Maclaren v. Kramar

144 N.W. 85 | N.D. | 1913

Lead Opinion

EisK, J.

This is an action to recover for the alleged conversion by defendant Kramar, who was sheriff of McHenry county, of certain personal property claimed to belong to plaintiff, and which such sheriff levied upon under an execution issued on a judgment against one Wellington I. Ginther, wherein the Eirst National Bank of Waterloo, Iowa, is the judgment creditor. Pursuant to such levy the defendant took the property into his possession, and subsequently sold the same at public auction to satisfy the amount called for by the execution. The property consisted of a portion of a general stock of merchandise and one new Gary safe located in a store building at Drake, in this state, and formerly owned and conducted by the execution debtor, Ginther. Plaintiff bases his claim to ownership of the property upon a certain so-called trust deed or assignment for the benefit of creditors, executed and delivered by Ginther to the plaintiff, as trustee, some time prior to the levy of such execution by defendant. The complaint is in the usual form, and the answer, as originally interposed, amounts to a general denial.

By stipulation of the parties a jury was waived and the cause tried to the court, resulting in findings of fact and conclusions of law in defendant’s favor, pursuant to wbicb judgment was ordered and entered, dismissing the action, with costs. The appeal is from such judgment.

Appellant’s brief contains a large number of assignments of error based upon alleged erroneous rulings in the admission and exclusion of testimony, also in permitting defendant to file an amended answer after the trial, and in making certain findings of fact; but in the body of the brief counsel present and argue but two propositions. First, they contend that the assignment or trust deed is valid, and cannot be attacked or avoided by a nonassenting creditor; and, second, that in any event it is necessary for the defendant to place himself in the position of a nonassenting creditor before he can question the validity of the trust deed, and that he failed so to do by not properly pleading justification. It is argued that in not having pleaded justification under the judgment and execution, permitting the introduction of the judgment roll, transcript, and docket entries constituted reversible error, and that this was not cured by thereafter permitting an amended answer to be filed, wherein such justification is pleaded.

We shall accordingly confine ourselves to the points thus argued in the brief, treating as abandoned all assignments not thus argued, in accordance with the well-settled practice of this court. The case being one properly triable to a jury, the findings of fact have the force of the verdict of a jury, and no motion for a new trial having been made, the sufficiency of the evidence to support the findings is not in question. The cause is here on appeal, therefore, for the review only of alleged errors of law occurring at the trial (Hedderich v. Hedderich, 18 N. D. 488, 123 N. W. 276), and, as before stated, only those alleged errors will be noticed which are argued in the brief.

This brings us to appellant’s first contention. The so-called trust deed, and which appellant contends is valid and operated to transfer title to the plaintiff, is as follows:

This agreement, made and entered into in duplicate this 13th day of August, 1909, by and between Wellington I. Ginther, of Drake, North Dakota, party of the first part, and O. D. Macharen, of St. Paul, Minnesota, party of the second part, Witnesseth:

Whereas, The party of the first part is indebted to sundry and divers persons in large amounts, and is unable to pay and discharge said indebtedness as tbe same becomes due, and desires to place bis property-in tbe bands of tbe'party of tbe second part, to be realized upon in tbe best manner possible and tbe proceeds therefrom distributed ratable among bis creditors.

Now, Therefore, In consideration of tbe premises and tbe sum of one dollar to him in band paid, tbe party of tbe first part does hereby grant, convey, assign, transfer, and deliver unto tbe party of tbe second part, as trustee, all of that stock of hardware, tinware, leather and other findings, harness, tinner’s tools, machinery, and other personal property belonging to him and contained in and about that certain store building located in tbe village of Drake, North Dakota, and situated upon tbe south half of lot 11, and all of lot 12, in Block 2, of tbe village of Drake, in tbe county of McHenry, and state of North Dakota, including book accounts and books of account, bills receivable, cboses in action. Also to convey by proper deed of conveyance all bis interest in tbe above-described lots and the building situated thereon, to have and to bold tbe same and all thereof, as trustee for the use and purpose following: To convert said personal property into cash in such manner as in bis judgment will be for tbe best interest of all parties concerned, and for that purpose party of tbe second part is hereby authorized to . continue tbe business of tbe party of tbe first part at said village of Drake, so long- as it shall seem profitable so to do, and for that purpose may use proceeds from sales and collections to buy new goods to replenish tbe stock, and out of tbe proceeds of tbe sales of tbe property and collection of accounts to pay, first, tbe reasonable charges and expenses for creating and administering tbe trust hereby created. Second, to pay in full tbe debts and liabilities of tbe party of tbe first part, if sufficient shall be realized from tbe property so to do, and, if not, to distribute tbe proceeds of said property ratably among tbe-creditors of the party of tbe first part as shall consent to this trust agreement, and shall agree, in consideration of tbe benefits accruing to them thereunder, to absolve and discharge tbe party of tbe first part from any and all liability. Third, if there should be any residue of tbe property after making tbe disbursements and payments aforesaid, to repay or return to tbe party of tbe first part all property then remaining in the bands of tbe party of tbe second part.

