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prietors by retarding the flow of the water or sending it down in increased volumes, to his injury or at times when the stream would not otherwise be navigable. And this rule is not changed by the fact that a stream cannot be successfully used for logging purposes without such artificial aids to navigation on the ground of necessity. In Booming Co. v Speechly and Koopman v. Blodgett, supra, the Supreme Court of Michigan had occasion to consider the right to make a stream, which is navigable only at certain seasons of the year, navigable at other times by impounding the water until a flow sufficient to float logs could be caused. In the former case, Mr. Justice Cooley, after reviewing the Maine and Michigan cases, quoting with approval what is said to be the true rule by the New York Court of Appeals, noting the fact that all the cases carefully restrict, within the bounds of capability for use in their ordinary and natural condition, the public easement in streams navigable only at certain seasons of the year, and holding that a stream is navigable during the period the water in its natural condition is sufficient to permit of a public use, he says: "During that time the public right of floatage and the private right of the riparian proprietors must each be exercised with due consideration for the other, and any injury which the latter receives in consequence of a proper use of the stream for floatage he must submit to as incident to his situation upon navigable waters. Middleton v. Booming Company, 27 Mich. 533. But at periods when there is no highway at all there is no ground for asserting a right to create a highway by means which appropriate or destroy private rights. The doctrine that this may be done without compensation to parties injured is at war with all our ideas of property and of constitutional rights. The most that can be said of this stream, during the seasons of low water, is that it is capable of being made occasionally navigable by appropriating for the purpose the water to the natural flow of which the riparian proprietors are entitled. It is highly probable, in view of the large interests which are concerned in the floatage, that the general public good would be subserved by so doing; but this fact can have no bearing upon the legal question. It is often the case that the public good would be subserved by forcing a public way through private possessions; but it neither should be nor can be done under any circumstances without observing the only condition on which it can be permitted in constitutional government, namely, that the private proprietor be compensated for the value which he surrenders to the public. * * * As was remarked in Morgan v. King, 35 N. Y. 460, 91 Am. Dec. 67, the question of public right in a case like this is to be decided without reference to the effect which artificial improvements have had in the navigable capacity of the river; in other words, the public right is measured by the capacity
of the stream for valuable public use in its natural condition, and any attempt to create capacity at other times at the expense of private interests can be justified only on an assessment and payment of compensation." Monroe Mills Co. v. Menzel, supra, was a suit to enjoin the defendant from using the West Fork of Woods creek for floating shingle bolts and from maintaining a splash dam thereon. The court held the stream to be navigable or floatable during the freshets which occur with periodic regularity in the spring and fall of each year, but that the detention of the water by means of a dam, and the release thereof at irregular intervals, causing the stream to overflow and washing the lands of the lower riparian proprietor, was such an interference with the natural flow of the water as would be enjoined. And in Matthews v. Belfast Mfg. Co., supra, it was held that the floating of logs down a stream, by means of dams and artificial freshets, at the time of the year when it is not navigable in its natural state, is an abuse of the right of navigation for which an injunction will lie at the suit of riparian owners injured thereby, and that a private corporation which is not a boom company is not entitled to exercise the right of eminent domain against a lower riparian owner, for the purpose of facilitating the floating of logs down a stream by means of dams and artificial freshets, which damages the lower proprietor and interferes with his use of the stream. In fact, our attention has not been called to a case, nor have we been able to find one, sustaining the right to maintain dams or other artificial structures in a stream whereby the water is impounded and let down in such a head or volume as to make the stream navigable, when it would not otherwise be so, unless it be in the states of Maine, Wisconsin, and Minnesota, where the construction of dams in floatable streams to facilitate their use is authorized by statute. Brooks v. Cedar Brook, etc., Imp. Co., 82 Me. 17, 19 Atl. 87, 7 L. R. A. 460, 17 Am. St. Rep. 459; Kretzschmar v. Meehan, 74 Minn. 211, 77 N. W. 41; Field and Others v. Apple River Log Driving Co., 67 Wis. 569, 31 N. W. 17.
