McMillen v. Nelson

• Decision Date: 17 February 1921
• Citation: 181 N.W. 618,47 N.D. 284
• Parties: McMILLEN v. NELSON.
• Court: North Dakota Supreme Court

47 N.D. 284

181 N.W. 618

McMILLEN

v.NELSON.

Supreme Court of North Dakota.

Jan. 29, 1921.

Rehearing Denied Feb. 17, 1921.

Syllabus by the Court.

In September, 1918, the appellant, Nelson, purchased a going retail hardware business from one Zorn. The property transferred by Zorn to Nelson in such transaction consisted of the hardware stock and fixtures, the premises where the business was being conducted, and a certain dwelling house. In consideration of the transfer to him of this property, Nelson conveyed to Zorn certain equities in Minnesota lands, paid him $491.58 in cash, and assumed and agreed to pay debts which Zorn owed to certain wholesale houses. Among the claims which Nelson assumed and agreed to pay was one in favor of Farwell, Ozmun, Kirk & Co. On September 25, 1918, Nelson settled such claim by paying Farwell, Ozmun, Kirk & Co. $468 in cash, and executing and delivering to it certain notes for the balance of the claim. In the transaction between Nelson and Zorn there was no attempt whatsoever to comply with the provisions of the so-called Bulk Sales Law (sections 7224-7227, Comp. Laws 1913). On August 16, 1919, upon proceedings instituted by certain creditors, a receiver was appointed to take charge of the hardware stock and distribute the proceeds thereof pro rata among the creditors entitled thereto. On December 15, 1919, Farwell, Ozmun, Kirk & Co. executed a written assignment to Nelson of the claim which it had against Zorn on September 25, 1918. Nelson at no time rescinded or attempted to rescind the transaction with Zorn. On or about December 29, 1919, Nelson, claiming to be the owner of such claim, presented it to the receiver for allowance. The receiver rejected it. The trial court sustained the action of the receiver. Held, that the trial courts' ruling was correct.

Appeal from District Court, Bottineau County; Burr, Judge.

Proceedings for the allowance of the claim of A. N. Nelson against Geo. P. McMillen, receiver. From an order rejecting the claim, claimant appeals. Affirmed.

Grace and Robinson, JJ., dissenting.

H. B. Nelson, of Rugby, for appellant.

W. H. Adams, of Bottineau, for respondent.

CHRISTIANSON, J.

In September, 1918, the appellant, Nelson, purchased from one Zorn a hardware store located at Gardena, in Bottineau county, in this state. The appellant purchased the entire business, including the premises where the business was transacted, the fixtures, and the stock. In consideration of the transfer to him of this property, Nelson conveyed to Zorn certain lands in Minnesota subject to certain mortgages (the payment of which was assumed by Zorn); paid him some $491.58 in cash, and assumed and agreed to pay debts owing by Zorn to certain wholesale houses. Among the claims which Nelson assumed and agreed to pay was one in favor of Farwell, Ozmun, Kirk & Co. in the sum of $4,947.84. Part of this claim was represented by open account and part by notes. On September 25, 1918, Nelson paid this claim, part in cash and in part by giving his notes, all of which were later paid. In the transaction between Nelson and Zorn there was no attempt to comply with the provisions of the so-called Bulk Sales Law of this state. On November 21, 1918, the Bottineau County Bank, one of the creditors of Zorn, brought an action and caused an attachment to be levied upon the hardware stock. On August 16, 1919, the Bottineau County Bank (and other creditors of Zorn) made application to the district court for the appointment of a receiver to take charge of the hardware stock. In that application it was stated that such creditors had instituted actions on debts existing prior to the sale by Zorn to Nelson, and that such sale was made without any compliance whatsoever with the provisions of the Bulk Sales Law of this state. The application for the appointment of a receiver came on to be heard pursuant to stipulation between the attorney representing the creditors of Zorn and the attorney representing the appellant, Nelson. A receiver was accordingly appointed,and he forthwith qualified and entered upon the discharge of his duties. On December 15, 1919, Farwell, Ozmun, Kirk & Co. executed a written assignment in which it is recited:

That it “does hereby sell, assign, transfer, and set over onto the said party of the second part (Nelson), his heirs, executors, administrators, and assigns, without recourse upon the first party (Farwell, Ozmun, Kirk & Co.), all of the right, title, and interest first party has or had in and to that certain account with one T. H. Zorn, of Gardena, N. D., * * * on which account there was due on the 25th day of September, 1918, the sum of $4,947.84, * * * said sum of $4,947.84 being for goods, wares, and merchandise sold and delivered by first party to the said T. H. Zorn, prior to the 25th day of September, 1918, and on which there remains due to the first party from the said T. H. Zorn on said day said sum of $4,947.84.”