Tbe party of tbe first part in consideration of tbe premises and tbe benefits to be derived under tbis trust agreement further agrees to and with tbe party of the second part, that as soon and whenever the order of the distinct court of Kansom county, North Dakota, dated August 5th, 1909, entered in the action of Ginther v. Ginther, restraining the party of the first part from disposing of his real property, shall be vacated, the party of the first part will, by proper conveyance, convey to the party of second part all his right, title, and interest in and to the real estate now owned by him, or in which he has any interest, except the family homestead.

In witness whereof, the parties have hereunto set their hands the day and year first above written.

Wellington I. Ginther,

O. D. Macharen.

It will be noticed that such alleged assignment or trust deed does not purport on its face to transfer to the trustee all of the property owned by the said Ginther, but merely “all of that stock of hardware, tinware, leather and other findings, harness, tinner’s tools, machinery, and other personal property belonging to him and contained in and about that certain store building located in the village of Drake, and situated upon the south half of lot 11, and all of lot 12, in block 2, in the village of Drake, . . . including accounts and books of account, bills receivable, choses in action.” And the said Ginther therein agrees to convey by proper deed of conveyance all his interest in the above-described lots and the building situated thereon. The trustee is therein authorized to convert said property into cash “in such manner as in his judgment will be for the best interest of all parties concerned, and for that purpose the party of the second part is hereby authorized to continue the business of the party of the first part ... so long as it shall seem profitable so to do, and for that purpose may use proceeds from sales and collections to buy new goods to replenish the stock, and out of the proceeds of the sales of the property and collection of accounts to pay, first, the reasonable charges and expenses for creating and administering the trust hereby created. Second, to pay in full the debts and liabilities of the party of the first part, if sufficient shall be realized from the property so to do, and, if not, to distribute the proceeds of said property ratably among the creditors of the party of the first part as shall consent to this trust agreement, and shall agree, in considerar tion of the benefits accruing to them thereunder, to absolve and discharge the party of the first part from any and all liability. Third, if there should be any residue of the property after making the disbursements and payments aforesaid, to repay or return to the party of the first part all property then remaining in the hands of the party of the second part.”

. Counsel for appellant contend that these various conditions or stipulations in the trust deed do not affect its validity as a general assignment for the benefit of creditors, citing and- relying upon certain provisions of our Code, and also upon certain cases decided in other states. Their contention is of a dual nature, as we understand their brief. They assert, first, that under the common law, which must control in the absence of any statutory provisions regulating the form and provisions of assignments for the benefit of creditors, the instrument is valid upon its face; and, second, that such instrument is in any event not a general assignment for the benefit of creditors, but a mere security transaction, wherein the debtor exercised his legal right to prefer certain of his creditors, citing and relying upon the case of Joas v. Jordan, 21 S. D. 379, 113 N. W. 73, and McAvoy v. Jennings, 44 Wash. 79, 87 Pac. 53.

After due consideration we find ourselves unable to concur in either of such contentions. By the overwhelming weight of authority such instrument is void upon its face as a general assignment for the benefit of creditors. This court, construing a like instrument, so held in Bangs v. Fadden, 5 N. D. 92, 64 N. W. 78, using the following language : “It is urged that the assignment is void for the reason that it requires all creditors who desire to receive any benefit from the trust to release their claims as a condition of receiving any dividend. If the instrument must be necessarily so construed, then its invalidity cannot he doubted. Both under the settled rule of law and under the express provisions of our Code, such an assignment is void.”