Having thus ascertained that a stream, to be navigable or floatable for saw logs, must be capable in its natural condition at ordinary recurring freshets of being successfully and profitably used for that purpose, and that a stream not navigable or floatable in its natural condition cannot be made so by artificial means, nor can the capacity of a navigable stream be increased by such means to the injury of a riparian proprietor without compensation, we are now prepared to consider the facts of the particular case before us and determine the respective rights of the parties litigant. The plaintiff is the owner of 480 acres of land, most of which is bottom or meadow land and has been extensively improved and used as such. Through this
land, from the north and east, flows the North Fork of the Klaskanie, for a distance of about one-half mile, to a point a short distance west of plaintiff's land, where it joins another stream from the southeast, called the "South Fork" of the Klaskanie, and the two streams united flow to the west, forming the Klaskanie river. The tide ebbs and flows in the Klaskanie from its mouth up to or about • the confluence or junction of the two streams referred to, and is conceded by the plaintiff to be navigable to that point. From the junc tion of the two streams towards its source, the North Fork is a shallow tortuous stream, from 40 to 60 feet wide. For about half the distance through plaintiff's land it consists of riffles or shoals, and the water is but a few inches deep, in the summer time, and from 11⁄2 to 2 feet deep during the ordinary winter freshets. At places the banks on one side are from 4 to 6 feet high; the opposite bank gradually sloping back to the meadow land. The soil is alluvial, and easily eroded in time of high water, and plaintiff has expended large sums of money in constructing embankments and other improvements to preserve the banks. In the fall of 1903 the defendants went upon the stream, about 2 miles above plaintiff's land, and constructed a dam 28 feet high for use in their logging operations, which dam is provided with four gates-three trip gates, each 8 feet wide and 16 feet high, and one slide gate, & feet wide and 24 feet high. By means of this dam the defendants are enabled to impound a large volume of water, which they suddenly release and al low to flow down the channel to suit their convenience.
Many witnesses were called and testified in behalf of both parties as to the character and capacity of the stream. They differ as to whether logs can be floated down it without the aid of dams. The witnesses for plaintiff, most of whom are farmers or landowners along the stream or in the vicinity, all concur in opinion that it cannot be so used; while the witnesses for defendants, most of whom are loggers or mill men, are equally positive that it can. But, while the witnesses differ in their opinions, there is no substantial conflict in the facts as testified to by them. They all agree that the stream is not floatable except in times of winter freshets, and that such freshets do not ordinarily occur more than three or four times a year, and continue but a few hours at a time. Christian Peterson, who was plaintiff's foreman, and lived upon his farm for 24 years prior to 1902, testified that during the ordinary winter freshets the water was from 11⁄2 to 2 feet deep in the riffles and shoal places, and would not float logs, but there might be two or three days in the year during which small logs would float down the stream: that the freshets would continue sometimes a couple of hours, and sometimes a half a day, and the water would fall as rapidly as it came up; that some years ago
Gilliam and Warnstaff put 80,000 or 90,000 feet of logs in the stream above plaintiff's land, and that only five or six of them had come out, and the remainder were scattered along the banks at the time he left the farm in 1902. John Leahy, who for 20 years has lived about 11⁄2 miles above plaintiff's premises, testified that the water is from 1% to 2 feet deep in the winter, except in case of unusually high water, which may occur once or twice a year and continue for a few hours at a time; that logs could not be floated at ordinary high water, but they would stop on the bars and along the banks; that more damage was done to the banks during the winter of 1903 by the operation of defendants' splash dam than in the entire 20 years he had lived on the stream, and that logs had been left higher on the banks than by the winter floods; that within three weeks prior to the trial in July, 1904, defendants had flushed down the stream, by means of their dam, about 100,000 feet of logs, which had lodged above his place, and there was great danger of their carrying away his house. James Leahy, who had lived on the stream above