Rindles v. Bordewyk , 30 S.D. 439 ( 1912 )

HANEY, J.

The learned circuit court found the facts to be as follows: “(1) That a short time prior to January.9, 1909, the plaintiff and defendant entered into an implied contract, whereby the defendant undertook and agreed t-o sell two mares and one two-sea-ted buggy, the property of plaintiff, for him at public auction for a commission of 3 per cent., the same to be sold at a price acceptable -to plaintiff and to pay over the proceeds thereon in cash or good, secured, bankable notes. (2) That -on the 9th day of January, 1909, the defendant sold all of said property at public auction at said -town of Corsica, to one De Lang, the agent of II. Vis & Co., for the sum of $233, and thereupon delivered all of said property to said purchaser. (3) That subsequently and on the same day, the defendant accepted from H. Vis & Co., in full payment and satisfaction of the purchase price for said property ■two certain promissory notes, in words and figures as follows, to-wit: * * * That there was due an-d unpaid on said notes and owing from the plaintiff to H. Vis & Co. at the time of delivery of said notes to defendant -the sum of $247. That the defendant accepted said notes from H. Vis & Co., with the -express agreement and understanding that the same were to be fully paid and satisfied -by the delivery of the property of the plaintiff so purchased by H. Vis & Co. at said sale. (4) That subsequently and on the 9th day of January, - 1909, the plaintiff -demanded of the defendant settlement for said property in payment of the amount, for which the property sold, less his commission, in cash or good, secured, bankable notes. That the defendant failed and refused, -and ever since has failed and refused, to make settlement with the plaintiff or pay him any amount on account thereof, except that on said 9th day of January, 1909, he gave the plaintiff two checks, one for $2 prior to said sale, and one for $15 subsequent to said sale, on which was indorsed, ‘Advance money on sales.’ (5) That the commissions and expenses of the defendant on said -sale amounts to $11.65. (6) That on the 9th day of January, 1909, at the time of said sale, the plaintiff was a resident of the county of Douglas and state of South Dakota and the head of a family, that he owned no real estate, and that on that date he did not own personal property which in the aggregate, including the two mares and surrey, sold at said sale, was of the value to exceed the sum o $650.”

[1] From the facts so found, the court concluded as follows: “(1) That the defendant violated the terms of the contract between himself and his principal, the plaintiff in this action, when he accepted the past-due notes of plaintiff as a compromise settlement for.the property sold. (2) That by so doing, the defendant became personally liable to the plaintiff for the amount for which the property sold, less his commissions and expenses, the same as though said property had been sold for cash. (3) That the defendant is not entitled to recover on his counterclaim as against plaintiff’s -claim for exemptions. (4) That the plaintiff is entitled to judgment against the -defendant in the sum of $204.35 with interest at 7 per cent, from January 9, 1909, and costs.”

The only question requiring consideration is whether the facts as found by the trial court justify its judgment; such facts being within the pleadings and clearly sustained- by the evidence. The phrase, “secured bankable notes,” as employed in this case, means commercial paper immediately convertible into cash. Therefore the defendant was, in effect, authorized to accept- only cash from the purchaser of his principal’s -property; he was legally and morally bound to pay his principal, the proceeds of the sale in cash; and the plaintiff was under no obligations to accept any other consideration. By accepting plaintiff’s notes without the plaintiff’s authority or consent, the defendant disregarded his duty. If he did so for the purpose of defeating- the plaintiff’s lawful exemptions he acted in bad faith. But whatever may have been his motives, his position is the same as though he had sold ■the property for cash and refused to pay over the proceeds. Clearly, then, the plaintiff’s cause of action — a debt of $233, less the defendant’s commission and the sums received by the plaintiff on the day of the sale — was established.

[2, 3] It is contended, however, that the amount due on the plaintiff’s - notes, which exceeded the amount of the plaintiff’s claim, should have been set off against the latter and the defendant given a judgment for costs and disbursement's. The contention is untenable. It appears from the decision of the trial court that the plaintiff’s property wás exempt, in the sense that it was not subject to sale under an execution issued in an action founded on the notes described in the defendant’s counterclaim. With respect to such claims, the plaintiff’s demand represented the proceeds of exempt property. “A debtor’s right to exemption cannot be defeated by a set-off by the creditor. To subject the debtor’s demand to the creditor’s set-off would be as much a legal seizure thereof as if a creditor had impounded it under process of garnishment on an execution or attachment. The legal effect would be the same in either case, and therefore it cannot be allowed. To allow a set-off against a judgment for trespass or conversion of the exempt property, or against an action for replevin of the property, would -be a particularly inexcusable subversion of the exemption laws.” 18 Cyc. 1463. What could be a more “inexcusable subversion of the exemption laws” than to allow an agent to deprive his principal of the benefits of such laws by his own unauthorized and wrongful conduct? This court has held that a judgment for conversion of property exempt from execution cannot be liquidated by having set off against it another judgment held by defendant as plaintiff’s creditor, since the exemption attaches to the judgment for the proceeds of exempt property .as well as to the property itself. Long v. Collins, 15 S. D. 259, 88 N. W. 571. If the plaintiff’s claim could not be offset by the defendant’s, if both were in judgment, it should not be in this action. The statute relating to counterclaims must be construed with reference to the exemption statutes, which are to be liberally construed, and effect given to the legislative intent, though seemingly contrary to the letter of the statute relating to counterclaims.

The judgment of the circuit court is affirmed.