Newell v. Wagness

• Citation: 1 N.D. 62,44 N.W. 1014
• Parties: Newell et al. v. Wagness, Sheriff.
• Decision Date: 01 April 1890
• Court: North Dakota Supreme Court

1 N.D. 62

44 N.W. 1014

Newell et al.

v.Wagness, Sheriff.

Supreme Court of North Dakota.

April 1, 1890.

Syllabus by the Court.

L., a merchant, was embarrassed financially, and was being pressed by his creditors with demands which he was unable to pay. The plaintiffs, among others, were creditors of L., and were urging him to satisfy their claim. Under these circumstances L. executed and delivered to plaintiffs a bill of sale, absolute on its face, and which purported to sell and convey to plaintiffs all the merchandise then in L.'s store, and all other property in and about the store, including book-accounts and bills receivable. L., at the same time, leased the store-room to plaintiffs, and plaintiffs caused the bill of sale and lease to be filed for record with the register of deeds. At the time the bill of sale and lease were made, and as a part of the same transaction, plaintiffs agreed with L., by an agreement not reduced to writing, that plaintiffs should convert the property described in the bill of sale into money, and out of the money so obtained plaintiffs were to pay their own claim against L. and that of one other creditor. In pursuance of these agreements the plaintiffs took the property described in the bill of sale into their possession. Two days after the plaintiffs took possession of the property it was attached by certain other creditors of L. Held, that the parol agreement reserved a trust in the property in favor of L., and, not being apparent in the bill of sale, was secret, and consequently the transaction was against public policy, and fraudulent in law, and therefore void as to attaching creditors.

Appeal from district court, Ramsey county; Charles F. Templeton, Judge.Miller, Cleland & Cleland, and W. W. Wishart, for appellants. J. F. McGee and D. E. Morgan, for respondent.

Wallin, J.

This is an action of claim and delivery, whereby plaintiffs seek to recover a stock of merchandise, including safe, store fixtures, book-accounts, and bills receivable, seized by defendant as sheriff, under writs of attachment issued in actions instituted by the creditors of one T. T. Lee. The case was tried without a jury, and the district court filed its findings of fact and conclusions of law, and directed that judgment be entered for a return of the property to the defendant, or, in case a return could not be had, for the value thereof to the amount of the attachment liens. Among the facts found by the trial court are the following: That at the time in question defendant was sheriff of Ramsey county, and as such sheriff, on December 8, 1888, seized the property in question, while it was in plaintiffs' possession, upon writs of attachment issued in actions instituted against one T. T. Lee by the creditors of Lee; that on December 6, 1888, said Lee was the owner of and in the actual possession of said property, the same being situated in the lower story of a store building then owned by Lee at Devil's Lake, Ramsey county, Dak.; that on said 6th day of December, besides debts due the attachment creditors, Lee was indebted to the plaintiffs in the sum of $2,959.07, which amount was unsecured, and indebted to the Merchants' National Bank of Devil's Lake in the sum of $2,486.04, which last-mentioned indebtedness was secured by mortgage upon the store building of said Lee, the upper rooms of which building were the home of Lee and his family; that on said December 6th, and long prior thereto, said Lee was insolvent, and was being pressed for payment by various creditors; that the plaintiffs well knew that Lee was insolvent, and was being pressed for payment by his creditors, and had such knowledge at the time they took possession of the property under a bill of sale and lease from Lee, as hereinafter stated; that on said 6th day of December one W. S. Stockdale, an agent of plaintiffs, was at Devil's Lake, and then and there, in plaintiffs' behalf, took the entire property into plaintiffs' possession, the same being delivered to plaintiffs by Lee; that as a part of the same transaction, whereby the plaintiffs obtained possession of the property, Lee executed a lease of the store in which the goods were situated to plaintiffs, and also, for an expressed consideration of $5,800, made, executed, and delivered a bill of sale of all of said merchandise and property, absolute in form, to the plaintiffs; that plaintiffs continued in possession of said property in said store until the seizure was made under the writs of attachment upon the 8th day of December, as before stated. The trial court also finds the following facts: “That at the time of the execution and delivery of the above bill of sale, and as a part of the same contract, it was orally and privately agreed between the plaintiffs and the said Lee that said bill of sale, and the property described therein, was to be received by said Newell & Co merely as security for the amount due from said Lee to the plaintiffs, which amounted at that time to about $2,900; and also as a part of the same agreement and contract, but also resting in parol, the said Newell & Co. agreed with said Lee to convert said property into cash, and after paying their own claim against said Lee to pay a mortgage on the homestead of said Lee, amounting to $2,486.04, which was then held by the Merchants' National Bank of Devil's Lake, and after making such payments return the surplus to said Lee; that the plaintiffs at once, after the making of the above contract, and under and pursuant to the terms thereof, took possession of all of the property above described, and retained such possession until dispossessed by the defendant under the attachment above mentioned; that the plaintiffs caused said bill of sale to be filed for record in the office of the register of deeds of Ramsey county, Dak., on the 7th day of December, 1888, at 8 o'clock a. m.; that said bill of sale has ever since said date remained on file in said office; that said bill of sale was reported by the R. G. Dun & Co. Commercial Agency on the day or the day after said bill of sale was so filed for record; that the attachment creditors, Tarbox, Schliek & Co., learned of the existence of said bill of sale from the report of said R. G. Dun & Co. about the date of said bill of sale, and also learned of the existence of said bill of sale from letters written from Devil's Lake to said Dun & Co.; that the attachment creditors, Wyman, Mullin & Co., learned of the existence of said bill of sale on the date the same was filed for record, from a telegram from their attorney at Devil's Lake; that there was no evidence offered on the trial to show that the attaching creditors mentioned in the defendant's answer knew of the existence of the oral agreement which accompanied said bill of sale; that said Lee, at the time said bill of sale was executed, and as a part of the same transaction, by a written lease, leased his store building in Devil's Lake, Dak., in which the property described in the bill of sale was located, to the plaintiffs for the period of three months, with the privilege of one year, for $30 per month; that said lease was filed in the office of the register of deeds of Ramsey county, Dak., at the same time the bill of sale was filed; the property described in the above bill of sale was all the property, real or personal, owned by said Lee on the date of said bill of sale, which was not exempt from execution, except one quarter section of land, worth about $500, which land is subject to two mortgages, amounting in the aggregate to $665; that at the time when said Lee entered into the above-mentioned contract with the plaintiffs he had fully determined to stop business, and surrender said property therein described to the plaintiffs for the purpose stated in the oral agreement which accompanied said bill of sale; that the store building used by said Lee as a store on the 6th day of December, 1888, was at said time the homestead of said Lee, and was exempt from execution; that said Newell & Co., on the 6th day of December, 1888, and for some time prior thereto, knew that said building was the homestead of said Lee; that said homestead on said last-mentioned date was of the value of $3,000, and was ample security for the mortgage of $2,486.04 held by the Merchants' National Bank of Devil's Lake against the same, and was so considered by the said bank, and said bank on said 6th day of December, 1888, so informed the plaintiffs and said Lee; that the provision made by said Lee and the plaintiffs in the oral agreement above mentioned, by which the mortgage to said bank was to be paid out of the proceeds of the sale of the property...