plaintiff's place for more than 20 years, testified that during the winter of 1993 and 1904 there was but one freshet sufficient to float logs, and then only small ones, and that it did not continue for more than three hours; that some years there would be three or four freshets, depending upon the rainfall, but they would only continue two or three hours; that the running of logs by defendants during the winter of 1903 and 1904 caused more damage than the natural wash of the stream for the previous 20 years. Michael Leahy and Charles Gilliam, who live on the stream, say that the water is from 2 to 3 feet deep during the ordinary winter freshets, and not sufficient to float any but small saw logs. Gilliam testified that some 12 or 15 years ago he put 137 logs in the stream and got one out the first year, and that six or seven of the smaller ones came down to plaintiff's place; that he tried to get the logs out, but could not do so for want of water, and had to abandon the enterprise; that logs would go down from a quarter to a half mile during a freshet, and then the water would recede and leave them in the channels of the stream or along the banks; that some of the logs were still in the stream, and others came out during the winter of 1903, when defendants were operating their splash dam; that logs which had laid in the stream for 15 or 16 years and were not carried out by ordinary winter freshets were floated out by water from the splash dam. Stephen Thies, who had charge of plaintiff's farm from April, 1902, to date of trial in July, 1904, testified that during the winter of 1902 and 1903 there were two or three freshets, one of which was extremely high, and continued from 10 to 12 hours; that during ordinary winter freshets the water was from 2 to 3
feet deep in shoal places, and not that during the winter of 1903 and 1904; that in June, 1904, the defendants were running logs down the stream by use of their splash dam; that they opened the dam and allowed the accumulated water to come down the stream, bringing logs with it, perhaps 20 times during the winter; that they were not able by this means to get all the logs out, but many of them were left on the banks and lowland along the stream, and there has been no time since defendants commenced the operation of their dam that plaintiff's land has been free of logs. Frank Buxton, who was employed on plaintiff's farm, testified that the stream was flushed by defendants during the winter of 1903 and 1904 from 25 to 30 times. raising the water 2 or 3 feet above its natural stage; that there was a rise of water during the winter from natural causes sufficient to float small logs.
Most of the witnesses for defendants do not live on the stream and have no actual knowledge of its conditions, but testified as to their opinion from an examination of the stream and their general knowledge of the climatic conditions of the surrounding country and its waterways. They generally agree that not more than from two to five freshets, sufficient to float logs, may reasonably be expected in the streams of that vicinity each year, continuing, as a rule, from 6 to 12 hours, but there were no such freshets during the winter of 1903 and 1904. Wallace and J. C. Dunkin, who were employed by defendants, testified that there was not more than one logging freshet during the winter of 1903 and 1904, and that the splash dam, operated by defendants, would raise the water as high as an ordinary freshet. Fred Normand, one of the defendants, says there are ordinarily from three to five freshets a year, depending upon the amount of rainfall, and last from 3 to 5 hours; that defendants' splash dam was constructed in the fall of 1903, and there was once during the succeeding winter that logs would float down the stream in its natural stage; that defendants were careful not to open the dam so as to overflow the banks of the stream and carry the logs out on the meadow, nor in the summer time, "because we do not want to overflow the bottom land." Alex Normand, the other defendant, said that four or five freshets may be reasonably expected each year, and they usually last from 5 to 6 and 10 to 12 hours, and that, by assisting them, "we can run logs for a day and a half or two days"; that their dam will raise the water in the stream about four feet, when a full head is turned down, but hardly as high as an ordinary freshet; that defendants used the dam for scattering logs along the stream, and "to assist them on down, so we can market them and not have to wait for freshets, as we would otherwise have to do"; that during the winter of 1903 and 1904 they were able, by use of their dam, to float
down to tide water from 1,700,000 to 2,000,000 feet of logs, for about four miles, which they expected to splash out during the succeeding winter.
