Black Hills Mercantile Co. v. Gardiner

• Decision Date: 03 April 1894
• Docket Number: 388.
• Parties: BLACK HILLS MERCANTILE CO. v. GARDINER et al.
• Court: South Dakota Supreme Court

58 N.W. 557

5 S.D. 246

BLACK HILLS MERCANTILE CO. v. GARDINER et al.

No. 388.

Supreme Court of South Dakota

April 3, 1894

Syllabus by the Court.

1. Under section 4996, Comp. Laws, providing that, before an attachment can issue, the clerk must require "a written undertaking on the part of the plaintiff, with sufficient sureties," etc., it is not necessary that such undertaking be signed by the plaintiff, but, when a sufficient undertaking is given in behalf of the plaintiff the requirements of the statute are complied with.

2. When a chattel mortgage stipulates that he may, or the mortgagee knowingly allows the mortgagor to, retain possession of and sell the mortgaged goods in the usual course of trade without any agreement or understanding as to the disposition of the proceeds, the mortgage is presumptively fraudulent.

3. The presumption against the good faith of the mortgage is a rebuttable one, and, upon substantial evidence tending to show its actual good faith, the question as to its real character becomes a question of fact.

4. Failure to promptly file a chattel mortgage for record is not a sign of fraud, and those only can complain of such failure who are prejudiced thereby.

5. Under our statute, which makes a chattel mortgage a lien only on the mortgaged property, and allows a creditor to levy upon the mortgaged property after paying or tendering the amount for which such mortgage is an actual and bona fide lien, the taking of a mortgage upon $10,000 worth of property to secure a debt of $1,800 is not, on that account, fraudulent.

6. The further facts in this case tending to show the character of the mortgage and the transactions connected therewith examined, and, upon all the evidence, held, that the transaction was not fraudulent in fact, and did not furnish grounds for an attachment.

Appeal from circuit court, Lawrence county; Charles M. Thomas Judge.

Action in attachment by the Black Hills Mercantile Company against Charles H. Gardiner and Merritt J. Bailey, partners. From an order discharging the writ issued, plaintiff appeals. Affirmed.

Wood & Buell and McLaughlin & McLaughlin, for appellant. Martin & Mason, for respondents.

KELLAM J.

This is an appeal from an order of the circuit court of Lawrence county discharging an attachment. The grounds of the motion to discharge were: First, that the allegations of the attachment were untrue; and, second, that no sufficient undertaking was given, it not being required by the plaintiff. Section 4996, Comp. Laws, requires that, before an attachment can issue, the clerk must require a "written undertaking on the part of the plaintiff, with sufficient sureties," etc. In this case the undertaking was not signed by the plaintiff, but was signed by two sureties. The sureties justified, and the clerk approved. Under a statute using the same terms,--"on the part of the plaintiff with sufficient sureties,"--it has been definitely held, in several cases, that it is unnecessary that plaintiff should sign, or that there should be a principal obligor. See Howard v. Manderfield, 31 Minn. 341, 17 N.W. 946; Pierse v. Miles, 5 Mont. 551, 6 P. 347; Leffingwell v. Chave, 19 How. Pr. 57. There are cases holding otherwise, as in Bank v. Stelling (S. C.) 9 S. E. 1028, where McGowan, J., dissents. Our own court, in Board of Education v. Sweeney, 48 N.W. 302, recognizes the distinction, and the reason for it, between the requirement of the statute that an elected officer shall "give bond," and the requirement, in case of provisional remedies, that there shall be given "an undertaking on the part of the plaintiff, with sufficient sureties." In this case the undertaking was not required to be given "by the plaintiff," but "on the part of the plaintiff,"--that is, on the side of the plaintiff; in behalf of the plaintiff. We think, when others, of approved competency and sufficiency, gave the undertaking in behalf of the plaintiff, the requirements of the statute were complied with, and its object accomplished. The attachment, then, should not have been discharged on account of the insufficiency of the undertaking.

The other ground of the motion was the untruthfulness of the affidavit upon which the attachment was issued. These allegations were that "the defendants have assigned and disposed of, and are about to assign and dispose of, their property, with intent to defraud their creditors." We think the following facts are practically undisputed: Gardiner and Bailey were partners having two stores, one at Deadwood and the other at Custer city, the business of each being distinct from that of the other. On the 3d day of May, 1892, they gave a mortgage on their Custer city stock to the First National Bank of Custer City for $1,950. On the 6th day of May, 1892, they gave a mortgage on their Deadwood stock to the same bank for $1,790. The second of these mortgages was not filed for record until May 24, 1892, and the other May 23, 1892. They were then filed on account of rumors which reached the bank that the mortgagee's creditors were crowding them. The value of the Deadwood stock so mortgaged was about $10,000. From the time the mortgage was given on the Deadwood stock until it was attached in these proceedings, the mortgaged goods remained in the possession of the mortgagors, and were sold in the regular course of retail trade as before, and up to the time of the attachment no part of the proceeds had been applied on the mortgage debt. The mortgage contained no express provisions as to sales by the mortgagors, or as to dispositions of proceeds. The mortgagee, the Custer Bank, knew, however, that such sales were being made. On the 5th day of May, 1892, Gardiner sold his half interest in the Custer city stock to Hanley, who was cashier of the mortgagee bank, taking his note therefor for $1,500, which he turned over to the bank as collateral security to his said indebtedness to that bank of $1,950. The bank took possession of the Deadwood stock under their mortgage on the morning of May 25th, and prior to the levy of the attachment. The same stock was afterwards attached in this proceeding, and the Deadwood stock is the property involved in this action.

It is contended by appellant that, although the mortgage contained no provision or stipulation allowing the mortgagors to retain possession and sell in the ordinary course of trade without...