enough money on hand to pay its entire in debtedness, gave a mortgage to one who had been supplying milk to cover its indebtedness to him, and also such sum as would become due for milk delivered by him during the current month. Up to this time the business had been regarded as profitable. Some weeks later, however, other creditors began attaching, and the business was suspended. Held, that the mortgage was not void as the attempt of an insolvent corporation to prefer creditors.

Appeal from superior court, King county; I. J. Lichtenberg, Judge.

Action by F. L. Leslie against W. W. Wilshire, as receiver of the Seattle Dairy Association, and others, to foreclose a mortgage. Judgment for defendants. Plaintiff appeals. Reversed.

Burleigh, Gamble & Burleigh, for appellant. George E. de Steiguer, for respondents.

SCOTT, J. In September, 1891, certain persons then severally engaged in supplying milk to customers in the city of Seattle organized a corporation known as the Seattle Dairy Association for the purpose of joining their interests and continuing said business. Contracts were made with farmers who were producers of milk to furnish to the association a certain number of gallons of milk at a specified raté extending over a period of several months or a year. Such a contract was made with Malcolm McDougall, the assignor of the appellant. Subsequently, the price of milk having fallen, the association desired to be relieved therefrom. McDougall consented to give up his contract upon condition that he should be paid for the milk he had already supplied, and that a part of the stock of such association (which, owing to a resolution to the effect that milk would be taken from stockholders only, he had taken to enable him to enter into the contract) should be repurchased by the association. After some negotiations, it being deemed to the advantage of the association by the persons managing its business that so large a supply of milk should not be cut off suddenly, it was agreed between the association and McDougall that he should accept security for the amount due, and should continue to furnish milk at reduced rates; and on the 10th of February, 1892, a note and chattel mortgage to secure the same were executed to him by the president and secretary of said association. The amount so secured was $1,700. This covered the existing indebtedness, and also such sum as would become due for milk for the remainder of the month of February. Thereupon McDougall continued to furnish milk to the association, which it received during said month of February. The previous contract between McDougall and the association was canceled and delivered up. From the time of giving such mortgage up to the 24th of March following, the association continued in business, buying milk and selling the same to its cus

tomers. At that time attachment suits were brought by some of the stockholders of the corporation, which resulted in closing up its business. Foreclosure proceedings upon the mortgage were instituted by plaintiff, to whom the same had been assigned. The court found that the association was insolvent at the time the mortgage was executed, and that it was given for the pur pose of preferring a creditor, and was void, and decreed that all the property of the as sociation should pass into the hands of a receiver, to be distributed equally among all the creditors, whereupon the plaintiff appealed to this court.

The ground upon which the court rendered its decision seems to have been the main point in controversy, although it is contended that the mortgage was not properly executed. Upon this point the court made no finding. There was no resolution of the board of trustees authorizing the execution of the mortgage, but it fairly appears that a majority of the trustees participated in giving it, and, after a knowledge of its execution, the association continued to receive the benefits of the contract secured thereby. Subsequently, at a meeting of a majority of the board of trustees, the giving of said mortgage was expressly ratified. It is contended that this meeting was irregular, because the same had not been properly called. However this may be, the association is otherwise estopped from denying the validity of the mortgage. The manner in which it was exe cuted even seems to have been about as regu lar as were its business transactions generally. There is little or no controversy as to the law applicable to the case, the contention being over the proof. After an examination of the evidence we do not think there is sufficient in the record to warrant the finding that the association was insolvent when the mortgage was given, and that it was given for the purpose of preferring McDougall's claims. The association was em. barrassed to some extent, and had not enough money on hand to pay all of its indebtedness, but its business was then regarded as a profitable one, and its evident purpose at that time was to continue it, and the mortgage was given for the purpose of inducing McDougall to continue to supply milk to the association, in order that its business might be carried on. We think this is well established from the proofs. He had been paid up to the month preceding the giving of the mortgage. We are satisfied that the judgment holding appellant's mortgage void is erroneous, and it is reversed to that extent, and the cause is remanded, with instructions to enter a decree giving said mortgage full force and effect.

DUNBAR, C. J., and HOYT and STILES, JJ., concur.

(5 Wash. 206)

TACOMA RAILWAY & MOTOR CO. v. CUMMINGS.

(Supreme Court of Washington. April 15, 1893.)