We have made this extended reference to the testimony because whether a given stream is, in law, navigable or floatable, depends upon the facts, and a decision in one case cannot be regarded as a precedent in another, unless the facts are the same. From the testimony of the witnesses, both for plaintiff and defendants, it is apparent, we think, that the Klaskanie, where it flows through plaintiff's land, is not, in its natural condition, floatable for logs, because it is not capable of serving any important public use. Logs cannot be floated therein except, perhaps, at extreme high water continuing for a few hours at a time, and then only small logs. It would be going beyond any precedent of which we have knowledge to hold that such a stream is a public highway; and. since it is not such highway in its natural condition, it cannot be made so, by means of a splash dam or other artificial structures, without first acquiring the rights of the riparian proprietors.
It is suggested that, in view of the great lumber interests in the state, the public good would be subserved by holding that streams like the North Fork of the Klaskanie are public highways for the floating of saw logs; but this argument can have no bearing whatever upon the question. The magnitude or importance of any business or industry will not justify the slightest encroachment upon the rights of the citizen, and, unless a stream is in fact navigable or floatable, it cannot be taken or used without the consent of the owner, except by due process of law, however beneficial it might be to private interest or the public itself. It is often the case that the public good would be subserved by taking one man's property for the benefit of the community; but, as already quoted from Judge Cooley, "it neither should be nor can be done under any circumstances without observing the only condition on which it can be permitted in constitutional government, namely, that the private proprietor be compensated for the value which he surrenders to the public."
The decree will be reversed, and one entered here for plaintiff.
(50 Or. 233)
LEAVENGOOD v. MCGEE et al. (Supreme Court of Oregon. Aug. 20, 1907.) 1. APPEAL-DISMISSAL-DEFECTS IN RECORD. Where, in a suit to set aside a conveyance as in fraud of creditors, a transcript was filed on appeal, including copies of the findings, the decree, notice of appeal, and appeal bond. a motion to dismiss the appeal, on the ground that the original testimony and other papers on which the decree was based had not been transImitted to the clerk of the Supreme Court, as required by B. & C. Comp. § 553, subd. 1, and rule 1 of the Supreme Court (37 Pac. v). was without merit, as the filing of the testimony was
not necessary to confer jurisdiction, and there might be questions arising on the pleadings.
[Ed. Note. For cases in point, see Cent. Dig. vol. 3, Appeal and Error, § 3126.]
2. BANKRUPTCY-ACTION BY TRUSTEE-CONDITIONS PRECEDENT.
In order for a trustee in bankruptcy to maintain a suit to set aside a conveyance by the bankrupt as fraudulent, he must show by the record of the referee in bankruptcy that he has followed the procedure pointed out by the bankrupt act and that the claims on which he bases his action have been ascertained and established. [Ed. Note.-For cases in point, see Cent. Dig. vol. 6, Bankruptcy, § 421.]
3. APPEAL AND ERROR-RECORD-SUPPLYING DEFICIENCIES.
Where the record on appeal is deficient in any respect. it may be supplied on order at any time before the final disposition of the cause.
[Ed. Note. For cases in point. see Cent. Dig. vol. 3, Appeal and Error, § 2816.]
4. FRAUDULENT CONVEYANCES PLEADINGCOMPLAINT.
In a suit to set aside a conveyance as in fraud of creditors, the facts upon which the suit is predicated must be specially pleaded. 5. SAME-EVIDENCE-SUFFICIENCY.
In a suit to set aside a conveyance as in fraud of creditors, evidence considered, and held insufficient to warrant a decree for plaintiff.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 24, Fraudulent Conveyances. §§ 867-908.] 6. CORPORATIONS-DE FACTO CORPORATION.
Where a corporation has attempted to do the business which it was authorized to do by its charter, it is, irrespective of defects in organization, a corporation de facto.
[Ed. Note. For cases in point, see Cent. Dig. vol. 12, Corporations, § 70.]
7. SAME-ATTACKING VALIDITY OF INCORPO
The legality of the organization of a corporation, which appears to be at least one de facto, cannot be inquired into in any action other than one by the state.
[Ed. Note. For cases in point, see Cent. Dig. vol. 12, Corporations, §§ 77-80.]
Appeal from Circuit Court, Douglas County; J. W. Hamilton, Judge.
