Case Name: ED. DRINKWATER, as Trustee of Cornelius R. Pake, Bankrupt, in Bankruptcy, v. FRANCES E. PAKE and Cornelius R. Pake
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1916-02-28
Citations: 33 N.D. 190
Docket Number: 
Parties: ED. DRINKWATER, as Trustee of Cornelius R. Pake, Bankrupt, in Bankruptcy, v. FRANCES E. PAKE and Cornelius R. Pake.
Judges: 
Reporter: North Dakota Reports
Volume: 33
Pages: 190–193

Head Matter:
ED. DRINKWATER, as Trustee of Cornelius R. Pake, Bankrupt, in Bankruptcy, v. FRANCES E. PAKE and Cornelius R. Pake.
(156 N. W. 930.)
Referee — findings of fact — assailed for first time — in supreme court — trial' court — objections to findings — there first presented.
1. The findings of fact of a referee cannot be assailed for the first time in the appellate court. But the party dissatisfied with such findings must, in the first instance, present his objections thereto by proper exceptions in the court below.
Personal property — vendor — sale — possession — control — immediate delivery-change of possession — fraudulent — creditors — good faith.
2. Under the provisions of § 7221, Compiled Laws, every sale made by a vendor of personal property in his possession or under his control, unless accompanied by an immediate delivery and followed by an actual and continued change of possession of the property sold, is presumed to be fraudulent and void as against creditors of the vendor, unless those claiming under the sale make it appear that the same was made in good faith and without any intent to hinder, delay or defraud such creditors.
Opinion filed February 28, 1916.
From a judgment of the District Court of Burke County, Leighton,. J., defendants appeal.
Affirmed.
Francis J. Murphy, for appellants.
There was a bona fide indebtedness by Cornelius R. Pake to his wife, Frances E. Pake, and he had a right to pay to his wife the amount of such indebtedness. She was his creditor, and it was to pay her that the transfer was made. The common law recognizes the right-of the debtor to secure or pay one creditor in preference to another. Comp. Laws 1913, §§ 4654, 7218; Cutter v. Pollock, 4 N. D. 205, 25-L.R.A. 377, 50 Am. St. Rep. 644, 59 N. W. 1062; Wannemacher v.. Merrill, 22 N. D. 46, 132 N. W. 412.
Creditors of a husband cannot complain of a payment made by him in good faith of an honest debt due his wife. Kolbe v. Harrington,. 15 S. D. 263, 88 N. W. 572.
A conveyance by husband to his wife to secure a bona fide debt due to her from him is not void as to creditors, although the husband’s intent is fraudulent, unless the wife knew of such bad intent. Williams v. Harris, 4 S. D. 22, 46 Am. St. Rep. 753, 54 N. W. 926; First State-Bank v. O’Leary, 13 S. D. 204, 83 N. W. 45; Fluegel v. Hensehel,, 7 N. D. 276, 66 Am. St. Rep. 642, 74 N. W. 996; Wannemacher v. Merrill, 22 N. L). 50, 132 N. W. 412; Stevens v. Meyers, 14 N. D. 398, 104 N. W. 529.
George H. Gjerbson, E. E. S'wiMer, and Wolfe & Schneller, for respondents.
Hpon a sale of personal property there must be actual delivery, and immediate and continuous change of possession. Otherwise such sale is presumed to be fraudulent and void as to creditors of the vendor. Comp. Laws 1913, §§ 7221, 7223.

Opinion:
Christianson, J.
The plaintiff, Ed. Drinkwater, as trustee in bankruptcy of Cornelius R. Pake, bankrupt, brought this action to cancel a transfer of certain personal property from the defendant Cornelius R. Pake to his wife, the defendant Frances E. Pake, on the ground that such transfer was without consideration not accompanied by a change of possession, and was made with intent to hinder, delay, and defraud the creditors of the bankrupt, and is therefore null and void as to such creditors. By consent of the parties a reference was ordered, — the referee being empowered to try all issues and make findings of fact and conclusions of law. A trial was had before such referee, at which both sides produced witnesses and offered evidence. The referee made findings of fact and conclusions of law in favor of' the plaintiff, and, subsequently, pursuant to notice, the referee's findings and conclusions were confirmed by the trial court and judgment entered in favor of the plaintiff. The defendants appealed from this judgment and demanded a trial de novo in this court.
Appellants' principal contention is that the following fin ding of fact is not supported by a preponderance of the evidence: "That said assignment and transfer of said property was made without a transfer of actual possession and without a manual delivery of said property. " . . That said transfer of property was without consideration, and was made with intent to hinder and delay and defraud the creditors of the said Cornelius It. Pake." As already stated, the trial of all issues in this action was had before a referee. Tbe record shows that tbe referee's findings and conclusions were confirmed pursuant to notice, and that both plaintiff and defendant were represented at such bearing. No exceptions were taken to tbe referee's findings or conclusions, nor was any objection made to tbe confirmation of tbe referee's report at tbe time of tbe bearing of tbe application to confirm such report.
Section 7654, Compiled Laws, provides: "All acts of and proceedings by a referee shall be deemed excepted to in tbe same manner and under tbe same conditions as though such proceedings bad been before .a district or county court; and in all trials before a referee in which such referee shall make findings of fact and conclusions of law, tbe prevailing party shall serve upon tbe other a copy of such findings and conclusions, after tbe same shall have been filed with tbe clerk of court, with a notice of tbe time of such filing, and either party may except to any such findings of fact or conclusions of law, by filing a written statement of such exceptions with tbe clerk within twenty days after tbe service of such copy of notice; and all such exceptions shall be incorporated in tbe statement of case which may thereafter be settled. When tbe findings of fact or conclusions of law of a referee are set .aside or modified by tbe court, tbe action of tbe court in that regard .shall be deemed excepted to."
This section clearly contemplates that a party who desires to assail a finding of fact or conclusion of law made by a referee must do so, in tbe first instance, by proper exceptions in tbe trial court. It is intended that tbe trial court should know what finding or conclusions (if any) are assailed, when passing upon tbe application to confirm tbe referee's report. If it is contended that tbe evidence is insufficient to support tbe findings, or any of them, this objection must be called to tbe trial court's consideration by proper exception. See Illstad v. Anderson, 2 N. D. 167, 49 N. W. 659; 34 Cyc. 858, 860, 866; 17 Enc. Pl. & Pr. 1065. As no exceptions were made to any of tbe findings of fact or conclusions of law of tbe referee, they cannot be assailed for tbe first time in this court. To bold otherwise would be to disregard tbe plain provision of tbe statute.
We will add, however, that we have examined the evidence contained in the record, and in our opinion the finding of the referee which is assailed as unsupported by the evidence is sustained thereby. The property transferred consisted of horses, cattle, and machinery belonging to the defendant Cornelius B. Pake. Prior to, at, and subsequent to the time of the transfer, the two defendants were living together as husband and wife upon a farm in Burke county, in this state. After the execution and delivery of the bill of sale, the defendant Cornelius B. Pake continued to use the property as before. It is true he claims that he did so as the agent for his wife, but nevertheless he was still permitted for all apparent purposes to possess and use the property as before. This condition rendered the sale presumptively fraudulent, and placed upon defendants the burden of showing that the sale was made in good faith, and without intent to hinder, delay, or defraud the creditors of Cornelius B. Pake. Comp. Laws, 1913, § 7221.
We are satisfied that the evidence in the case, taken as a whole, sustains the findings of fact made by the referee.
The judgment of the District Court is affirmed.