Reitsch v. McCarty

• Decision Date: 14 September 1916
• Citation: 160 N.W. 694,35 N.D. 555
• Court: North Dakota Supreme Court

160 N.W. 694

35 N.D. 555

E. R. REITSCH and W. C. MCClintock v. JOHN MCCARTY

Supreme Court of North Dakota

September 14, 1916

[Copyrighted Material Omitted]

Rehearing denied December 30, 1916.

Appeal from the District Court of Pierce County, Burr, J.

Action to determine adverse claims.

Judgment for plaintiffs. Defendant appeals.

Reversed.

Reversed and remanded, with directions. Costs and disbursements taxed against the plaintiffs.

Albert E. Coger and F. T. Cuthbert, for appellant.

In the matter of pleadings, the legislature did not intend to eliminate the necessity of a reply to a counterclaim against plaintiff. Comp. Laws, §§ 7526, 7527, 8521.

Plaintiffs are now clearly estopped to reverse their position as to the reply being a proper pleading in this case. Sullivan v Traders' Ins. Co. 169 N.Y. 213, 62 N.E. 147.

The general rule is that parties are bound by, and estopped to controvert, allegations or admissions in their own pleadings. 31 Cyc. 87; Myrick v. Bill, 3 Dak. 284, 17 N.W. 268.

Nor can a party obtain relief on a different theory from that upon which his pleading rests. 21 Enc. Pl. & Pr. 649, 650.

The provision of the instrument of assignment relating to the transfer of all property did not operate of itself to transfer real property. There was no actual transfer, and the assignment itself was invalid. MacLaren v. Kramar, 26 N.D. 244, 50 L.R.A.(N.S.) 714, 144 N.W. 85; 2 R. C. L. 680.

Where the assignment of a sheriff's certificate is unambiguous, the court will give it effect according to the natural and obvious meaning of the language employed, and parol evidence is inadmissible to vary its terms. Behr v. Gerson, 95 Ala. 438, 11 So. 115; Flynn v. Butler, 189 Mass. 377, 75 N.E. 730; Dunbar v. Montreal River Lumber Co. 127 Wis. 130, 106 N.W. 389; Thomas v. Board of Education, 81 N.J.Eq. 186, 86 A. 412; Weed v. Jewett, 2 Met. 608, 37 Am. Dec. 115; Hennessy v. Griggs, 1 N.D. 52, 44 N.W. 1010; Northwest Fuel Co. v. Bruns, 1 N.D. 137, 45 N.W. 699; National German American Bank v. Lang, 2 N.D. 66, 49 N.W. 414; Edwards & McC. Lumber Co. v. Baker, 2 N.D. 292, 50 N.W. 718; Plano Mfg. Co. v. Root, 3 N.D. 165, 54 N.W. 924; Hutchinson v. Cleary, 3 N.D. 270, 55 N.W. 729; William Deering & Co. v. Russell, 5 N.D. 319, 65 N.W. 691; Fletcher Bros. v. Nelson, 6 N.D. 94, 69 N.W. 53; Foster v. Furlong, 8 N.D. 282, 78 N.W. 986; Reeves v. Bruening, 13 N.D. 157, 100 N.W. 241; Alsterberg v. Bennett, 14 N.D. 596, 106 N.W. 49; Howe v. Walker, 4 Gray, 318; Rieck v. Daigle, 17 N.D. 365, 117 N.W. 346; American Nat. Bank v. Lundy, 21 N.D. 167, 129 N.W. 99; McCulloch v. Bauer, 24 N.D. 109, 139 N.W. 318; Cughan v. Larson, 13 N.D. 373, 100 N.W. 1088; Gilbert v. Moline Plough Co. 119 U.S. 492, 30 L.Ed. 476, 7 S.Ct. 305, 3 Dak. 239, 15 N.W. 1; Hardwick v. McClurg, 16 Colo.App. 354, 65 P. 405, 21 Mor. Min. Rep. 412; State ex rel. Yeoman v. Hoshaw, 98 Mo. 358, 11 S.W. 759; Tyler v. Giesler, 85 Mo.App. 278; Enright v. Franklin Pub. Co. 24 Misc. 180, 52 N.Y.S. 704; Newman v. Blum, Tex. , 9 S.W. 178; AEtna Iron Works v. Owen, 62 Ill.App. 603; Brown v. O'Byrne, 153 Ala. 621, 127 Am. St. Rep. 77, 45 So. 129; Furculi v. Bittner, 60 Misc. 112, 125 N.Y.S. 36; Southern School Book Depository v. Holmes, 104 Miss. 736, 61 So. 698; Re Bird, 180 F. 229; Mulrooney v. Royal Ins. Co. 157 F. 598; Albert v. Albert, 12 Cal.App. 268, 107 P. 156; Pollard v. Sayre, 45 Colo. 195, 98 P. 816; Flynn v. Butler, 189 Mass. 377, 75 N.E. 730; Kasal v. Hlinka, 118 Minn. 37, 136 N.W. 569; Janvey v. Loketz, 122 A.D. 411, 106 N.Y.S. 690.

