187 N.W. 421 | N.D. | 1922
Lead Opinion
Statement.
On January 23, 1918, Max Schultze filed a voluntary petition in bankruptcy. Prior thereto, on October 23, 1917, he and one Goeschel had made a. written agreement, which provides that the balance due upon the purchase price of two sections of land in -Montana, namely, $2,050, should be deposited in the First National- Bank of New Salem, now reorganized as the defendant bank, that $400 out of such deposit should be paid to one Pierson, and the remainder to the intervener herein dependent upon the determination of litigation, then pending in Montana, concerning the lands. The First National Bank of New Salem accepted the terms of the deposit; the amount of such deposit was paid by Goeschel into the bank. The plaintiff is the trustee of the bankrupt’s estate. He instituted this action against' the depositary bank. His complaint alleges that such deposit constitutes a preference under the terms of the Bankruptcy Act (U. S. Comp. St. §§ 9585 — 9656), and was made for the purposes of hindering, delaying, and defrauding the bankrupt’s creditors. The trustee seeks to recover' the amount of the deposit. The defendant, in its answer, requests permission to pay the money into court for disposition under the court’s order. The parties stipulated that the Farmers’ & Merchants’ State Bank might intervene and defend in this action. For its complaint in intervention the intervener asserts that the deposit so made was not the property of the bankrupt, but that of his son. ■ It denies the allegations of the complaint concerning the creation of a preference and a deposit made to defraud creditors. The action was tried to the court without a jury. The
The trial court found that the litigation in Montana resulted in a •determination that Goeschel was the owner of the land; that the intervener did not have knowledge of the insolvency of the bankrupt when
Decision.
Plaintiff’s cause of action is founded upon the provisions of the federal Bankruptcy Act concerning the creation of a preference (7 C. J. 148), and concerning transfers made for the purpose of hindering or defrauding creditors (7 C. J. 170). Such cause of action presents questions of fact for determination by a jury. The plaintiff, in his; prayer for relief, seeks a money -judgment against the defendant and intervener. This cause of action sounds in law and not in equity. Accordingly this court, upon appeal from the judgment concerning such cause of action, does not try the action de novo. The so-termed Newman Act, as heretofore existing or as now amended, does not apply.. Section 7846, C. L. 1913; chap. 8, Laws 1919; Novak v. Lovin, 33 N. D. 424, 157 N. W. 297; St. A. & Dak. Elev. Co. v. Martineau, 30 N. D. 425, 153 N. W. 416; Barnum v. Land Co., 13 N. D. 359, 100 N. W. 1079; Laffy v. Gordon, 15 N. D. 282, 107 N. W. 969.
The appeal, therefore, is before this court for review upon specifications of error. The findings of the trial court are presumed to be
Upon a review of the entire record we are of the opinion that the findings of the trial court should not be disturbed. The plaintiff is not in a position to complain concerning the failure of the trial court to make findings, upon the allegations of the complaint, that the deposit was made for the purpose of hindering or defrauding creditors. The trial court permitted the plaintiff, at the trial, to amend his complaint so as to state a cause of action: Parts of the pleadings were read into the record at the trial. The plaintiff in open court stated the nature of the action to be one to recover on an alleged preference. The alleged cause of action, that the transfer was made for hindering and defrauding creditors, w.as not separately stated as a cause of action. The record does not establish evidence to support the same as a separate cause of action. Evidently the trial court regarded such allegations to be in connection with the cause of action for an alleged preference, and not to be a separate cause of action. The findings cover the issues presented upon the evidence.
The judgment is affirmed, with costs.
Concurrence Opinion
(concurring). This is an action brought by a
trustee in bankruptcy to set aside an alleged preferential or fraudulent transfer.
It is alleged in the complaint:
(1) That such transfer was made by the bankrupt while insolvent, and within four months before the filing of the petition in. bankruptcy, for the purpose and with the iiitent to prefer the intervener and enable it to obtain a greater percentage of its debt than any other ¿.realtors of the same class. • •
(2) That such transfer was made “by said Max Schultze with the purpose and intent on his part to hinder, delay, and defraud his creditors, or some of them, in the collection of their just debts, and with the purpose and intent to hinder, delay, defraud, and prevent all .of his
The trial court made findings to the effect:
(1) That it was not established by a preponderance of the evidence that the moneys transferred to the intervener belonged to the bankrupt, or that his estate had been diminished by the deposit and payment thereof.
(2) That the intervener did not know, and had no reasonable cause to believe, that the transfer or payment of the moneys to it would effect a preference.
These findings are based upon the testimony of witnesses who were called and testified orally in the trial court, so the trial judge had opportunity, not only to hear their testimony but to observe their demeanor while testifying. And in my opinion both findings are correct. The first finding is decisive of the action, for manifestly there can be-neither disposition of property with the intent to hinder, delay, or defraud creditors, nor a preferential transfer, within the purview of the Bankruptcy Act, unless the property transferred was something belonging to the bankrupt, which his other creditors had a right to subject to the payment of their claims. 7 C. J. 165, 166. The burden was upon the plaintiff, trustee, to establish that the moneys sought to be recovered belonged to the bankrupt, and were by him transferred in violation of the provisions of the Bankruptcy Act. 7 C. J. 269. This burden was not sustained. On the contrary, the preponderance of the evidence sustains the contention of the intervener that the moneys in controversy did not belong to the bankrupt, but belonged to Fred! Schultze.