See also May v. Walker, 35 Minn. 194, 28 N. W. 252; McConnell v. Rakness, 41 Minn. 3, 42 N. W. 539; Moore v. Bettingen, 116 Minn. 142, 133 N. W. 561, Ann. Cas. 1913A, 816.

Even the cases which uphold trust deeds requiring releases as a condition to participating in the benefits thereof seem to require that such instrument on its face must purport to transfer all of tbe debtor’s property (except sucb as is exempt) to tbe' trustee or assignee. May v. Walker, supra. Tbe reasons underlying tbe common-law rule are clearly and succinctly stated by tbe Minnesota court in tbe above case, as follows: “Though there is some conflict of opinion, every consideration of honesty and good sense supports tbe proposition that an assignment by an insolvent debtor of bis property, providing, as in tbe present case, that tbe proceeds shall be applied towards tbe payment of bis indebtedness to sucb of bis creditors only as shall release their claims against him, is, in tbe absence of express statute to tbe contrary, as by a bankrupt law, or something in tbe nature of one, fraudulent and invalid; and this, for tbe reason that it is tbe duty of an insolvent debtor to apply bis property to tbe payment of bis debts, as far as it will go, without conditions, and without coercing bis creditors to surrender any part of their just claims against him as tbe price of receiving their just share of bis estate. Bennett v. Ellison, 23 Minn. 242; Grover v. Wakeman, 11 Wend. 188, 25 Am. Dec. 624; Burrill, Assign. § 195. Even where a common-law assignment, with sucb provisions for release, is tolerated, tbe rule is that it must be general, and not, as in tbe case at bar, partial.

“The fraud and gross injustice of permitting an insolvent debtor, without a surrender of all bis unexempt property, to coerce bis creditors to a compromise, is apparent. In contemplation of law, all bis un-exempt property belongs to bis creditors, . . . and to permit him to put a part of it out of their reach, unless they will submit to bis terms and take less than they are entitled to, is to permit him to binder and delay them in tbe collection of their demands out of property justly and legally liable for tbe same, even if a common-law assignment, with sucb provisions for release, be tolerated at all.”

We entertain no doubt that as to nonassenting creditors tbe instrument is void upon its face, not only upon tbe ground that it operates to coerce creditors to consent thereto and to release their claims as a condition to participation in tbe trust fund, or else be delayed and hindered in tbe collection of their claims, but also for tbe reason that it does not purport to transfer all of the debtor’s property not exempt, and for the additional reason that it provides for tbe payment of any surplus to tbe debtor, thus operating to put sucb surplus beyond tbe reach of nonassent-ing creditors, and to hinder and delay them in the collection of their demands.

This question is ably treated and the authorities collated in 5 Ene. Law & Pr., in the article on Assignments for the Benefit of Creditors. AYe quote from the text at pages 1028 and 1029 as follows:

“There can be no doubt that a person who gives credit to another taires into consideration not only the property which he has at the time, but also the probability of his acquiring property in the future; and it would seem unjust and contrary to public policy to allow a debtor to make an assignment on such terms as to compel a creditor to surrender the right to resort to future acquisitions in case the property of the debtor is insufficient to satisfy the claim in full, and thus acquire a benefit for himself at the expense of his creditors. On this point, however, there is a direct conflict of opinion.

“Many of the courts have taken the view that a debtor cannot thus coerce his creditors into accepting less than the full amount of their claims, and have held that an assignment for the benefit of creditors is rendered fraudulent and void on its face by a stipulation that the debtor shall not be liable to any creditor who assents to the same, for any deficiency that may remain unsatisfied after execution of the trust by a distribution of the assigned property. . . .

“To uphold the validity of such stipulations would, it has been held, enable every insolvent debtor to enact a bankrupt law in his own behalf; to appropriate as surplus the pro raía shares of the nonreleasing creditors; to reserve the right and power to prefer favored creditors at a future time, and compel the others to accept any terms offered to them; to dictate terms to his creditors which would make him independent of his legal obligation to devote his unexempted property unreservedly to the payment of his creditors, and enable him practically to reserve a trust for his own benefit; and, finally, would compel the creditors to come in under any scheme of settlement devised by the combined ingenuity of the assignor and the assignee selected by him.”