A conveyance to secure an honest debt is not fraudulent. Paulson v. Ward, 4 N.D. 100, 58 N.W. 792; Comp. Laws 1913, § 7220.

The contract viewed as a general assignment is void. MacLaren v. Kramar, 26 N.D. 244, 50 L.R.A.(N.S.) 714, 144 N.W. 85; Cutler v. Pollock, 4 N.D. 210, 25 L.R.A. 377, 50 Am. St. Rep. 644, 59 N.W. 1062; 2 R. C. L. 690.

"It is not every conveyance that has the effect of delaying or hindering creditors, that is, in itself, fraudulent. In some degree it is the effect of every assignment of a debtor's property for the benefit of his creditors, to produce hindrance and delay. United States v. Bank of United States, 8 Rob. (La.) 402; Farmers Bank v. Douglass, 11 Smedes & M. 539; Hafner v. Irwin, 23 N. C. (1 Ired. L.) 490; Hempstead v. Johnston, 18 Ark. 123, 65 Am. Dec. 458.

"It is the settled rule that, in the absence of statutes forbidding preferences, every debtor has the right to prefer one or more of his creditors to the rest, and he may do this in an assignment for the benefit of creditors as freely as in any other way." 2 R. C. L. 44.

When trustees act honestly and legally proper, they receive the favor and protection of the court. The legal presumption always is that a trustee has faithfully executed his trust, unless the contrary is fully and clearly proved. Burrill, Assignm. 6th ed. p. 568; Valentine v. Decker, 43 Mo. 583; Jefferis's Appeal, 33 Pa. 39; 1 Am. Lead. Cas. (Hare & W.) 303, notes; McLaughlin v. Park City Bank, 22 Utah 473, 54 L.R.A. 343, 63 P. 589.

This is not a case of purchasing trust property. But even if it were, there is no showing to affect the actions of the so-called trustee, or the property, and the plaintiffs are in no position to raise such question.

The right to question such a purchase and have it set aside belongs only to the cestuis que trust, the trustee himself, creditors, and third persons generally, possess no such right. 39 Cyc. 369, 370.

That a trustee, under an extinguished trust, is not bound by its dissolved ties, is clear. 39 Cyc. 189; Pico v. Warner, 73 Cal. 17, 14 P. 377; Civil Code (Cal.) §§ 2279, 2282; 20 Cyc. 416.

"Equity will not aid avarice in purloining property." Anthes v. Schroeder, 3 Neb. (Unof.) 604, 92 N.W. 196; Curtis v. Price, 12 Ves. Jr. 103, 33 Eng. Reprint, 35, 8 Revised Rep. 303; May, Fraud, Conv. 689; Story, Eq. Jur. 12th ed. 371, 381; Bradley v. Snyder, 14 Ill. 263; Richardson v. Welch, 47 Mich. 309, 11 N.W. 172; Bradley v. Larkin, 5 Kan.App. 11, 47 P. 315; Veeder v. Veeder, 141 Iowa 495, 120 N.W. 61; Williams v. Nierenberg, N.D. , 115 N.W. 510.

The debtor is an indispensable party to a suit to set aside a fraudulent conveyance. 5 Enc. Pl. & Pr. 539-541.

