Watson v. Goldstein
| Decision Date | 07 December 1928 |
| Docket Number | No. 26885.,26885. |
| Citation | 222 N.W. 509,176 Minn. 18 |
| Parties | WATSON v. GOLDSTEIN (FIRST NAT. BANK OF MINNEAPOLIS, Garnishee; GOLDSTEIN, Intervener.) |
| Court | Minnesota Supreme Court |
Appeal from District Court, Hennepin County; Frank E. Reed, Judge.
Action by R. M. Watson, as father of Helen Jean Watson, a minor child, against Milton Goldstein, wherein the First National Bank of Minneapolis was made garnishee, and wherein Lina Goldstein intervened. From an order denying a motion for a new trial the intervener appeals. Reversed, and a new trial granted.
Wm. E. MacGregor, of Minneapolis, for appellant.
Shaw, Safford, Putnam & Shaw, of Minneapolis, for respondent.
The intervener appealed from an order denying her motion for a new trial.
Plaintiff, a judgment creditor of defendant, garnisheed the bank, which disclosed that at the time of the service of the garnishee summons it had in its possession a promissory note for $13,000 dated September 21, 1922, given by one Durkee and wife to defendant together with a real estate mortgage securing the same. The mortgage was recorded. The note was indorsed by defendant to the bank, and the mortgage was assigned by him to it by a written assignment as collateral security to a note given the bank by defendant and the intervener but which had been paid at the time of the disclosure. The loan was also secured by a Clifford note and mortgage given direct to and owned by intervener, the mother of defendant. There was other collateral owned by defendant, who in fact paid the bank. The loan from the bank was for him.
The intervener filed a complaint in intervention claiming to be the owner of the $13,000 note and mortgage. This was denied by plaintiff's answer. The court found that defendant was the owner.
1. Prior to 1920 one Irwin S. Goldstein, a brother of defendant, died leaving personal property of $75,000 and thirty-two pieces of real estate to his mother, the intervener, who put the management of her property in defendant's hands. The parties employed a bookkeeper who kept two sets of double entry books; one for defendant, and one for intervener. Each set consists of two books, a journal and a ledger. The ledgers are loose leaf, but the journals are not. The journal entries were made when the particular transactions occurred. In consideration of defendant looking after intervener's property and keeping her books, she agreed orally that defendant might use her money as he collected it from time to time. He was not required to pay interest. Accounts of such borrowings were kept in the books, and from time to time, beginning in 1920, defendant transferred to intervener securities to reduce his indebtedness. There were three instances in 1921, perhaps seven in 1922, and some in 1923. Such securities sometimes were made to run to defendant, who assigned them to intervener, and others ran direct to her. In either event appropriate entries were made upon both sets of books.
On December 27, 1922, the Durkee note and mortgage were transferred by defendant to intervener upon their respective books, and it was definitely agreed that she was to be the owner thereof. At that time defendant owed intervener more than $12,700, the then face value of the note and mortgage, and he received credit for $12,700. Intervener knew that the note and mortgage were then at the bank and held as collateral. There was no written assignment of the mortgage nor indorsement upon the note, both of which remained in the possession of the bank. After the transfer interest and principal payments were made monthly and entered in the books of the intervener, although, like other money which defendant handled for his mother, it was deposited in his bank account, from which he paid his mother's bills. She got the money.
In every instance subsequent to the transfer of a security on the respective books intervener has received the income and has been charged with the expense, if any, of maintaining the particular property. Intervener's income tax has been calculated upon these books, and since 1922 she has accounted in her return for the receipts of the Durkee note and mortgage.
From time to time prior to December, 1922, intervener demanded that defendant turn over to her assets which he acquired, at least in part, through the use of money borrowed from her. This was done. Defendant is a builder, and the Durkee note and mortgage were given to get money to pay for construction work. Intervener personally inspected the property and furnished defendant the money with which to make this particular loan.
The foregoing facts are disclosed by the books, the testimony of the defendant, the intervener, and their bookkeeper; and they are uncontradicted and unimpeached, unless by the facts and circumstances now to be stated, which it is urged present a question of fact, to wit: Defendant on October 19, 1922, assigned the note and mortgage to the bank and indorsed the note to the bank as collateral to a loan from the bank for his benefit. We see no significance to the conceded transfer by defendant to the bank. That was a completed act before the transfer to intervener, who was a party to the loan from the bank. It really bears no relation to the present controversy. Defendant made entries in his journal of payments made by Durkee after December 27, 1922, but they were necessary in keeping the accounts of money coming into his hands. These payments were properly entered upon intervener's books and she received the money. Defendant handled intervener's money for his own use without paying interest. The agreement was that he need not pay interest because he rendered services. But the fact that the mother did not exact interest from her son holding her confidence is of little probative value. There are in evidence several financial statements made to the bank by defendant for himself and intervener. They are not important. Exhibits 5, 6, 7, and 9 were made before September 22, 1922. Exhibit 10 is a crude financial statement for intervener made October 31, 1923. It does not mention by name the Durkee note and mortgage nor any other one. It shows "mortgages and contracts receivable, $154,703.00." There is nothing to indicate that the Durkee paper is not included. Exhibit 4, defendant's financial statement of October 31, 1923, made several months before plaintiff had a cause of action, lists "mortgages and contracts receivable, $7,756.05." No more. The Durkee paper then amounted to about $11,700. It could not have been included in the lesser amount, and the undisputed testimony is that the $7,756.05 was made up of four specific items. No notice was ever given to the bank or Durkee that intervener and not defendant owned the note and mortgage. The parties were under no duty to notify either the bank or Durkee as to the transfer, and a failure to do so is of no consequence. After the garnishee disclosure defendant executed an assignment dated December 27, 1922, but which was made, executed, acknowledged and recorded on November 23, 1925. No one denies this or makes any effort to deceive any one by claiming it to be otherwise. It was apparently intended as some written evidence of the oral agreement. Possibly the parties then thought there was some necessity for it. It was made after this controversy arose, and no one claims any advantage because of this paper. Neither its existence nor its making carries any moral turpitude or bad faith. Intervener testified at the trial in 1927 on cross-examination that at the time the Durkee note and mortgage were transferred to her she saw them in the safety deposit box in the Irwin-Dick Building. Relative to this she was mistaken, because they were then in the bank as collateral to the note which she had signed. She knew this. She knew counsel and others knew it.
Certainly she could not have intended to say the papers were in the deposit box when all concerned knew they were in the possession of the bank. The character of the alleged falsehood and the futile success attained thereby practically destroy the...
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