Chaffee v. Atlas Lumber Company
| Decision Date | 03 January 1895 |
| Docket Number | 5558 |
| Parties | CLARENCE L. CHAFFEE v. ATLAS LUMBER COMPANY |
| Court | Nebraska Supreme Court |
ERROR from the district court of Furnas county. Tried below before COCHRAN, J.
AFFIRMED.
Martin Langdon, McClure & Anderson, and I. Dunn, for plaintiff in error, cited: Savage v. Hazard, 11 Neb. 327; Temple v. Smith, 13 Neb. 514; Dorrington v Minnick, 15 Neb. 404; Lane v. Starkey, 15 Neb 289; Tallon v. Ellison, 3 Neb. 75; Brunswick v McClay, 7 Neb. 137; Jones v. Hetherington, 45 Iowa 681; Herman, Chattel Mortgages, 229-236; Anderson v. Patterson, 25 N.W. [Wis.], 541; Bullis v. Drake, 20 Neb. 171; White v. Woodruff, 25 Neb. 805; Rector-Wilhelmy Co. v. Nissen, 35 Neb. 716.
W. S. Morlan, contra, cited: Ahlman v. Meyer, 19 Neb. 65; Fitzgerald v. Andrews, 15 Neb. 52; Kay v. Noll, 20 Neb. 389; Taylor v. Ryan, 15 Neb. 578; Cameron v. Marvin, 26 Kan. 612; Frankhouser v. Ellett, 22 Kan. 127; Jones v. Huggeford, 3 Met. [Mass.], 515; Briggs v. Parkman, 2 Met. [Mass.], 258; Kleine v. Katzenberger, 20 Ohio St. 117; Miller v. Lockwood, 32 N.Y. 293; Ford v. Williams, 24 N.Y. 359; 1 Parsons, Contracts, 571; Turner v. Killian, 12 Neb. 580; Rowley v. Rice, 10 Met. [Mass.], 7; 3 Am. & Eng. Ency. Law, 181; Robinson v. Williams, 22 N.Y. 382; Jones, Chattel Mortgages, sec. 79; Byram v. Gordon, 11 Mich. 531; Kaysing v. Hughes, 64 Ill. 123; Stoughton v. Pasco, 5 Conn., 442; Bumpas v. Dotson, 7 Humph. [Tenn.], 310; New v. Sailors, 114 Ind. 407; Jones, Chattel Mortgages, sec. 644; Gregory v. Thomas, 20 Wend. [N. Y.], 17; Hill v. Beebe, 13 N.Y. 556; Lyon v. Ballentine, 63 Mich. 97, 6 Am. St. Rep., 284.
This action was brought by the Atlas Lumber Company, a corporation, against one S. S. Hewitt, to recover possession of a stock of lumber and building material situated in the town of Beaver City. The plaintiff claimed the property under a chattel mortgage executed by one William M. Ingalls, and by him delivered to the plaintiff. Hewitt, as sheriff of Furnas county, held the property under a writ of attachment issued out of the district court of said county in a suit wherein the Howell Lumber Company was plaintiff and said Ingalls was defendant. C. L. Chaffee, being the successor of the Howell Lumber Company, and the owner of all the property and accounts belonging to said company, was, on his own motion, substituted by the court as defendant in place of the sheriff. Upon the trial the jury returned a verdict in favor of the plaintiff, and assessing his damages in the premises at one cent. The defendant filed a motion for a new trial, which was overruled, and judgment was thereupon entered by the court upon the said verdict of the jury.