Appellant’s contention that the instrument should be construed as a security transaction, and upheld under our Code provisions permitting a debtor to prefer his creditors, seems to have the support of numerous courts, including the South Dakota and AYashington courts. In Joas v. Jordan, 21 S. D. 379, 113 N. W. 73, the supreme court of South Da-lcota in passing upon a similar instrument, among other things, said: “We are clearly of the opinion that in the case at bar that the purported deed of trust was in the nature of a security for the benefit of the creditors assenting thereto, and did not constitute a general assignment under the provisions of our Code, and that it was competent, therefore, for the debtor to prefer the creditors who assented to the assignment, and agreed to accept their pro rata, share of the proceeds of the property assigned, and release the debtor from all further liability, and that the purported trust deed or agreement entered into by the debtor with Jordan as trustee and the creditors accepting the conditions was a complete disposition of his property under the provisions of our Code above quoted, and the construction given to the same in the case of Sandwich Mfg. Co. v. Max, 5 S. D. 125, 24 L.R.A. 524, 58 N. W. 14. While the trust deed may not technically be denominated a mortgage, it constituted in effect a mortgage, and the plaintiff, before he could levy upon the same, was, by the terms of § 2099, Rev. Civ. Codes, required to pay or tender the amount due those several creditors before he could legally levy upon the property. Jewett v. Sundback, 5 S. D. Ill, 58 N. W. 20 [citing cases]. The question of the right of a debtor to prefer certain of his creditors is so fully discussed by this court in the case of Sandwich Mfg. Co. v. Max, supra, that a further discussion does not seem to us necessary, as we are clearly of the opinion that the purported trust deed was legal and valid as against the creditors of the debtor. Not assenting to become a party thereto, the plaintiff acquired no rights to said property under and by virtue of the execution issued upon his judgment.”

And in McAvoy v. Jennings, 44 Wash. 79, 87 Pac. 53, the Washington court gives similar reasons to those of the South Dakota court for upholding the agreement upon the theory that it was a security transaction, and that the insolvent debtor had a right to prefer one class of creditors to the exclusion of others. With due respect for these .courts, we are unable to concur in the conclusion or reasoning adopted in either of such cases. Obviously, it was the intention of the debtor, in executing the instrument in question, not to secure certain of his creditors, but, on the contrary, his intention clearly was to make a general assignment of the property therein described for the benefit of such of his creditors as would consent to release their claims in full.

An instrument, the same in all essential particulars as tbe one in tbe case at bar, was construed by Judge Amidon, of tbe United States district court for tbis district, in a recent case, He Courtenay Mercantile Co. 186 Fed. 352, and in disposing of a like contention it was said: “Counsel for tbe Mercantile Company contends that tbe restriction above quoted, limiting tbe creditors wbo shall receive the benefits of tbe deed to those wbo shall become parties to it and release their claims in full, destroys tbe character of tbe instrument as a general assignment, and converts it into a mere security for those creditors wbo shall decide to accept its benefits. I cannot adopt that interpretation. As to the effect of such a restrictive clause upon a deed of assignment for tbe benefit of creditors, there is great conflict in tbe authorities. In some jurisdictions, it is held to render the instrument void; in others, it is considered valid. These authorities are collected in the last edition of the American & English Encyclopaedia of Law & Practice, vol. 5, at page 1028. In the present proceeding I do not deem it necessary to decide which class of decisions represents the sounder view of the law. ^ In all jurisdictions it is held that the deed is valid as between the parties, and can only be assailed by creditors who do not consent to its provisions and whose rights are thereby prejudiced. .As against the assignor, it is uniformly treated as a general,assignment. The only exception that I have found is the case of Joas v. Jordan, 21 S. D. 379, 113 N. W. 73. If that decision can be sustained at all, it must receive its support from the local statute.

“On the face of the instrument here involved, it was a disposition of all the property of the assignor for the benefit of his creditors. All the creditors had a right to accept its benefits. The assignor could in no way control this discretion. Their right to do this would continue until the estate had been distributed. The character of the instrument should be judged as of the time of its execution and delivery. Otherwise the whole estate could be converted into cash and administered under the deed, without its being possible to ascertain whether it was an assignment for the benefit of creditors, or a security for a part of the creditors. Such a construction of the instrument would make it possible for any creditor to escape the provisions of the Eederal bankruptcy act by the mere phrasing of a general assignment of his property.”

