him to the plaintiff. At the time of issuing the summons in the action, the plaintiff also commenced a garnishee action or proceeding against the Citizens' Bank of Drayton and John R. Hogg, claiming that they had money or property in their hands belonging to the defendant. The plaintiff instituted the garnishee action or proceeding by filing and serving the affidavit prescribed by section 5383, Rev. Codes 1899, and the garnishee answered by serving their affidavits prescribed by section 5389, Rev. Codes 1899, in which they denied having any money in their hands belonging to the defendant. The plaintiff took issue upon the allegations of this affidavit, pursuant to section 5393, Rev. Codes 1899. The sole issue for trial was whether the garnishees had any money or property in their hands on November 30, 1901; that being the day on which the garnishee summons was served. Before the trial the plaintiff secured a judgment against Caldwell upon the promissory note described in the complaint, and the judgment roll was received in evidence at the trial. The district court made findings of fact and conclusions of law in favor of the garnishees, and judgment was entered dismissing the garnishee action. The plaintiff has appealed from the judgment, and asks a review of the entire case, under section 5630, Rev. Codes 1899.
There is no practical dispute as to the facts on which the judgment is based. The appeal is founded more particularly upon the conclusions of law which the court made from the facts. The principal facts upon which the garnishee action is based are the following: On and prior to July 6, 1901, the defendant was indebted to the garnishee bank in the sum of about $ 3,550. On that day the defendant executed and delivered to the bank a bill of sale absolute in terms, but in reality as security only, upon about 560 acres of growing flax belonging to the defendant. Under parol agreement made when the bill of sale was executed, the bill of sale was to be security for said sum of $ 3,550, and for such future advances as might thereafter be made by the bank to the defendant. The bill of sale was filed in the office of the register of deeds. Thereafter advances were made by the bank from time to time and notes taken for such advances at times, and sometimes such advances were evidenced by cash slips kept by the bank. Some of these advances were temporary loans made for a short time and paid promptly, and the slips returned or canceled. The defendant retained complete possession of the crop of flax and harvested it and delivered it for shipment in the bank's name to Duluth, and turned over all the shipping bills to the bank, and the proceeds of the flax were remitted to the bank. After the bill of sale was executed and delivered, the defendant made orders upon the bank for the payment of certain claims owed by him to other parties, and these orders were accepted by the bank and the sums paid by it to such persons out of the proceeds of the flax. The first shipment of flax was made on the 19th day of October, 1901. The next shipment was made on or about November 19, 1901. The proceeds of each shipment were remitted to the bank and aggregated about $ 5,148. The bank paid out upon the Caldwell claims, orders and liens due to other persons the sum of $ 1,933, and applied the balance of the money in its hands upon its own debt against Caldwell. This left Caldwell still owing the bank the sum of $ 1,829. The garnishee summons was served on the bank on November 30, 1901.
The plaintiff's contentions in reference to this transaction are: (1) That the bill of sale was void as to...
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