Nelson presented this claim to the receiver, who rejected it. At the time the receiver's report was presented, Nelson objected to the disallowance of his claim, and the matter came on for hearing before the district court with the result that an order was entered sustaining the action of the receiver.

The sole question presented on this appeal is the correctness of the order made by the district court. The only papers certified to this court on appeal are the summons, complaint, affidavit for attachment, undertaking in attachment, warrant of attachment, sheriff's return, application for appointment of receiver, stipulation for hearing of such application, order appointing receiver, assignment of claim by Farwell, Ozmun, Kirk & Co. to Nelson, proof of claim by Nelson, order of receiver disallowing claim, report of receiver, objections to disallowance, order to show cause hearing receiver's report, order confirming receiver's report, application for and order enlarging time in which to procure “a transcript of the proceedings had in said matter of the official stenographer reporting the same,” stipulation as to the papers to be certified to this court, order identifying such papers, notice, and undertaking on appeal. We have no means of knowing what proceedings were had or what proofs were adduced upon the hearing before the trial court; for, although the record before us shows that the time was enlarged in which to obtain a transcript of the proceedings had before the trial court, such transcript is not in the record. However, there is apparently little or no dispute as to the transaction between Nelson and Zorn. In his brief on this appeal appellant says:

“It was agreed in the deal that Nelson was to take over the payment of the amounts owing the wholesale houses, and that Zorn was to take over the payment of the amount due on the mortgages on the land. The value of Nelson's interest in the land was estimated, and it was agreed that an inventory of the hardware stock should be taken, and, if inventoried below a certain amount, Zorn was to pay up the deficiency, and, if more than a certain amount, Nelson was to pay the difference to Zorn. Thereafter, and on September 18, 1918, the inventory was taken, and on September 25, 1918, Nelson was given the possession of the hardware business and Zorn was given possession of the Minnesota land. In conformity with the agreement between Nelson and Zorn, Nelson did take over the payment of the wholesale accounts. It is the account of Farwell, Ozmun, Kirk & Co. against Zorn, as it existed on September 25, 1918, that is the basis of the controversy in this case. * * *

There had been no compliance with the Sales in the Bulk Law, as Nelson was informed when inquiry of Zorn was made that all his indebtedness consisted of the accounts he owed to the wholesale houses. Zorn, however, did have other creditors, and thereafter several of them instituted actions upon their claims against Zorn and attached the hardware stock and subsequently applied to the court for the appointment of a receiver to distribute the proceeds of the stock pro rata among the creditors of Zorn.”

In his brief the respondent says:

“The respondent desires to supplement appellant's statement of facts. Besides the hardware stock and fixtures, the defendant Zorn sold to claimant A. N. Nelson a store building and lot and a dwelling house and lot, both in Gardena, N. D. As consideration for the hardware stock and fixtures, store building and lot and dwelling and lot, claimant A. N. Nelson transferred to defendant Zorn an equity in real property in the state of Minnesota, paid him $491.58 in cash, and assumed and agreed to pay the indebtedness owing by said Zorn to Farwell, Ozmun, Kirk & Co., the amount of which was $4,947.84. This claim was evidenced by notes executed and delivered by Zorn to Farwell, Ozmun, Kirk & Co. Claimant Nelson paid Farwell, Ozmun, Kirk & Co. a part of this claim and gave them his notes for the balance, and, having paid such notes, Farwell, Ozmun, Kirk & Co., thereupon transferred their Zorn notes and assigned their Zorn account to claimant Nelson. We desire to emphasize the fact that claimant Nelson assumed and agreed to pay Zorn's indebtedness to Farwell, Ozmun, Kirk & Co. as a part of the purchase price which he paid Zorn for the hardware stock and fixtures, the store building and lot and the dwelling and lot which he bought from Zorn. And it is the same $4,947.84 which he paid, or assumed and agreed to pay, Farwell, Ozmun, Kirk & Co. that he claims should be repaid to him out of the Zorn stock of merchandise and fixtures in the hands of the receiver McMillen. Nelson also filed with the receiver a claim for the $491.58 which he paid Zorn as part consideration. This claim was also disallowed, but no appeal is taken from its disallowance.

The contract which claimant Nelson made with Zorn has never been rescinded. Zorn still retains the money paid him by Nelson and the Minnesota land. Nelson retains the store building and...