APPEALABLE JUDGMENTS

WHAT CONSTITUTE JUDGMENT SETTING ASIDE AWARD. Code, 426, which provides that, if no exceptions are filed to an award of arbitrators, the court to which such award has been delivered shall treat it as a verdict of a jury, and may take the same proceedings concerning it as if it were a verdict in a civil action, interpreted in the light of section 429, which provides that, if the arbitrators have committed error, the court may send the case back, with directions to amend the award, and, on their failure to do so, "the court shall be possessed of the case, and proceed to its determination," clothes the court with full jurisdiction to proceed to final determination of the controversy, where it is impossible to send the award back for correction because of the disqualification of an arbitrator; and in such case a judgment setting aside the award is such a final determination of the controversy as will sustain an appeal. Per Stiles, J., dissenting.

Dissenting opinion. For majority opinion, see 31 Pac. Rep. 747.

STILES, J. It seems to me that the court has erred in its treatment of this case by an unnecessary attempt at construction. To my mind, section 426 is complete in itself. If no exceptions are filed, judgment is to be entered as upon the verdict of a jury, and execution issues; but, if the last part of the section be taken to mean that before judgment the same proceeding may be had upon the award as may be taken to set aside a verdict, (which is not admitted,) confusion ensues. The proceeding to be taken to get rid of a verdict is to move for a new trial in the same court, before another jury. But the terms of sections 428 and 429 preclude this. The exceptions are laid before another tribunal, which sits as a court of review, and, upon discovering error, it may (which I interpret "must") refer the case back to the arbitrators, directing the amendment of the award forthwith. If there is failure to secure the correction in this manner, the court becomes possessed of the case, and determines it, if it can, from what is reported to it; otherwise, the whole proceeding fails. But, according to the decision of the majority, this case must now go back to the court below for a trial upon new evidence, before a jury probably, which is not at all what the parties stipulated for. I hold the conclusion of the court below to have amounted to a final determination of the arbitration, because the stipulation was to submit the case to two men, who should choose a third, and one of the three was found to have been disqualified to sit as an arbitrator at all. The court also found that there were errors, both of law and fact, in the award; and, had there been competent arbitrators, it would have been its duty to refer the award back to them for correction. But the disqualification of one arbitrator left it impossible to re

fer, and the court became possessed of the case, and empowered to proceed to its determination. It did then determine it by set. ting aside the entire award, and ordering the costs taxed to Cummings, which is the judgment appealed from. Now, Cummings had the award, and it seems to me that when that award is totally set aside, and the costs are taxed to the formerly successful party, that ought to be enough to show that the court was about through with the case, although there is no formal statement that nothing is found to be due from one party to the other.

(6 Wash. 240)

SURBER et al. v. KITTINGER et al.1 (Supreme Court of Washington. April 20,

1893.)

ACTIONS-LEGAL AND EQUITABLE.

A suit brought originally in equity to enforce a mechanic's lien and for personal judgment, may, on abandonment of the lien, be tried by a jury as an action at law.

Appeal from superior court, Whatcom county; John R. Winn, Judge.

Action by W. H. Surber and others against C. H. Kittinger and others. Judgment of dismissal. Plaintiffs appeal. Reversed.

Fairchild & Rawson, for appellants. Beriah Brown, Jr., for respondent Burns.

SCOTT, J. This action was brought to foreclose a mechanic's lien to recover the sum of $2,855. The claim arose upon a contract for driving piles upon tide lands, and a lien was sought to be enforced against a wharf erected thereon. The complaint prayed for a personal judgment against the defendants, and also that the amount be decreed a lien upon the structure in question. Judg ment by default was entered against certain of the defendants for the amount claimed. Frank Burns, the respondent, appeared, and filed an answer. When the case was called for trial the plaintiffs announced to the court that they waived any claim to a lien for the reason that there was no foundation there for, the title to the land being in the state, and the structure consequently not being subject to a mechanic's lien, and they demanded that the cause be tried by a jury as an action at law. The defendant objected to this on the ground that the pleadings showed that the cause was an equitable one. The court overruled the objection, and a jury was called, and trial had, which resulted in a verdict for the plaintiffs. The defendant filed a motion to quash this verdict, and dismiss the action, upon the grounds that the suit was instituted in equity for the purpose of foreclosing a lien, and, as there was no foundation for a lien, the court had no jurisdiction to proceed with the cause, and it should have been dismissed; thus attempting to renew the question previously disposed of. The court granted this motion, set aside the verdict, and dismissed the action, and plaintiffs appealed.