The instrument in the case at bar differs from that involved in the South Dakota case, supra, in that it does not purport to convey to the trustee ail of the debtor’s property. This fact serves to differentiate the cases to some extent. We choose, however, to place our decision of this point squarely upon the reasons - above given, believing, as we do, that the authorities in support of such holding are sounder on principle and announce a rule more conducive to justice and a sound public policy.

This brings us to a consideration of appellant’s second point, which is that defendant is not in the position of a nonassenting creditor, and therefore cannot question the validity of the trust deed. It is first insisted by counsel that, no justification having been pleaded in the original answer, it was error to admit the introduction of testimony to prove such justification, and, second, that in 'any event no justification was properly shown. In reply, counsel contend that justification may be shown under a general denial; but in any event, the allowance of the amended answer pleading justification was proper. Also that such justification was properly shown.

That justification under process is new matter which must be specially pleaded in order to avail as a defense is too firmly settled to be now open to question. 35 Cyc. 1816 and cases cited; 20 Enc. Pl. & Pr. 151—154 and cases cited; Pom. Rem. & Rem. Rights, § 704; Jacobs v. Remsen, 12 Abb. Pr. 390; Graham v. Harrower, 18 How. Pr. 144; Banning v. Marleau, 121 Cal. 240, 53 Pac. 692.

Under the issues as framed by the pleadings it was therefore clearly error to receive evidence, over plaintiff’s objection, tending to show justification. Whether the evidence offered and received for such purpose was competent, we need not determine, for the same was clearly irrelevant.

Respondent’s counsel earnestly contend that, even though it be held that justification must be pleaded in order to be available as a defense, the allowance of the amended answer after the trial in which - such justification is alleged renders plaintiff’s point in this respect of no avail. In other words, it is contended that by the allowance of such amended answer defendant is in as advantageous a position as he would have been in had he pleaded such new matter in the original answer. We are unable to uphold respondent’s contention in this respect. Had the testimony showing justification been introduced without objection, a different situation would arise, but as we understand the settled rule, while amendments to pleadings to conform to the proof will, in furtherance of justice, be liberally granted, they will never be granted where the admission of evidence was promptly objected to when it was offered, upon the ground that it did not tend to support the allegations in the pleadings. 1 Enc. Pl. & Pr. 585 and cases cited. As said in Beard v. Tilghman, 66 Hun, 12, 20 N. Y. Supp. 736: “The court had no power at the close of the case to conform the affirmative allegations in the answer to the proof, for the reason that the evidence at the time it was offered, to which the allegations in the answer were made to conform, was objected to, and admitted under exceptions. Under these circumstances, the court had no power to conform the pleadings to the proof, because the.party whose objection had been overruled had a right to rely upon his exception, and the rights which such exceptions gave to him could not he taken away by the device of conforming the allegations of the pleadings to the proof offered, such exception having been well taken at the time the proof was offered. If any amendment to the pleadings was necessary, it should have been made prior to the introduction of the evidence if the evidence was objected to; and, for the reasons stated, it is apparent that such a motion could not be made under such circumstances at the close of the case.”

In the case at bar, what the learned trial court did was not to conform the pleading to the proof, but it granted defendant leave to file and serve an amended answer. While such order was no doubt made within the exercise of a sound discretion, the service and filing of such amended answer merely operated to change and enlarge the issues as of the date the same was served and filed. The new issue thus brought into the case cannot avail the defendant in the absence of evidence properly introduced in its support! Defendant’s counsel should have applied for leave to reopen the case and submit such evidence. The fact that plaintiff’s counsel, by. retaining the amended answer without objection, may have foreclosed their right to question the validity of the order allowing the same, does not alter the situation in the least. The fact remains that there is no competent evidence in the case proving or tending to prove justification; hence, the judgment in defendant’s favor is erroneous, and the same is accordingly ordered to be vacated and ¿ new trial had, and it is so ordered.

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Rehearing

On Petition for Rehearing (Filed November 21, 1913).

Fisk, J.

