Cadwell v. Pray

• Decision Date: 01 July 1879
• Court: Michigan Supreme Court
• Parties: WARREN CADWELL AND MARVIN CADWELL v. ORMAN O. PRAY.

2 N.W. 52

41 Mich. 307

WARREN CADWELL AND MARVIN CADWELL v. ORMAN O. PRAY.

Supreme Court of Michigan

July 1, 1879

A chattel mortgage upon a stock of goods covenanted that the stock should be kept up to a certain value. Held, that the mortgage covered goods subsequently acquired. A chattel mortgage upon a stock of goods was executed April 10, 1876 to secure a note for $1,150. April 2, 1877, before the note became due, a new note was given for unpaid balance, and the old one surrendered. Afterwards the note and chattel mortgage were assigned to plaintiff, who brought replevin against the mortgagor to recover the goods mortgaged. Held, that the question whether the giving of the new note operated to extinguish the mortgage was for the jury; that demand was necessary before replevin would lie, though the mortgage was past due.

Error to Clinton ________

R. Strickland and A. Stout, for appellant.

O.W Barker and J.O. Seldon, for respondent.

CAMPBELL, C.J.

Pray replevied certain goods from the plaintiffs in error, Warren and Marvin Cadwell, claiming a right to them as mortgagee under a mortgage from Marvin Cadwell to John A. Barrington.

On the tenth day of April, 1876, Marvin Cadwell gave his note to Barrington for $1,150, payable, without interest, one year from date, and secured it by a chattel mortgage on his stock of goods in Eureka, Clinton county, valued at $2,300 "said stock to be kept up to the present value until above mentioned debt is satisfactorily paid." The mortgagee was authorized, when he should deem himself insecure, or in case of sale, assignment, disposal, or removal of any of the property, without written consent, to take possession and keep it until the debt accrued, and then sell. This mortgage was filed April 12, 1876, in the town clerk's office, but never renewed.

On the second day of April, 1877, several days before this mortgage became due, and there then remaining unpaid $800, Marvin Cadwell gave Barrington a note for $800, with interest at ten per cent., payable in twelve months, and due, therefore, on the fifth of April, 1878. Barrington gave up the old note. One principal question in dispute is whether the mortgage was continued as security for this new note, or whether it ceased to operate.

Marvin Cadwell continued in business, buying and selling goods. On or about February 12, 1878, Barrington agreed to sell to Pray an interest of $600 in the last note, and guaranteed its collection March 30th. Marvin Cadwell paid the interest and $200 of the principal to Barrington, who, on the same day, gave the note thus reduced to $600 to Pray, and who also undertook to assign the chattel mortgage to him.

On the second day of April Barrington is claimed to have been sent by Pray to have an interview with Marvin Cadwell. The account given of this interview by Barrington is substantially as follows. He met Marvin Cadwell and asked him, in Warren Cadwell's presence, for payment of the note. He said it was not convenient to pay it, and on being asked when he proposed to pay it replied, when he got ready. Barrington said: "I understand you have sold your goods to your brother." Cadwell said: "I don't know as that is any of your business." Barrington then said: "I propose you pay the note before you are ready." Cadwell said: "I would like to see how you do it." Barrington then said: "By virtue of this mortgage I hold upon the goods." Cadwell said: "You hold no mortgage; I want nothing to do with you except on the floor of the court-room." Barrington took the mortgage and read it, and then asked Marvin Cadwell if he wished to pay it. He said he did not. This ended the conversation. On this same day Pray sued out this replevin.

There was evidence tending to show that, on March 28th, Marvin Cadwell had sold out to his brother Warren, and that this was what induced Pray to send Barrington to the store on April 2d. There was also evidence tending to show that some of the goods had never belonged to Marvin, and were put in the store by Warren.

The many questions arising on the trial, so far as now important, may be disposed of separately. The objection taken by plaintiffs in error, that the mortgage did not cover goods put in to keep up the stock, is of no force, as it expressly contemplates and covenants to keep up the stock, and we have frequently held this is competent. People v. Bristol, 35 Mich. 28; American Cigar Co. v. Foster, 36 Mich. 368.

Whether the mortgage was in existence as...