Suit by C. J. Leavengood, as trustee in bankruptcy of P. T. McGee, against James T. McGee and others. From a decree in favor of plaintiff, defendants appeal. Reversed.
Plaintiff sues, as a trustee in bankruptcy of P. T. McGee, a bankrupt, to set aside, as fraudulent as to his creditors, two deeds ultimately conveying to J. T. McGee certain lots in the town of Myrtle Creek, Douglas county. James T. McGee and Ruth, his wife, Frances, wife of P. T. McGee, and the McGee Company, a corporation, are made defendants. The first of these deeds is alleged to have been made on November 29, 1897, by P. T. McGee and his wife, for the expressed consideration of $2,600, to the McGee Company, which was incorporated on that date by P. T. McGee, his wife, and son Hugh, with a capital stock of $5,000, for the purpose of carrying on a general merchandise business at Myrtle Creek. But it is alleged that no stock was subscribed or paid for: that the corporation was not organized, and for that reason had no power or authority to make or enter into a contract for the purchase of
real property; that, in fact, no contract was made by and between P. T. McGee and the corporation for the purchase of real property described in the deed; but that the conveyance was voluntary, and wholly without consideration, and made with the intent and purpose of putting the title in such a condition that it could not be reached by McGee's creditors. The second deed is alleged to have been made on March 2, 1902, by the McGee Company, conveying the same property to James T. McGee, also a son of P. T. McGee, for the expressed consideration of $1,000, when the company was in failing circumstances and unable to meet its liabilities, and was in fact insolvent; that the execution of the deed was not authorized by any acting board of the corporation, and was without consideration, and was made for the purpose of putting the property beyond the reach of the creditors of P. T. McGee and of the corporation, with the intent and for the purpose of defrauding them. It is also further alleged that since the making of this conveyance P. T. McGee has had the management and control of the property thereby conveyed to James T. McGee, and has collected the rents, and has assumed to be, and is in fact, the owner of the property; that claims amounting to about $1,500 have been presented and allowed against the estate of P. T. McGee, and that the debts which are the basis of these claims were incurred at divers dates between January 1, 1897. and December 1, 1904; that the assets of the estate amount to no more than the sum of $60. A demurrer to the complaint was interposed, assigning all of the grounds allowed by statute, which being overruled, J. T. McGee answered separately, with a general denial of the complaint, and alleging affirmatively that about March 1, 1898, P. T. McGee and his wife sold and conveyed the real property mentioned in the deed, together with some store fixtures and a stock of goods, to the defendant company for the consideration of $2.600; that the corporation held the title and the possession of the lots until December 14, 1900, when it sold and conveyed the lots to him for the sum of $1,000, which he paid, and that his transaction with the company was in good faith, without notice or knowledge of any intended fraud by P. T. McGee or by the company upon his or its creditors. The remaining defendants answered jointly to the same effect. Plaintiff replied, denying the new matter of the separate answers. The cause was referred to a referee for the taking of testimony, and, on his report coming in and being considered by the court, findings were made in plaintiff's favor, and thereon a decree was entered, setting aside each of the deeds, and the property ordered sold and the proceeds applied to the payment of the indebtedness of P. T. McGee, as allowed in the administration of his estate as a bankrupt. From this decree all of defendants appeal.
C. S. Jackson, for appellants. J. C. Fuller- | 70, subd. "e," Bankr. Act Cong. July 1, 1898 ton, for respondent.
On Motion to Dismiss.