1 Rehearing denied.

The ruling of the court in quashing the verdict and dismissing the cause was erroneous. Although the action was originally commenced in equity, the court had authority to permit it to be tried as an action at law, there being nothing to give a court of equity Jurisdiction thereof. The court did this, and a trial was had which to all appearances was a fair one, as there was no claim made by the defendant that he was surprised in any way, or prevented from having a fair trial, by reason of the action of the court in the premises. Judgment reversed, and cause remanded, with a direction to enter judgment upon the verdict in favor of the plaintiffs.

HOYT, ANDERS, and STILES, JJ., concur.

(6 Wash. 242)

BURT v. AGASSIZ et al. (Supreme Court of Washington. April 21, 1893.)

FRAUDULENT CONVEYANCES-EVIDENCE-REVIEW

ON APPEAL.

Where a debtor, pending a suit against him, conveyed property to his partner, to whom he was indebted, but which indebtedness was amply secured, and after the conveyance continued to collect rents from parties occupying the land conveyed, a finding that the conveyance was fraudulent will not be disturbed on appeal.

Appeal from superior court, King county; I. J. Lichtenberg, Judge.

Action by Silas W. Burt against Richard Agassiz, Anna H. Panting, James A. Panting, and Frank A. Stewart to set aside certain fraudulent conveyances. From a judgment for plaintiff, Stewart appeals. Affirmed.

Hughes, Hastings & Stedman, for appellant. Bausman, Kelleher & Emory, for respondent.

SCOTT, J. We are of the opinion that the decision of the court holding the conveyances from the Pantings to appellant fraudulent on the ground that they were executed to hinder, delay, and defraud creditors must be sustained. At least we do not find the evidence strong enough the other way to justify us in overturning the same, under its most favorable view for the appellant. In cases like this, where the decision turns solely upon a question of fact, it is generally not advisable to burden the reports with a detail of the evidence. A few of the more salient points, however, will be stated. At the time of the transfers from the Pantings to Stewart it appears that James Panting was indebted to Stewart in the sum of $1,750 only; that the whole of this amount was then amply secured by collateral notes and otherwise; that Stewart had not requested any further security; that at said times a suit was being prosecuted against the Pantings to recover the sum of $20,000; that James Panting and Stewart were partners in business. It is claimed that the deeds to the real estate in

question were not intended as absolute conveyances, but were given for the purpose of securing the indebtedness then existing from Panting to Stewart, and for further loans and advancements. The whole of said indebtedness, including all advances made, at no time exceeded the sum of $8,000, according to appellant's claim, while the value of the property transferred was greatly in excess of this. After said conveyances Panting continued to collect rent from various parties occupying said premises. It is claimed that this was done as the agent of Stewart. It is conceded that the suit aforesaid was subsequently decided in favor of the defendants, but it was pending at the time said conveyances were made. It is further contended that the conveyance to Agassiz should be sustained in any event, but the appellant is in no position to question the ruling of the court upon the conveyance made by him to Agassiz, and Agassiz himself did not appeal therefrom. Judgment affirmed.

(Supreme Court of Washington. April 24, 1893.)

COVENANTS AGAINST INCUMBRANCES-WHAT CON

STITUTES-BREACH-LIABILITY.

1.1 Hill's Code, § 1424, provides that a warranty deed containing the words "convey and warrant" shall be construed to contain express covenants by the grantor to the grantee, his heirs and assigns, that the premises are free from all incumbrances, "and such covenants shall be obligatory upon any grantor, his heirs and personal representatives, as fully and with like effect as if writte at full length in such deed." Held, that the statute did not apply to a deed which was not drawn in view of the statute, and which set out the exact things warranted by the grantor.

2. A covenant which recites that the grantor covenants, grants, and agrees that he, "against all and every person and persons whomsoever lawfully claiming or to claim the same, or any part thereof, shall and will warrant and forever defend," is a covenant for quiet enjoyment, and not one against incumbrances.

3. Outstanding city and county taxes at the time the deed is executed do not constitute a breach of such covenant.

4. The payment of such taxes by the grantee, before any move is made to collect the same, is a voluntary payment, and imposes no liability upon the grantor, under the covenant.

Appeal from superior court, King county R. Osborn, Judge:

Action by Sarah M. Leddy against John Enos for breach of covenant. Judgment for plaintiff. Defendant appeals. Reversed.