Counsel for respondent have filed an elaborate petition for rehearing wherein they challenge the correctness of the foregoing opinion in certain particulars. Such petition contains thirty-six pages of typewritten matter, consisting of a reargument and citation of numerous authorities claimed to be in point, but nothing new is presented, and the same amounts to a rehash of the matters contained in the original brief, with the addition of the citation of many authorities.

Notwithstanding a failure of counsel to observe the rules regarding the matters which may be properly set forth in a petition for rehearing, we have devoted considerable time to a consideration thereof, and have examined most of the authorities therein collated. After such consideration we see no reason to change our conclusions as above announced.

It is not our purpose at this time to answer in detail the various propositions advanced by counsel in such petition, but will briefly notice some of them. The fact must not be overlooked that this is not an action in claim and delivery, but one brought to recover damages for the alleged conversion by defendant of certain personal property claimed to belong to plaintiff. Defendant, by his original answer, merely puts in issue the allegations of the complaint by what amounted to a general denial; no attempt to plead justification was made. The issues thus framed were therefore clearly defined. In order to recover, plaintiff had the burden of proving, first, ownership in him as alleged; second, wrongful conversion of the property by defendant as alleged; and, third, the damages occasioned thereby. In their petition, counsel for respondent argue that because plaintiff in his complaint alleged that defendant unlawfully took said property from the plaintiff’s possession, and that because plaintiff’s counsel in proving their case offered testimony showing that defendant, as sheriff, claimed to act under a certain execution issued in an action wherein the First National Bank of Waterloo was plaintiff and W. I. Ginther was defendant, that this opened the door to defendant to prove and rely upon justification. Such contention is far-fetched and unsound. The fact that plaintiff went to the trouble of proving the unnecessary particulars regarding the method of the alleged conversion by defendant of this property did not have the effect of broadening the issues in the case as framed by the pleadings. The sole purpose of sucb testimony was to prove tbe allegation in the complaint that defendant took and converted the property. Nor does the fact that plaintiff had knowledge of the capacity in which and the process under which defendant seized this property thus operate to broaden the issues and to permit a defense of justification under the pleadings. It is no hardship upon litigants to confine them to the issues which they have framed by the pleadings, and not to do so would result in endless confusion in our practice. It is no answer to this to say that plaintiff could not possibly have been prejudiced by permitting defendant to prove and rely upon a defense which he did not see fit to allege. When proof of such defense was offered and objected to, proper and orderly practice required defendant to move to amend his answer by alleging such new matter by way of defense; and if such a motion had been made, it no doubt would have been granted, for, under the facts, it would have constituted an abuse of discretion to have denied such application; but, as before stated, such fact in no way obviates the necessity for such an' amendment in order to permit of the defense of justification. The logical effect of counsel’s reasoning, it seems to us, would be to do away with the necessity of pleading defenses where it can be shown that the plaintiff had knowledge of their existence. The mere statement of the proposition is enough to show the fallacy of such contention.

What we have here said does not in the least conflict with the well-settled rule that courts should be liberal in allowing amendments, and that a variance between the allegations in a pleading and the proof shall not be deemed material unless it has actually misled the adverse party to his prejudice, etc. The fact that a party has not been misled to his prejudice, nor in any manner taken by surprise, is a very good reason why his objection to a proposed amendment should be ignored; but it is no reason for dispensing with the necessity of any amendment at all; nor is it any justification for permitting an amendment after the trial, materially changing the issues, nor of permitting an amendment of the pleadings after the trial to conform to the proof where such proof was improperly received over objection. Counsel have devoted much space in their petition in an attempt to convince us that the above opinion is erroneous in asserting that ah amendment, after the trial, to conform the pleadings to the proof, cannot be made where such proof was improperly received, over objection, and they cite a large number of cases which they claim to be in point, and among them is Barker v. More, 18 N. D. 85, 118 N. W. 823. Most of the cases cited and relied upon are from California. The cases from other states do- not seem to support counsel’s contention. An examination of the opinion in Barker v. More discloses that it was an action in equity, tried under the so-called Newman law, where all evidence offered must be received on trial, in which cases rulings are not made on the objections to evidence, and the portion of the opinion relied upon by counsel was purely dictum, as the following quotation from the opinion shows: “In reference to the action of the trial court in permitting an amended answer to be served, we think there was no abuse of discretion, and that the plaintiff was in no way prejudiced by the amendment. The complaint alleged that the assignment to Cooper was for security purposes only. The original answer expressly denied that there was any trust relation created by that assignment, and under that allegation and denial it would not have been error to admit proof that the assignment of November 7, 1902, was not a conditional one. However, disregarding entirely the question of the sufficiency of the original answer, we discover no reason why it was prejudicial or erroneous to permit the amendment to be filed to conform to the proof. It was not a different or new defense from that which was foreshadowed by the general denial or answer, wherein there was an express denial of any trust relation growing out of the assignment. The amended answer alleged that fact in more specific terms.” It will be seen from the foregoing that what was said hardly reached to the dignity even of a dictum, in favor of the respondent’s contention, as the amendment brought no new issue into the case, and we certainly do not consider it as in any way controlling in the case at bar.

