Oregon Mill & Grain Co. v. Hyde ( 1918 )

Mr. Justice Harris

delivered the opinion of the court.

Sections 6069 to 6072, L. O. L., as amended by Chapter 281, Laws 1913, and commonly referred to as the Bulk Sales Act, requires a written statement under oath containing the names and addresses of the creditors of the vendor, directs the giving of notice to such creditors, and provides that a sale of a stock of goods in bulk without complying with the act “shall, as to any and all creditors of the vendor, be conclusively presumed fraudulent and void.” The sale by Hyde to Kirkpatrick was the sale of a stock of goods in bulk, and it was made without attempting to comply with the requirements of the Bulk Sales Act. The judgment in the garnishment proceeding is predicated upon the theory that as against the judgment creditor the Oregon Mill & Grain Company, the garnishee Kirkpatrick had in his possession property belonging to the judgment debtor, Hyde. The appeal is presented on the hypothesis that the suit in equity prosecuted by Hyde against Kirkpatrick and the action at law pursued by the corporation against Kirkpatrick constituted (1) an adjudication that Kirkpatrick was not indebted to Hyde; and (2) an election by the corporation to approve the sale to Kirkpatrick.

1. The right of a judgment creditor to recover from a. garnishee depends upon whether the garnishee has property belonging to or owes a debt to the judgment debtor. The garnishee becomes liable to the judgment creditor only because he is indebted to or has property in his possession belonging to the judgment debtor. The garnishee may have in his possession property which (1) is in fact or (2) is in contemplation of law, although not in fact, owned by the judgment debtor. It may be assumed, for the purposes of the instant case, that as between Hyde and Kirkpatrick the latter neither owes nor has in his possession property belonging to the former; and it may also be assumed, but it is not decided, that the court adjudicated in the suit prosecuted by Hyde and in the action maintained by the corporation against Kirkpatrick that the latter did not agree to pay Hyde’s debt to the corporation. In brief, in order that the contention of the garnishee may be presented upon a statement of facts most favorable to him it may be assumed that he neither owed Hyde a debt nor agreed to pay Hyde’s debt to the corporation; that as between Hyde and Kirkpatrick the latter did not have in his possession any property belonging to the former; and that it has already been determined by a final adjudication that Kirkpatrick did not agree to pay Hyde’s debt to the Oregon Mill & Grain Company.

2.- The sale of the stock of goods was valid as between Hyde and Kirkpatrick; and, therefore, as between them the latter did not have property which in fact belonged to the former: 12 it. O. L. 525. The statute, however, interposes and provides that as to the creditors of the vendor the sale shall “be conclusively presumed fraudulent and void,” so that while there may be a change of possession there cannot be a transfer of title if the Bulk Sales Act is not complied with, and hence the vendee holds in his possession property which in contemplation of law is still the property of the vendor; and since the vendee has property which in the eyes of the law belongs to the vendor a creditor of the latter can attach the property. " If the vendee has sold or disposed of the property he is nevertheless liable to the creditors of the vendor to the extent of the value of the property and the proceeds of the sale may be garnished by such creditors, on the theory that the vendee stands in the position of a trustee who is responsible to the creditors for the disposition of the property: Kohn v. Fishbach, 36 Wash. 69 (78 Pac. 199, 104 Am. St. Rep. 941); Owesso Carriage & S. Co. v. McIntosh & Warren (Tex.), 179 S. W. 257; Jaques & Tinsley Co. v. Carstarphen Warehouse Co., 131 Ga. 1 (62 S. E. 82); Schneider v. Lee, 33 Or. 578, 583 (17 Pac. 269); 12 R. C. L. 529. The right of the Oregon Mill & Grain Company to reach the stock of goods sold to Kirkpatrick does not depend upon whether Kirkpatrick had property which in truth belonged to Hyde; but its right depends upon whether Kirkpatrick had in his possession a stock of goods which had been delivered to him by Hyde without complying with the Bulk Sales Act and consequently it is immaterial whether Kirkpatrick owed a debt to or had property which in fact belongs to Hyde or whether the garnishee in truth agreed to pay the debt of Hyde or whether it was finally adjudicated that Kirkpatrick did not agree to pay Hyde’s debt to the Oregon Mill & Grain Company.