SLATER, C. (after stating the facts as above). At the hearing in this court a motion to dismiss the appeal was entered by plaintiff on the ground that the original testimony, and other papers in this cause, on which the decree of the circuit court was based, had not been transmitted to the clerk of this court as required by section 553, subd. 1, B. & C. Comp., and by rule 1 of this court (37 Pac. v). Before argument thereon defendants filed a counter motion, supported by an affidavit, for an order on the county clerk of Douglas county requiring him to complete the record by forwarding all the testimony and exhibits produced at the trial in the court below. A transcript in this case was filed in this court on June 15, 1906, which, besides the pleadings, includes copies of the findings, the decree, notice of appeal, and undertaking on appeal. No question is made by plaintiff that any of the necessary steps to perfect the appeal were omitted or were not taken in the time required by law to confer jurisdiction upon this court of the cause, and the filing of such a transcript here did confer jurisdiction. The filing of the testimony was not necessary to confer jurisdiction, and its absence would not destroy that jurisdiction, for there may be questions arising upon the pleadings to be tried on appeal, as well as whether the decree is supported by the pleadings and the findings; but the absence of the testimony would prevent this court from trying the case de novo on the facts. The plaintiff's motion, however, amounts to a suggestion of a diminution of the record, and the deficiency may be supplied on order at any time before the final disposition of the cause. B. & C. Comp. 445. The motion, therefore, must be denied, and, the testimony having been received by the clerk since the submission of the case, it should be ordered filed.
On the Merits.
It will not be necessary to separately consider the questions raised by the demurrer, but it will be considered and disposed of along with the merits. On behalf of defendants the contention is made that, before a creditor can maintain a suit to set aside as fraudulent a conveyance of his debtor, he must either establish his claim by judgment or acquire a lien by attachment; and such is the rule in this state. Dawson v. Coffey, 12 Or. 513, 8 Pac. 838; Dawson v. Sims, 14 Or. 561, 13 Pac. 506: Bennett v. Minott, 28 Or. 339, 39 Pac. 997, 44 Pac. 288: Matlock v. Babb, 31 Or. 516. 49. Pac. 873; Fleischner v. Bank of McMinnville, 36 Or. 553, 54 Pac. 884, 60 Pac. 603. 61 Pac. 345. And they further contend that a trustee in bankruptcy, having no greater authority, is bound by the same rule, citing 30 Stat. 566, c. 541 (section
[U. S. Comp. St. 1901, p. 3452]), which is as follows: "The trustee may avoid any transfer by the bankrupt of his property, which any creditor of such bankrupt might have avoided, and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication. Such property may be recovered or its value collected from whoever may have received it, except a bona fide holder for value." This rule that a creditor must reduce his claim to a judgment before he will be allowed to attack in a court of equity a conveyance of his debtor for fraud is based upon two reasons: (1) That the claim must be a liquidated claim, so that an equity court will not be required to stop and inquire into the validity of the claim. The object of a creditors' bill is not to ascertain or determine the amount and validity of the claim or debt, but that is the province of the law. (2) A judgment and the issuance of an execution and its return nulla bona is required as an evidence that all of the remedies at law have been exhausted before resort is made to equity. This is the reason of the law, but there are exceptions to the general rule. Note to section 1415, Pomeroy's Equity. A judgment is not necessary to enable a trustee in bankruptcy to maintain a suit to set aside transfers of property by the bankrupt in fraud of creditors, since under the bankruptcy act neither the trustee nor the creditor whom he represents could obtain such a judgment. Mueller v. Bruss, 112 Wis. 406, 88 N. W. 229. But a method is provided by the procedure in bankruptcy whereby the claims of creditors may be legally adjudicated and before the trustee should be permitted to attack by a suit in equity the conveyance of the bankrupt he shall allege and prove by the record of the referee that such procedure has been followed and that the claims on which he bases his contention have been ascertained and established. In this case the claim of Edwin Weaver, amounting to $97, dated January 8, 1901, is, according to the contention of plaintiff, of some importance, because of the close proximity of the date of its occurrence to the date of the deed from the McGee Company to James T. McGee. But the rightfulness of it is assailed by the defendants, who claim the note upon which the claim is based has been paid in full and $3.72 overpaid. The claim has not been acted upon by the referee, and hence it cannot be made a basis for a suit of this character.
It is difficult, however, to determine from the averments of the complaint upon what particular ground of fraud plaintiff relies to avoid the deeds. It is alleged that the deed by McGee and wife to the corporation was made with the intention of putting the title beyond the reach of his creditors, and that it was in fraud of his creditors; but it is not