88 N.W. 284 | N.D. | 1901
The plaintiffs seek in this action to recover damages-from the defendant, as sheriff of Richland county, for the alleged conversion by him of a stock of general merchandise upon which the plaintiffs claim to have had a mortgage. Their damages are laid at the sum of $2,966.81, with interest thereon from the date of the alleged conversion. The facts and proceedings which are essential to a determination of the questions presented on this appeal may be stated as follows: The property in controversy, at and prior to its seizure by this defendant, was owned by a copartnership composed of August Bergman and Henry Maack, who were then engaged in the general mercantile business in the village of Lidgerwood, in said county, under the firm name of Bergman & Maack. The chattel mortgage upon which plaintiffs’ rights in this action are based was executed b)r said copartnership on December 16, 1898, and filed in the office of the register of deeds of said county on December 19, 1898, and covered the property in question. On December 22, 1898, the defendant sheriff seized said property under a warrant of attachment in an action pending in the district court of Richland county, wherein Wyman, Partridge & Co. was plaintiff and said copartnership was defendant, upon a debt due from said copartnership amounting to $1,367.46, for goods sold and delivered to it by said attaching creditor. On December 29, 1898, the plaintiffs caused a demand to be made upon the defendant for the property covered by their mortgage, and the same was refused. On January 3, 1899, bankruptcy proceedings were instituted in the United States district court for the district of North Dakota against said copartnership, and on the 4th da}r of January, 1899, a warrant issued out of said court under which the marshal of said court took from the possession of the defendant all of the goods theretofore seized by him as above stated. On Janaury 23, 1899, said firm of Bergman & Maack was adjudged bankrupt, and on February 3, 1899, a trustee was appointed to administer the trust estate; and said trustee, as such, received from the United
The case was tried to a jury. At the close of the testimony, counsel for defendant moved for a directed verdict for defendant upon the ground that it conclusively appeared from the evidence (I) that the mortgage under which plaintiffs claim a right or interest in the property attached was fraudulent and void as to the creditors of the mortgagors; (2) that both the lien of the attachment and plaintiffs’ mortgage was destined by the bankruptcy proceedings, and that the title to the property in question had vested in the trustee in such bankruptcy proceedings. This motion was denied. But the court, upon its own motion, being of opinion that plaintiffs were entitled to recover, but that they had sustained only nominal damages, instructed the jury to return a verdict for plaintiffs for $1. Thereafter the court made an order for judgment on the verdict, and for costs and disbursements in favor of the plaintiffs. Later, upon motion of defendant, the judgment was modified by depriving plaintiffs of their costs, and awarding costs to defendant. Plaintiffs have appealed to this court, and, in a statement of case duly settled, specify for review a number of alleged errors.
The first and most important error assigned relates to the direction of the verdict. Appellants claim that “the court erred (1) in directing a verdict in this case for the plaintiffs for the sum of one dollar; and (2) in not directing a verdict for plaintiffs for the amount claimed in the complaint.” We are of opinion that the trial court did not err in the particulars complained of to plaintiffs’ prejudice. It is apparent that the foundation of plaintiffs’ right to recover any sum whatever in this action is the chattel mortgage. If for any reason it appears that the instrument is invalid, their entire cause of action fails. The defendant’s motion for a directed verdict assailed the mortgage as being fraudulent and void as to creditors of the mortgagors, and also upon the ground that the lien thereof had been stricken down by the bankruptcy proceedings. We shall have occasion to consider only the first ground of the motion, namely, the question as to whether the mortgage was fraudulent and void as to the creditors of the partnership. Counsel for appellants assert that the validity of the mortgage is sustained by the principles laid down by this court in Bank v. Barnes, 8 N. D. 432, 79 N. W. Rep. 880. We have reached an opposite conclusion. The views of this court as to the test to be applied to chattel mortgages of merchandise, like that now under consideration, were expressed in the following extract from the opinion formulated by Wallin, J., in the case referred to: “There is much conflict of judicial opinion as to the effect of permitting, a debtor who has given a mortgage upon a stock of merchandise to remain
Turning now to the mortgage in question, we find that it conclusively appears from the provisions therein contained that its primary purpose an necessary effect was to hinder and delay the creditors of the mortgagors, and to serve as a shield and cover for the partnership property. Or, in other words, it operated not as security for the debt due the mortgagees, but as a protection to the mortgagors in the further prosecution of their business, and was thus primarily for the benefit of the mortgagors. By referring to its condition, it will be seen that no change whatever in the conduct of the business was contemplated. On the contrary, it was to continue just as it had been formerly conducted. The stock was to be kept up to the same actual value as when the mortgage was given, by additions thereto made from the proceeds of sales of the mort
The mortgage in question is void as to creditors for another reason. When the mortgage was given the partnership was .insolvent. The mortgage covered practically all, if not .all, of the partnership property, and it undertook to secure the individual debts of the partners, which debts the partnership was under no legal or moral obligation to pay. In short, it was an attempted gift by an insolvent partnership of all of its property. This cannot be done. There is entire harmony in the authorities on this point. “A partnership paying the private debt of one of its members is paying what it is not liable for in law, equity, or morals, and is, in effect, giving away its property; and such conveyance, no bona fide rights intervening, is fraudulent and void as to existing creditors if theyr are prejudiced thereby, as well as to the separate creditor ■of the other partner, whose individual interest in the firm is thus given -away.” 1 Bates, Partn. § 566. See, also, Ransom v. Van Deventer, 41 Barb. 307; Keith v. Pink,, 47 Ill. 272; Heineman v. Hart, 55 Mich. 64, 20 N. W. Rep. 792; Cron v. Cron’s Estate, 56 Mich. 8, 22 N. W. Rep. 94; Wilson v. Robertson, 21 N. Y. 587; Person v. Monroe, 21 N. H. 562; Patterson v. Seaton, 70 Iowa 689, 28 N. W. Rep. 598; Menagh v. Whitwell, 52 N. Y. 147, 11 Am. Dec. 683; Keith v. Armstrong, 65 Wis. 225, 26 N. W. Rep. 445.
Having reached the conclusion that the mortgage was fraudulent and void as to creditors, it follows that plaintiffs had no cause of action. The court therefore properly refused to direct a verdict for plaintiffs for the full amount of their claim. Error was committed, however, in awarding to plaintiffs nominal damages, and the inclusion of the sum of $1 in the judgment appealed from was