In view of counsel’s very urgent contention upon the proposition that the court has power to conform the pleadings to the proof, even though such proof was introduced over the objection that it was not within the issues, we desire to cite in support of our holding the following authorities in addition to those cited in the main opinion: 31 Cyc. 452, and the numerous cases cited in note 85, from the states of Indiana, Kansas, Massachusetts, Minnesota, Nebraska, New York, and Oregon. Also the following more recent cases: Audley v. Townsend, 126 App. Div. 431, 110 N. Y. Supp. 575; Leggat v. Palmer, 39 Mont. 302, 102 Pac. 327. Anri we call special attention to tbe cases of Guerin v. St. Paul F. & M. Ins. Co. 44 Minn. 20, 46 N. W. 138; Walker v. O'Connell, 59 Kan. 306, 52 Pac. 894; and Mendenball v. Harrisburg Water Power Co. 27 Or. 38, 39 Pac. 399.

We quote from tbe latter opinion as follows: “ ‘When,’ says Lord, J., in Cook v. Croisan, 25 Or. 475, 36 Pac. 532, 'tbe parties proceed with a trial, and evidence is received without objection, supporting material matters wbicb are not set out in tbe pleadings, tbe court may permit the pleadings to be amended to conform with tbe proofs.’ Tbe right to amend a pleading so as to make it conform to tbe proof proceeds upon tbe theory that it presented tbe issues sought to be established by tbe evidence introduced and admitted without objection, but that some material allegation bad been inadvertently omitted therefrom. In such cases it is tbe duty of the court, after tbe evidence upon tbe supposed issue has been introduced without objection, to permit tbe amendment; but when objection has been made to its introduction, tbe court has no authority to allow such an amendment, as this would have a tendency to invert tbe orderly mode of trial prescribed by statute, and lead to tbe practice of settling issues after, instead of before, trial, thereby returning to primitive methods. Tbe plaintiff having made objection to tbe introduction of this evidence, there was no abuse of discretion in denying leave to tbe defendant to file its amended answer.”

In Walker v. O’Connell, tbe Kansas court, speaking upon this question, said: “After successfully resisting all tbe defendant’s attempts to secure recognition of tbe rule, tbe plaintiff finally moved for leave to amend her petition to conform to tbe facts proved, by alleging tbe nonappointment of an administrator of tbe decedent’s estate. This motion was allowed and tbe amendment made. However, it was not made, nor tbe motion therefor filed, until five days after tbe close of tbe trial, tbe return of tbe verdict, and tbe discharge of tbe jury, and two days after tbe motion for new trial was filed. It was made, however, before tbe rendition and entry of judgment on tbe verdict and findings.

“While tbe statute (Civil Code, § 139) allows amendments to be made, either before or after judgment, to conform to tbe proof of facts, and while this statute should be liberally construed and a liberal exercise of tbe right of amendment allowed, we >-are clear that the amendment in question should not have been permitted at tbe time and under tbe circumstances disclosed in this case. It will be observed that, at every proper and available opportunity, the attention of the court was called to the vital defect in the plaintiff’s petition, and a challenge made to her right to proceed because of such defect. In particular, the court had been requested to instruct the jury to find for the defendants, because of the lack of the necessary allegation in plaintiff’s petition to entitle her to recover. Excc^ jus to the court’s rulings were made as each successive phase of the question arose and was disposed of. These rulings and exceptions showed substantial and reversible error, within the previous decisions of this court.

