O.S. Paulson Mercantile Co. v. Seaver

• Decision Date: 15 December 1898
• Docket Number: 6731
• Citation: 77 N.W. 1001,8 N.D. 215
• Court: North Dakota Supreme Court

77 N.W. 1001

8 N.D. 215

O. S. PAULSON MERCANTILE COMPANY v. W. K. SEAVER

No. 6731

Supreme Court of North Dakota

December 15, 1898

Appeal from District Court, Traill County; McConnell, J.

Action by the O. S. Paulson Mercantile Company against W. K. Seaver as sheriff of Traill county, for the conversion of a stock of merchandise, held by the defendant under a seizure upon warrant of attachment in an action by L. A. Shakman & Company against one O. S. Sletto. The trial resulted in a verdict for defendant. From an order granting a new trial, defendant appeals.

Affirmed.

Bangs & Guthrie, for appellant.

The only error upon which a new trial was order by the lower court was the admission of evidence of statements made by Sletto and Paulson with reference to the ownership of the stock in question. These men were associated for the illegal purpose of defrauding Sletto's creditors, and the admissions of one of them during the pendency of the unlawful enterprise and in furtherance of its objects, were competent against the other. 1 A. & E. Enc. L. (2nd Ed.) 711; Underhill Ev. 69; Sundry Goods v. United States, 7 L.Ed. 450; Nudd v. Burrows, 91 U.S. 426, 23 L.Ed. 286; McKean v. Adams, 32 N.Y.S. 281; Guneberg v Truesch, 61 N.W. 872. The admissions made by duly authorized agents of corporations are looked upon as the admissions of the corporation. 2 Whart. Ev. 1170; Toll Bridge Co. v. Bettsworth, 30 Conn. 380; Abbott v Co., 25 P. 693; Chicago, etc., Ry. Co. v Coleman, 68 Am. Dec. 544; McGinness v. Adriatic Mills, 116 Mass. 177; Costigan v. Company, 38 Mo.App. 218; St. Louis Paint Mfg. Co. v. Mepham, 30 Mo.App. 15; Josephi v. Clothing Co., 33 P. 1. The declarations made by an officer or agent of a corporation in response to timely inquires relating to matters under his charge in respect to which he is authorized in the usual course of business to give information may be given in evidence against the corporation. Bank v. Field, 2 Hill 445; Morse v. Ry. Co., 6 Gray 450; Abbott's Trial Ev. 44; Xenia Bank v. Stewart, 114 U.S. 224.

McLaughlin & Boyesen, for respondent.

There was no allegation of fraud, collusion or conspiracy in the answer and all evidence to prove either was inadmissible. Frisbee v. Langworthy, 11 Wis. 394. New matter constituting a defense must be plead. Subd. 2, § 4914 Rev. Codes. New matter is that which under the rules of evidence the defendant must affirmatively establish. If the onus of proof is thrown upon the defendant, the matter to be proved by him is new matter. Percy v. Sabin, 10 Cal 22. Fraud is never presumed. It is an affirmative defense. Glazer v. Clift, 10 Cal. 304; Mey v. Gulleman, 105 Ill. 272. The facts constituting the fraud must be stated. Bliss on Code Pleading, § 211-239; Ockenden v. Barnes, 43 Ia. 619; Finley v. Quirk, 9 Minn. 194. It was neither alleged in the answer nor proved that L. A. Shakman & Company were creditors of O. S. Sletto. As between the parties the sale by Sletto to plaintiff was good against any but creditors of plaintiff's vendors at the time of the transfer. Braley v. Byrnes, 20 Minn. 435; Hornberger v. Bradenberger, 35 Minn. 401; James v. Van Duyn, 45 Wis. 512; Daman v. Bryant, 2 Pick. 411; Hines v. Chambers, 29 Minn. 7; Williams v. McGrade, 13 Minn. 46; Howard v. Manderfield, 31 Minn. 337; Oberfelder v. Kavanaugh, 32 N.W. 295; Williams v. Eikenbury, 41 N.W. 770; Bartlett v. Cheesebrough, 49 N.W. 360; Paxton v. Moravek, 47 N.W. 919. Declarations to third persons by a vendor of property after the sale and delivery thereof has been consummated are inadmissible against the vendee to impair the latter's title. Orr v. Lindsay Shoe Co., 67 F. 990; Zobel v. Bauersachs, 75 N.W. 43. Such declarations are both irrelevant and hearsay. Winchester, etc. v. Creary, 116 U.S. 161; Kurtz v. Ry. Co., 63 N.W. 1; Milling v. Hillenbrand, 40 N.E. 941; Williams v. Eikenbury, 41 N.W. 770; Howland v. Fuller, 8 Minn. 50; Zimmerman v. Lamb, 7 Minn. 336; Benson v. Lundy, 3 N.W. 149; Allen v. Kirk, 47 N.W. 906; Derby v. Gallup, 5 Minn. 119; Shaw v. Robertson, 12 Minn. 445; Groff v. Ramsey, 19 Minn. 44; Burt v. McKinstry, 4 Minn. 204; Buckingham v. Taylor, 41 N.W. 868; Fay v. Rankin, 2 N.W. 562. Declarations of an agent of a corporation to bind the principal must be made within the scope of the agent's authority and must accompany the act or contract which he is authorized to do or make. Angel & Ames on Corp. § 309; Mundhenk v. Railway Co., 11 N.W. 657; Verry v. Railway Co., 47 Ia. 549; Sioux Valley State Bank v. Kellogg, 46 N.W. 859; Met. Nat. Bank v. Bank. 74 N.W. 28.