3,4. Although the word “void” is used, the plain meaning of the statute is that a sale is valid as between the seller and purchaser but it is merely voidable at the instance of a creditor of the seller: 12 R. C. L. 474, 525; McGreenery v. Murphy, 76 N. H. 338 (82 Atl. 720, 39 L. R. A. (N. S.) 374). As said by Mr. Justice Burnett in Benson v. Johnson, 85 Or. 677 (165 Pac. 1001, 1003), the legislation “vests in creditors a right which when acting for themselves they are at liberty either to assert or ignore”; and since a sale of a stock of goods is merely voidable at the instance of a cred- • itor, the fraud which the law conclusively presumes to exist may be waived and the sale ratified by the creditor: Bradtfeldt v. Cooke, 27 Or. 194, 201 (40 Pac. 1, 50 Am. St. Rep. 701); Rice v. West, 80 Or. 640, 645 (157 Pac. 1105); Knoop v. Kelsey, 102 Mo. 291 (14 S. W. 110, 22 Am. St. Rep. 777, 779); 20 Cyc. 434; 12 R. C. L. 499; but as stated in Bump on Fraudulent Conveyances (4 ed.), Section 456,

“mere notice without any action on the part of the creditor, or mere acquiescence by taking no present measures to interfere with the transfer, does not amount to confirmation, for he can be precluded from assailing the transfer only on the ground of estoppel or agreement; there must be a benefit conferred upon him, or a disadvantage suffered by the grantee such as can bind the conscience of the former or clothe his act with the character of a contract.”

It is not pretended that the corporation gave its consent before the sale was made and hence if the company is prevented from attacking the sale it is only because it has confirmed the sale either by acts and . declarations which create an estoppel in pais or by an election of remedies.

5. Kirkpatrick has not sustained any loss, or suffered any detriment or changed his position by reason of any act or declaration of the corporation; nor has the corporation gained any advantage or benefit by reason of any act done or any declaration made by it. Kirk-patriot has neither done anything that he would not have done nor omitted to do anything that he would have done except for the acts or declarations of the corporation. Even though the Oregon Mill & Grain Company were until now unknown to Kirkpatrick nevertheless he would have done exactly as he did do. The conduct of the corporation did not work an estoppel in pais: Marquette County Sav. Bk. v. Koivisto, 162 Mich. 554 (127 N. W. 680).

6, 7. We now come to a consideration of the question of whether the prosecution of the action by the Oregon Mill & Grain Company against Kirkpatrick operated as an election of remedies so as to preclude the right subsequently to resort to garnishment. Election of remedies is defined in 15 Cyc. 252, thus:

“Election of remedies has been defined to be the right to choose, or the act of choosing between different actions or remedies, where plaintiff has suffered one species of wrong from the act complained of. And broadly speaking, an election of remedies is the choice by a party to an action of one of two or more coexisting remedial rights, where several such rights arise out of the same facts; but the term has been generally limited to a choice by a party between inconsistenl remedial rights.”

See also: Kearney Milling & Elevator Co. v. Union Pacific Ry. Co., 97 Iowa, 719 (66 N. W. 1059, 59 Am. St. Rep. 434, 439). An election of remedies is defined in 9 R. C. L. 956

“as the choosing between two or more different and coexisting modes of procedure and relief allowed by law on the same state of facts.”

The basis of the application of the doctrine, as stated in Mills v. Parkhurst, 126 N. Y. 89 (26 N. E. 1041, 13 L. R. A. 472, 474),

“is in the proposition that where there is, by law or by contract, a choice between two remedies, which proceed upon opposite and irreconcilable claims of rig'ht, the one taken must exclude and bar the prosecution of the other.”

The same facts may create two or more remedial rights each of which is inconsistent with the other, and all of which exist in a state of suspension until one of them is selected by the person entitled to choose; but when he makes his choice the right chosen is preserved and from that moment becomes the only one available to him, while all the rest are dissolved and cease to exist. Illustrations without number could be given. Our own precedents illustrate the doctrine. If a person is intrusted with chattels with power to sell pledges the property to secure advances made on his own account, the owner can sue him for the value of the property converted or he can sue on the contract; but the owner cannot have both remedies: Nichols v. Gage, 10 Or. 82, 85. The breach of a contract providing for the conditional sale of personal property gives the seller more than one remedial right; but if he undertakes to recover the price he cannot after-wards change his position and recover the property in specie: Francis v. Bohart, 76 Or. 1 (143 Pac. 920, 147 Pac. 755, L. R. A. 1916A, 922); American Process Company v. Florida White Pressed Brick Co., 56 Fla. 116 (47 South. 942, 16 Ann. Cas. 1054). The rule itself is simple enough although the application of it is sometimes difficult and occasionally confusing; and perhaps as suggested in Rowell v. Smith, 123 Wis. 510 (102 N. W. 1, 3 Ann. Cas. 773), some of the seeming conflict of judicial opinion arises out of a failure to observe the finer distinctions between the doctrines of estoppel in pais, res adjudícala and election of remedies. The question of whether coexisting remedial rights are inconsistent with each other is to be determined by a consideration of the relation of the parties with reference to the right attempted to be enforced: American Process Co. v. Florida White Pressed Brick Co., 56 Fla. 116 (47 South. 942, 16 Ann. Cas. 1054); Capital City Bank v. Hilson, 64 Fla. 206 (60 South. 189, Ann. Cas. 1914B, 1211); Rowell v. Smith, 123 Wis. 510 (102 N. W. 1, 3 Ann. Cas. 773).