“At no time after verdict and before the amendment was made could any question exist as to the right of the defendants to an order setting aside the verdict and findings and awarding a new trial. We think it was not within the power of the court, at the late time this amendment was proposed, to allow it to be made, and through its retroactive effect to cure the substantial errors which had been committed through lack of its earlier making. To such effect are the authorities. 'A motion, after the close of the evidence, to conform the pleadings to the proof, can never be granted where the admission of the evidence was promptly objected to when it was offered, upon the ground that it did not tend to support the allegations in the pleadings.’ 1 Enc. Pl. & Pr. 585. We have examined many of the authorities cited under the above quotation, and find that they fully support the text.

“We cannot conjecture whether an administrator of the estate of John O’Connell had been in fact appointed, and we have no way of ascertaining the fact except by the record before us; and that was silent upon the question until the amendment was made, long after all opportunity for the defense to be heard upon it had passed. Had an issue been made upon this question in proper time and form, it might have been that the defendants could have proved the making of an appointment. We cannot assume a lack of good faith on their part in insisting that such issue be framed and that they be heard upon it. We cannot assume that their contention is a technical and vexatious insistence upon a mere matter of form, readily ascertainable against them. As shown in Eureka v. Merrifield, 53 Kan. 794, 37 Pac. 113, it is matter of substance, and not of form, and what the fact may be is impossible for us to know.”

Tn Guerin v. St. Paul F. & M. Ins. Co. tbe Minnesota court said: “Tbe court also erred iu permitting tbe amendment. Tbe defendant properly and seasonably objected to tbe reception of testimony inadmissible under tbe pleadings, but wbicb, as tbe court charged tbe jury, was essential to a recovery by tbe plaintiffs, and was thereafter entitled to the benefit of its objection and exception. It is true that under tbe statute . . . much discretion is properly given to tbe trial court in tbe way of amendments, before and after judgment, in furtherance of justice. But in this instance tbe manifest purpose and tbe inevitable effect of tbe amendment was to deprive the defendant of a legal right it had secured during tbe trial, by means of its exception to tbe ruling. This was a clear abuse of discretion upon tbe part of tbe court. Tbe plaintiffs should have applied for tbe amendment when, through tbe objection made on the trial, its necessity became strikingly apparent.”

And Mr. Sunderland in bis able article on Pleading, 31 Cyc. 452, states what undoubtedly is tbe sound rule as follows: “Tbe right to amend pleadings so as to conform to proof proceeds upon tbe theory that this presents tbe issues sought to be established by tbe evidence introduced and admitted without objection; but it is quite generally held that, where tbe evidence offered has been promptly objected to on the ground that such evidence offered has been promptly objected to on tbe ground that such evidence does not tend to support tbe allegations of tbe pleadings, a motion to amend after admission of tbe evidence, so as to conform to proof, should not be granted, and if under such circumstances it is granted, it is an abuse of discretion, and tbe amendment will not be considered on appeal. If evidence is objected to on tbe ground of variance, tbe motion to amend should be made before it is admitted.”

In tbe light of counsel’s citation of tbe many authorities wbicb they assert support their contention, it is interesting to observe that in tbe note to Cyc. above cited tbe only eases collated as bolding contrary to tbe general rule are four California decisions, as follows: Firebaugh v. Burbank, 121 Cal. 186, 53 Pac. 560; Guidery v. Green, 95 Cal. 630, 30 Pac. 786; Clark v. Phœnix Ins. Co. 36 Cal. 168; and Stringer v. Davis, 30 Cal. 318. Tbe reason for tbe rule is stated in such note as follows: “To allow an amendment under such circumstances would have a tendency to invert the ordinary mode of trial, and lead to the settling of issues after, instead of before, trial.”

We deem it unnecessary to extend this opinion further in answer to the various contentions in the petition. While we regret the necessity of ordering a new trial, and thus subjecting tbe1 defendant to added expense, we see no other alternative. The fact that a like result may and probably will be reached on a new trial does not, under the record, justify us in affirming the judgment. Although the plaintiff’s so-called trust deed, upon which his title to the property in controversy rests, is void as to nonassenting creditors of Mr. Ginther, it is valid and enforceable as to all other persons, and therefore it is incumbent upon defendant, in order to defeat plaintiff’s recovery, to allege and prove justification. This he failed to do.

Petition denied.