OPINION

BARTHOLOMEW, C. J.

The plaintiff, the O. S. Paulson Mercantile Company, is a corporation. As such, it sues the defendant, Seaver, in conversion for the value of a certain stock of goods which was in a store building at Reynolds, in Traill county. It alleges that it was the owner of said stock, and that the defendant wrongfully seized and converted the same. The defendant, by answer, denies plaintiff's ownership and damages, and stated that, as sheriff of said Traill county, he seized said stock of merchandise under and by virtue of a writ of attachment duly issued out of the District Court of said county, and placed in his hands for service, in an action brought by A. L. Shakeman & Company against one O. S. Sletto to recover the value of certain merchandise sold by said Shakeman & Co. to said Sletto; that he seized said stock of goods as the property of said Sletto; and that he, the said Sletto, was in fact the owner of said stock of goods when the same was so seized. A trial resulted in a verdict for defendant. Subsequently plaintiff moved for a new trial, and one of the grounds of such motion was errors of law occurring at the trial and excepted to by plaintiff. The Court granted the motion, and the order stated: "The same is hereby granted upon the sole ground of error in law occurring at the trial in admitting in evidence, over the objection of plaintiff's counsel, certain testimony as to statements made by O. S. Sletto and O. S. Paulson with reference to the ownership of the stock in question." From this order defendant appeals. To understand the full force of the ruling, it will be necessary to state some facts. The plaintiff corporation received its charter about October 25, 1894. At that time, and for more than a year prior thereto, O. S. Sletto had been conducting a general merchandise business in the City of East Grand Forks, in the State of Minnesota. Commencing on September 10, 1894, and at various dates from that time to October 25th, large quantities of goods were shipped by O. S. Sletto from East Grand Forks, billed to himself at Reynolds. On October 9th and 24th, and on November 2nd and 5th, small shipments were made from East Grand Forks by O. S. Sletto to O. S. Paulson at Reynolds and during the month of October some shipments of goods from wholesale houses were received at Reynolds, billed to O. S. Sletto. All goods received at Reynolds billed to Sletto were taken by O. S. Paulson, and receipted for by him in Sletto's name, and were placed in a storeroom in Reynolds, and constituted practically the stock of goods that was seized by defendant. These goods were being sold at retail. Until about November 1st the business was conducted in the name of O. S. Paulson, and was in his personal charge. After that date it was conducted in the name of the O. S. Paulson Mercantile Company; O. S. Paulson as president and general manager, continuing in charge. On October 31, 1894, O. S. Sletto executed to O. S. Paulson, for the stated consideration of $ 3,500, a bill of sale of goods in the store at Reynolds. On the same date, for the expressed consideration of $ 565, Sletto executed a bill of sale to the O. S. Paulson Mercantile Company of certain other goods in said store. The bills of sale were filed for record November 5, 1894, and at the same time there was filed a bill of sale from O. S. Paulson to O. S. Paulson Mercantile Company, covering same goods, for the expressed consideration of $ 5,000. It was defendant's contention that the sale from Sletto to Paulson was fraudulent and collusive, and made for the sole purpose of defrauding Sletto's creditors, and the organization of the corporation by Paulson was but a part of the scheme by which they hoped to introduce a third party, who might figure as an innocent purchaser of the goods. On the 6th day of November--the day following the recording of the bills of sale--one Neisser, who was the traveling salesman of A. L. Shakeman & Co., the plaintiff in the attachment suit, appeared at East Grand Forks for the purpose of ascertaining Sletto's financial condition and collecting the bill due his firm. One Fried, another traveling salesman, was with him. The depositions of these parties were taken by defendant, and introduced over plaintiff's objection. They testified that Sletto told them on that day that he owned the goods at Reynolds, and that again, and in Paulson's presence, he made the same statement, and that Paulson stated that Sletto owned the goods, and that he (Paulson) was simply in there to help Sletto out. It was upon the introduction of this testimony that the court based its order for a new trial.

We think the order must be sustained, upon the ground that the statements of Sletto, the vendor, made in the absence of the vendee, and tending to defeat the title, were improperly admitted. The general rule which excludes the statements of a vendor, not in possession, and which tend to defeat the title of his vendee, is well established. But the rule has its exceptions. After proof has been introduced to show a fraudulent combination on the part of the vendor and the vendee to defraud the creditors of the vendor, then the statements of the vendor, in the absence of the...