212 N.W. 47 | S.D. | 1927
The appellant sued one Auguski for money due as rentals for land owned by appellant and occupied by Auguski.
During the years 1920 and 1921 Auguski occupied the land
In January, 1923, an agreement was made between Auguski and the garnishee defendant A. R. Crooks to the- effect that a public sale of practically all of Auguski’s chattels should be made, Crooks to clerk the sale, to apply the proceeds upon the notes held by the bank, and to pay the surplus, if any, to Auguski. • The sale was held, pursuant to this- agreement, on February 6, 1923. And at this sale grain from the 1922 crop was sold to- .the value of $273.20, andi other property not covered by the bank’s mortgages was sold to the value of $419.57. The entire proceeds of the sale failed to satisfy the bank’s, mortgage.
Crooks, who was the cashier of the bank, did the actual work of clerking -the sale. On the day of sale, and after the sale was over, both the bank and Crooks were garnisheed in appellant’s suit against Auguski. Each of these garnishee 'defendants, served and filed an affidavit, in statutory form, denying liability.
Appellant took issue upon these affidavits. Prior to- the trial of these issues judgment was entered against Auguski.
Upon the trial as to the liability of the garnishees the trial court made findings in favor of the garnishees and entered judgment in accordance therewith.
The only question presented for the consideration of this court is whether the agreement made between Auguski and Crooks made the proceeds of the sale a trust fund for the satisfaction of the bank’s notes. There is no claim of any fraudulent intent in the agreement, nor is any bankruptcy involved.
It seems to be well established that where the mortgagor turns his property over for sale under an agreement that the mortgagee is to collect the proceeds of the sale, either personally or through a third party, and to apply such proceeds to. the payment of his debt, the proceeds, in so far as required to meet the debt
These decisions are absolutely decisive of the right of respondent bank to the proceeds of all property covered by its mortgage. As to the $419.57 derived from the sale of property not covered by the bank’s mortgage, the record shows that the agreement was that the proceeds of this property, as well as that covered by the mortgage, was to be applied on Aúguski’s debt to-the bank. This part of the agreement was the preferring of a creditor by Auguslci. But, in the absence of fraud or bankruptcy, he had a right to- -give such preference. Under the agreement as shown by the record -the proceeds of the sale of his property also became a trust fund to be applied upon the notes held by the bank.
Finding no error in the record, the judgment and order appealed from are affirmed.