It is not necessary to determine whether the mere commencement of an action to enforce one of two or more coexisting but inconsistent remedial rights operates as an irrevocable selection, although the clear weight of judicial opinion is to the effect that the commencement of a suit or action is an election: Frisch v. Wells, 200 Mass. 429 (86 N. E. 775, 23 L. R. A. (N. S.) 144); Conrow v. Little, 115 N. Y. 387 (22 N. E. 346, 5 L. R. A. 693); Rowell v. Smith, 123 Wis. 510 (102 N. W. 1, 3 Ann. Cas. 773); Grizzard v. Fite, 137 Tenn. 103 (191 S. W. 969, L. R. A. 1917D, 652); 15 Cyc. 259; 7 Ency. Pl. & Pr. 368. In a few jurisdictions, however, the mere commencement of a suit or action does not prevent the plaintiff from dismissing it and pursuing another remedy: Johnson-Brinkman Com. Co. v. Missouri Pacific Ry. Co., 126 Mo. 344 (28 S. W. 870, 47 Am. St. Rep. 675, 26 L. R. A. 840); 9 R. C. L. 961.

The selection of one of two or more coexisting, inconsistent remedial rights is not irrevocable however unless made with a knowledge of the facts out of which such rights arise; and hence if one commences a suit or action in ignorance of the substantial facts which offer an alternate remedy, he may, when informed, adopt a different remedy: Rehfield v. Winters, 62 Or. 299, 305 (125 Pac. 289); Kearney Milling & Elevator Co. v. Union Pacific Ry. Co., 97 Iowa, 719 (66 N. W. 1059, 58 Am. St. Rep. 434); Zimmerman v. Robinson & Co., 128 Iowa, 72 (102 N. W. 814, 5 Ann. Cas. 960); Moline Plow Company v. Rodgers, 53 Kan. 743 (37 Pac. 111, 42 Am. St. Rep. 317); Murphy v. Hutchinson, 93 Miss. 643 (48 South. 178, 17 Ann. Cas. 611, 21 L. R. A. (N. S.) 785); 15 Cyc. 261; 9 R. C. L. 962. The Oregon Mill & ©rain Company excuses the prosecution of the action at law against Kirkpatrick by alleging and offering evidence to show that it was induced to bring the action by statements made by both Hyde and Kirkpatrick. We do not find it necessary to decide whether the excuse offered is sufficient to bring the corporation within the rule which permits a party to surrender the remedial right previously asserted and to adopt another inconsistent- right in lieu of the one surrendered, but we shall proceed to inquire whether the Oregon Mill & ©rain Company did in fact select one of two or more coexisting, inconsistent remedial rights when it brought the action at law against Kirkpatrick.

The garnishment proceeding arises out of the fact that Hyde owes the corporation and Kirkpatrick has property which in contemplation of law belongs to Hyde and can be applied upon his debt. When Hyde sold to Kirkpatrick, the corporation confessedly had the right to attach the property purchased by Kirkpatrick but it did not have an independent right to compel Kirkpatrick to pay Hyde’s debt because Kirkpatrick had not agreed to pay it. It must be admitted that the right to recover from Hyde and the right to attach the goods in' Kirkpatrick’s possession existed when the purchase was completed and that such right of attachment still exists unless defeated by the election of an inconsistent coexistent right. Kirkpatrick contends and it is here assumed that he never agreed to pay Hyde’s debt and therefore the corporation never at any time had the independent right to compel Kirkpatrick to pay Hyde’s debt. The situation presented here then is one where it is conceded that immediately after the sale the corporation had the right it now seeks to enforce, but never at any time had the right it first asserted. In other words, the corporation did not at first assert a right that it did have, but it only asserted a right that it did not have. The corporation was mistaken. There were not in fact or in law two or more rights from which to choose although one remedial right did actually exist. There would be neither justice nor sense in a rule that takes from a person that which he has merely because he claims that which he does not have. Our attention has not been directed to a single adjudicated case involving a state of facts analogous to those presented here and supporting the position taken by the garnishee. If Kirkpatrick had promised to pay Hyde’s debt then one of two rights would have been available to the corporation; and a different state of facts would also be presented if Kirkpatrick had been indebted to Hyde for all or a portion of the purchase price and that debt had been attached by the corporation for the payment of Hyde’s debt: Carter v. Smith, 23 Wis. 497. The garnishee in the instant case, however, is arguing that the corporation must lose what all parties are obliged to admit was a once existing right, solely because it asserted a right which never existed at any time. The pursuit of a fancied remedy is not penalized by the loss of a real remedy. The attempt upon the part of the corporation to collect from Kirkpatrick by a direct action' against him was the pursuit of a fancied remedy; the right to sue Hyde directly and to attach the property in Kirkpatrick’s possession was a real right which actually existed and, therefore, the prosecution of the action at law against Kirkpatrick was a fancied remedy while the garnishment proceeding is a real remedy. In the well-considered case of American Process Co. v. Florida White Pressed Brick Co., 56 Fla. 116 (47 South. 942, 16 Ann. Cas. 1054), the court uses the following language:

“If in fact or in law only one remedy exists and a mistaken remedy is pursued the proper remedy is not thereby waived. Where more than one remedy for the enforcement of a particular right actually exists, and such remedies considered with reference to the relation of the parties as asserted in the pleadings are inconsistent, the pursuit of one with knowledge of the facts is in law a waiver of the right to pursue the other inconsistent remedy.”

The rule that the assertion of a mistaken remedy does not preclude the enforcement of a real remedy is thoroughly established by the opinions of courts and text-writers: Powell v. Dayton, S. & G. R. R. Co., 16 Or. 33, 43 (16 Pac. 833, 8 Am. St. Rep. 251); Morris v. Sheridan, 86 Or. 224 (167 Pac. 593, 596); Rehfield v. Winters, 62 Or. 299, 306 (125 Pac. 289); Capital City Bank v. Hilson, 64 Fla. 206 (60 South. 189, Ann. Cas. 1914B, 1211); McCoy v. McCoy, 32 Ind. App. 38 (69 N. E. 193, 102 Am. St. Rep. 223); Bolton Mines Co. v. Stokes, 82 Md. 50 (33 Atl. 491, 31 L. R. A. 789); Henry v. Herrington, 193 N. Y. 218 (86 N. E. 29, 20 L. R. A. (N. S.) 249, 251); Rowell v. Smith, 123 Wis. 510 (102 N. W. 1, 3 Ann. Cas. 773); Fuller-Warren Co. v. Harter, 110 Wis. 80 (85 N. W. 698, 84 Am. St. Rep. 867, 53 L. R. A. 603); Clausen v. Head, 110 Wis. 405 (85 N. W. 1028, 84 Am. St. Rep. 933); Zimmerman v. Robinson & Co., 128 Iowa, 72 (102 N. W. 814, 5 Ann. Cas. 960); Harrill v. Davis, 168 Fed. 187 (94 C. C. A. 47, 22 L. R. A. (N. S.) 1153); Agar v. Winslow, 123 Cal. 587 (56 Pac. 422, 69 Am. St. Rep. 84); Wells v. Western Union Tel. Co., 144 Iowa, 605 (123 N. W. 371, 138 Am. St. Rep. 317, 24 L. R. A. (N. S.) 1045); Clark v. Heath, 101 Me. 530 (64 Atl. 913, 8 L. R. A. (N. S.) 144); Snow v. Alley, 156 Mass. 193 (30 N. E. 691); Johnson-Brinkman Com. Co. v. Central Bank, 116 Mo. 558 (22 S. W. 813, 38 Am. St. Rep. 615, 625); 15 Cyc. 262; 9 R. C. L. 962; 7 Ency. Pl. & Pr. 366.

The action at law brought by the corporation against Kirkpatrick was decided by this court on June 3,1913, and a petition for rehearing was denied on July 15, 1913. On September 25, 1913, the corporation commenced the action at law against Hyde. A judgment was obtained against Hyde on January 4, 1914, and Kirkpatrick was served with notice of garnishment on February 10, 1914.

Assuming without deciding that the garnishee could plead laches and that he has sufficiently pleaded it, nevertheless that defense is unavailing because the evidence fails to support it: Rowell v. Smith, 123 Wis. 510 (102 N. W. 1, 3 Ann. Cas. 773, 778); Wills v. Nehalem Coal Co., 52 Or. 70 (96 Pac. 528). The judgment is affirmed. ' Affirmed.