M. Gilliam, for appellant. Frank G. Haddock, (James Leddy, of counsel,) for respondent.

ANDERS, J. It is only necessary for us to decide one of the questions presented by the record in this case, and that is as to the suffi

For dissenting opinion, see 34 Pac. Rep. 665

ciency of the complaint. The case was brought to recover damages for a breach of the covenants of a deed made by appellant to the respondent. There was no special covenant against incumbrances in said deed. The only covenant relied upon and set out in the complaint was substantially as follows: "And the said party of the first part, his heirs, executors, and administrators, does, by these presents, covenant, grant, and agree to and with the said party of the second part, her heirs and assigns, that he, the said party of the first part, his heirs, executors, and administrators, all and singular the premises hereinbefore conveyed, described, and granted or mentioned, with the appurtenances, unto said party of the second part, her heirs and assigns, and against all and every person and persons whomsoever lawfully claiming or to claim the same, or any part thereof, shall and will warrant and forever defend." The alleged breach of covenant was the fact that certain taxes assessed by the city of Seattle and the county of King upon the land conveyed were due and unpaid, and the damages sought to be recovered were on account of the payment of such taxes. It is contend.. ed on the part of the appellant that the covenant above set out was simply one for quiet enjoyment, and not one against incumbrances, and that, since the only breach assigned was the existence of an incumbrance on the property, the complaint, upon its face, showed no violation of the covenants of the deed. That the covenant is not one against incumbrances is conceded by respondent, if the language is to be construed without any aid from our statute. She contends, however, that as such statute provides that a deed - which is made in the form prescribed therein shall be construed as a warranty deed, carryIng implied covenants, as provided for in said statute, one of which is against incumbrances, this deed must be construed as though such covenant had been expressed therein. We are unable to agree with this contention. It is evident that this deed was not drawn in view of such statute, and, not being so drawn, the implied covenants provided for therein would not obtain. By virtue of the statute, certain covenants were implied from the use of the word "warrant" in a deed. But these covenants were to be implied only when there was one expressed. But where, as in this case, the grantor, instead of simply using the word "warrant," and leaving the statute to define what should be implied thereby, goes further, and sets out the particular thing or things which he will warrant against, he cannot be held to have intended other covenants than the ones thus set out. It follows that the covenants of the deed in question were only those for quiet enjoyment. Such being the case, was there a breach thereof by reason of the unpaid taxes upon the land? The respondent concedes that, under the doctrine formerly existing, such incumbrance would not constitute

breach of such covenants. She contends, however, that, under the modern rule, the grantee may pay off incumbrances, and, under the covenants for quiet enjoyment, recover the same from the grantor. Whether or not this is true as to any incumbrance before the same has been actively asserted against the grantee, in such a manner as to endanger his title, in our opinion no such right exists until there has been, at least, some threat that it would be so asserted. The complaint in this case does not show that there was anything being done by the city or county that could in any manner endanger the title of the plaintiff. For all that appears in the complaint, the appellant may have intended to contest such taxes in the courts, and have them set aside, or, failing that, to pay them. Under these circumstances, the payment thereof by respondent was a purely voluntary one, and no liability was thereupon incurred by the grantor in the deed on account of the covenants contained therein. The judgment must be reversed, and the cause remanded, with instructions to dismiss the action.

HOYT, SCOTT, and STILES, JJ., concur.

(6 Wash. 261)

SAMUEL v. KITTINGER et al.1 (Supreme Court of Washington. April 28, 1893.)

FRAUDULENT CONVEYANCES WHAT CONSTITUTE -KNOWLEDGE OF GRANTEE-PREFERENCES.

1. In an action by a creditor to set aside certain transfers as fraudulent, it appeared that defendant and three others purchased prop erty with money borrowed from a bank, and subsequently gave a deed thereof to the bank cashier as security for the loan, under a declaration of trust, which was not recorded. The cashier was also to hold defendant's interest in the property to secure a debt owing the bank. The value of the property was speculative. The cashier did not know of plaintiff's claim against defendant, nor of any fraudulent intention on the part of the latter. Held, that the transfers were not fraudulent.

2. In an action to set aside a conveyance as in fraud of creditors, it appeared that it was made for an express consideration of $5,000; that the grantee paid nothing, aud did not know of it at the time, but a short time afterwards the grantor informed him of the transaction, stating that the property had belonged to his brothers and himself, that he had received his share from sales made, and that his brothers were the equitable owners of the property, whereupon the grantee agreed to hold the property for the owners. The deed was recorded the day after its execution, and there was no evidence that the property was to be held for the grantor, or that the grantee knew of any fraudulent intent on his part. Held, that the transfer was not fraudulent.

3. Where no trust for the grantor is agreed upon or understood between him and the grantee, but the object of the transfer is to pay ог secure a debt, the transaction is valid, though it preclude other creditors from subjecting the property to the payment of their claims.

4. A deed intended to operate as a mort'Rehearing denied.