"A trustee, who is also a large creditor, has the right to purchase for himself at a forced foreclosure sale." Leavell v. Leavell, 4 Ky. L. Rep. 889.

Even though a person has the right to redeem from a foreclosure sale, yet he may not be under any obligation to do so for his own protection; and if he pays the proper sum to the purchaser and receives an assignment in the due and usual form, it is not a redemption, but a purchase of the rights and title of the purchaser at foreclosure sale. 27 Cyc. 1866; McRoberts v. Conover, 71 Ill. 524; Comp. Laws 1913, § 7222.

An act which does not in any way obstruct creditors in the enforcement of their legal rights cannot be said to be fraudulent. Stevens v. Meyers, 14 N.D. 398, 104 N.W. 529; 4 Cyc. 219.

In general, a debtor's property may be reached by creditors, but not his talents or industry. He cannot be compelled to labor for the benefit of his creditors, and therefore they are not defrauded, and cannot complain if he donates his labor or services to another. 20 Cyc. 358; Voorhees v. Bonesteel, 16 Wall. 16, 21 L.Ed. 268; Abbey v. Deyo, 44 N.Y. 343.

"A bill to reach a judgment debtor's assets which have been fraudulently conveyed will not lie until the creditor has exhausted his remedy at law to every available extent, and has secured a return of his execution nulla bona. Case v. Beauregard (Case v. New Orleans & C. R. Co.) 101 U.S. 688, 25 L.Ed. 1004; Schofield v. Ute Coal & Coke Co. 92 F. 269; 2 Moore, Fraud. Conv. p. 771; Jones v. Green, 1 Wall. 331, 17 L.Ed. 554; National Tube Works Co. v. Ballou, 146 U.S. 517, 36 L.Ed. 1070, 13 S.Ct. 165; Taylor v. Bowker, 111 U.S. 110, 28 L.Ed. 368, 4 S.Ct. 397.

The plaintiffs are estopped to attack the foreclosure sale for the reason that they received and accepted the purchase money. Moore, Fraud. Conv. chaps. 3, 5, §§ 8, 20, pp. 83, 212; 20 Cyc. 434; 14 Am. & Eng. Enc. Law, 281; Lemay v. Bibeau, 2 Minn. 291, Gil. 251; Heaton v. Ainley, Iowa , 74 N.W. 766.

The proof of fraud in any case must be clear and satisfactory. Graham v. Graham, 184 Mich. 638, 151 N.W. 596, 20 Cyc. 121; Kvello v. Taylor, 5 N.D. 76, 63 N.W. 889.

Paul Campbell, for respondent.

The title here is held in trust by the defendant for our grantors--mortgagors. By defendant coming in and answering, claiming title, in an action to determine adverse claims, he becomes the plaintiff and takes the burden of proof. Walton v. Perkins, 28 Minn. 413, 10 N.W. 424.

An unnecessary pleading is mere surplusage. A voluntary reply should be disregarded. 21 Enc. Pl. & Pr. 281, d; 18 Enc. Pl. & Pr. 693, note 1, 723c; Gull River Lumber Co. v. Keefe, 6 Dak. 160, 41 N.W. 743.

Fraud, where it exists, is always in issue, even without a pleading, where the party has not had opportunity to plead it. 9 Enc. Pl. & Pr. 684, 685; Jackson v. Brown, 76 Hun, 41; Lyon v. Plankinton, 15 S.D. 400, 89 N.W. 1018.

Like, where the only clear and convincing proof is peculiarly in the knowledge and power of the defendant and his fraudulent grantor. 2 Am. & Eng. Law, 487 (2), 489, note 6, 490 (d), 491 (c), 492, 493, 498 (4) (a), 499 (c), 499 (b), 500, 502 (d), 506, 4 a (1), 507, 510, 512 (b) 516 (3) (a), 519 (c), 522 (4), 524 (6), 526 (10); 1 Sutherland, p. 743, note 111; 4 Sutherland, p. 3736, note 284.

It is true that absence of evidence and the explanation on the part of the defendant, in whose knowledge alone certain facts existed, was considered by the court, and properly so. 20 Cyc. 346, 4, 450, 10, 763, N.

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