The first contention made by counsel in the brief of plaintiff in error is that the verdict is contrary to, and is not supported by, sufficient evidence. It appears from the evidence in the record that the defendant in error on, and for a long time prior to, April 30, 1890, was engaged in the lumber business at Beaver City, this state, the enterprise being conducted by one William M. Ingalls, its manager. On the date aforesaid the Atlas Lumber Company sold and disposed of the business and stock on hand to said Ingalls for the sum of $ 2,700, Ingalls paying $ 1,300 of the consideration in cash, and the balance, amounting to $ 1,400, was divided into four equal payments of $ 350 each, for which Ingalls gave his notes, but the same were unsecured. Two of these notes having matured, and the same not having been paid, one Burt Coldren, a representative of the defendant in error, about the last of July, or the first of August, 1890, went to Beaver City, interviewed Mr. Ingalls, and requested that he take up the old notes and give new ones in their place and secure the same by a chattel mortgage on his stock. Mr. Ingalls objected and refused at that time to give security, on the ground that it would injure his credit. About the 6th day of August, 1890, Mr. Coldren called again upon Mr. Ingalls and renewed his demand for security, and as an inducement for the latter to secure the claim, Coldren proposed to reduce the rate of interest from ten per cent to eight per cent, and to extend the time of payment one year on other indebtedness of Ingalls to the company. This proposition was finally accepted by Ingalls, and he on said date gave four new notes, amounting to $ 1,437.33, payable as follows: One for $ 437.33, due October 1; $ 300, due January 1, 1891; $ 300, due April 1, 1891; and $ 400, due on July 1, 1891. Mr. Ingalls at the same time secured the payment of these notes by a chattel mortgage covering his stock of lumber, including the property in controversy herein. This mortgage was duly filed in the office of the county clerk of Furnas county on the next day after it was executed. At the same time, as further security for said indebtedness, Ingalls assigned to defendant in error a mechanic's lien upon a church building for $ 372 and transferred accounts due him amounting to something less than $ 500, which accounts were deposited for collection in a bank at Beaver City. After the giving of the mortgage Ingalls remained in possession of the stock and sold the same in the usual course of business. About the first day of May, 1890, Ingalls purchased, on sixty days' time, of the Howell Lumber Company, lumber and building material amounting to the sum of $ 1,664, no part of which has been paid. For some cause or other Ingalls did not succeed in his business venture, and on or about the 20th day of September, 1890, he left Beaver City for Salt Lake City, with the purpose of not returning. He met Mr. Howard, the president of the defendant in error, at Denver, and on September 23d, at the request of Howard, and as a further or additional security for his indebtedness, he executed a bill of sale to the Atlas Lumber Company of his entire stock of lumber and building material, which was recorded on the 27th day of said month in Furnas county. On the 13th day of October, 1890, the Howell Lumber Company attached the stock on hand, which was covered by said chattel mortgage and bill of sale, and the sheriff held the same until replevied in this suit.
It is insisted that the chattel mortgage was given by Ingalls, and received by the defendant in error, for the purpose of defrauding the Howell Lumber Company. This contention is not well founded. The uncontradicted testimony shows that the mortgage was given for the sole purpose of paying a bona fide, pre-existing debt, a portion thereof being then past due. This was a sufficient consideration, and protects the defendant in error to the same extent as though there had been a new consideration given when the mortgage was executed. (Turner v. Killian, 12 Neb 580, 12 N.W. 101; Henry v. Vliet, 36 Neb. 138, 54 N.W. 122.) It is true that the officers of the Atlas Lumber Company were aware, when the mortgage in question was taken, of the indebtedness of Ingalls to the Howell Lumber Company, and that Ingalls was being pressed by the latter for the payment thereof, but this did not invalidate the mortgage. It is no longer a mooted question in this state that a debtor, in failing circumstances, as was Ingalls when the mortgage was executed, may lawfully pay, or secure, one creditor to the exclusion of others. (Lininger v. Raymond, 12 Neb. 19, 9 N.W. 550; Deitrich v. Hutchinson, 20 Neb. 52, 29 N.W. 247; Rothell v. Grimes, 22 Neb. 526, 35 N.W. 392; Ward v. Parlin, 30 Neb. 376, 46 N.W. 529.) Instead of there being an intention to defraud, either on the part of the mortgagor or mortgagee, the contrary conclusively appears from the record. It was only after much persuasion that Ingalls was induced to give the security. But it is contended that the fact the mortgagor remained in possession and sold lumber and converted the moneys derived therefrom to his own use shows the transaction to be fraudulent, and that the mortgage was a mere device to assist Ingalls to prevent his other creditors from collecting or securing their claims. While the possession of mortgaged chattels by the mortgagor raises the presumption that the mortgage was fraudulent, yet it is not conclusive, but may be overcome by evidence showing that the same was made in good faith. (Robison v. Uhl, 6 Neb. 328; Miller v. Morgan, 11 Neb. 121, 7 N.W. 755; Turner v. Killian, 12 Neb. 580, 12 N.W. 101; Davis v. Scott, 22 Neb. 154, 34 N.W. 353.) In the case at bar there is no question, from the evidence adduced, that the mortgage and the bill of sale were made in the utmost good faith and without any intent to defraud the creditors of Ingalls. Again, the presumption of fraud raised by the statute from the possession of mortgaged chattels by the mortgagor remains only so long as...
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