Carroll v. Anderson

Decision Date02 October 1923
Docket Number1073
PartiesCARROLL v. ANDERSON
CourtWyoming Supreme Court

ERROR to the District Court, Laramie County; WILLIAM C. MENTZER Judge.

Action in replevin by Theodore Anderson as plaintiff claiming the right of possession as mortgagee of a stock of merchandise against George Carroll as Sheriff of Laramie County, who had seized said merchandise under a writ of attachment on behalf of other creditors. There was a judgment for plaintiff and defendant brings error.

Affirmed.

C. E Lane and Garwood and Garwood for plaintiff in error.

Plaintiff in error sought to enforce a superior lien upon the merchandise involved in this action as against defendant in error whose claim as chattel mortgagee was shown by the evidence to be fraudulent, void and collusive; no demand was made by the plaintiff before commencing his action of replevin. (Boswell v. First Nat. Bank, 16 Wyo. 193; 92 P. 626; 34 Cyc. 1405-1406.) But, irrespective of demand, or rather non-demand, this action will lie against the sheriff, holding under a writ of attachment. (34 Cyc. 1375.) The goods were in the custody of the law. (34 Cyc. 1400.) The chattel mortgage to Anderson was void as to creditors.

1. Because it was withheld from record for a considerable time after its execution.

2. It was given to secure pre-existing notes held without security until creditors began to attach the stock of goods.

3. There was no accounting between the parties.

4. The stock was not replenished, as sales had been made therefrom, but was depleted without the proceeds being applied on the indebtedness.

5. Mortgagor kept no books.

(Hasbrouck v. LaFebre, 23 Wyo. 380; 152 P. 169; Durr v. Landay, 84 N.W. 437; Baumbach Co. v. Hobkirk, 80 N.W. 740.)

Section 4698 C. S. permitting mortgagor to sell from a stock of mortgaged goods expressly provides that unless permission is given in the mortgage for the retention of sale proceeds the same must be paid over to the mortgagee. (Hasbrouck v. LaFebre, supra.) Anderson never had title to the goods attached, for the following reasons:

1. The goods were bought by the mortgagor after the chattel mortgage was recorded.

2. The goods were acquired by fraud and with the knowledge and acquiescence of Anderson, to-wit: false and fraudulent statements of both Anderson and the mortgagor; the goods being obtained by fraud a constructive trust resulted; Anderson the mortgagee is estopped by his own acts and laches.

1. In not recording his chattel mortgage for some months after its execution.

2. In taking the chattel mortgage to secure pre-existing notes carried without security, until other creditors threatened attachment.

3. By the credit statements made by mortgagor with Anderson's knowledge.

4. By the manner in which Anderson treated the goods after they were attached;

The evidence discloses a collusive arrangement between Anderson and the mortgagor whereby Anderson could be the owner or one-half owner and partner of the mortgagor, and thus defeat other creditors. A similar arrangement was condemned by the court in, (Stirling v. Wagner, 4 Wyo. 47, 32 P. 1128.)

Walter Q. Phelan for defendant in error.

Replevin may be maintained without prior demand against an officer who has seized mortgaged property under attachment. (23 R. C. L. 889; Hopkins v. Bishop, 91 Mich. 238; Bunce v. McMahan, 6 Wyo. 24, 42 P. 23, 34 Cyc. 1404.) The question of demand cannot be urged for the first time on appeal. (23 R. C. L. 890; Denver Live Stock Co. v. Parks, 41 Colo. 164; 91 P. 1110; 14 Ann. Cas. 814.) Replevin is the only method to try title of property taken by an officer under attachment. Plaintiff in error cannot be heard to complain of the giving of instructions numbered 7, 8 and 10, for the reason that they embodied statements of the law, upon which the attachment plaintiff relied to void the chattel mortgage and which were even more favorable to plaintiff in error than he was entitled to; a chattel mortgagee in possession has a title superior to attaching creditors. (50 Mo.App. 564, 46 Mo.App. 16; 109 Ill.App. 138; 53 Wash. 127.) The mortgage permitted sales by mortgagor, and the right to substitute other property, and was therefore valid as against subsequent attaching creditors of the mortgagor. (Peabody v. Landon, 61 Vt. 318; 15 Am. S. R. 903; Bishop v. Sheriff, 35 Ia. 60; Stephens v. Pence, 56 Ia. 258; Blanchor v. Cook, 144 Mass. 207.)

C. E. Lane and Garwood and Garwood in reply.

Absence of demand was raised by answer, argument of the case, and by requested instructions:

1. The evidence established that the goods were obtained by fraud.

2. That the sales were made with knowledge of the mortgagee and none of the proceeds applied on the mortgage.

3. There was no agreement between the mortgagee and the mortgagor that the mortgagor might retain proceeds from sales.

4. More than enough goods were sold to have paid the mortgage in full.

Credit was obtained upon false statements made with the knowledge of the mortgagee; the evidence showed that the mortgage was collusive and fraudulent, and as such had no standing as against general creditors. (Barnett v. Ferfus, 51 Ill. 352; Orton v. Orton, 7 Ore. 478; 33 A. R. 717; Gilbert v. Peppers, 65 W.Va. 355, 36 L. R. A. (N. S.) 1181; Bergman v. Jones, 10 N.D. 520, 88 Am. St. Rep. 739; Bank v. Joannes, 73 N.W. 997 (Wis.) ; Durr v. Landau, 84 N.W. 437 (Wis.) ; 11 C. J. 573; 5 R. C. L. 434-435; Stephens v. Curran, 28 Mont. 366; Dobyns v. Meyer, 95 Mo. 132; Claflin v. Foley, 22 W.Va. 434; Rodman v. Norton, 29 So. 637 (Ala.) ; Wilson v. Voight, 9 Colo. 614; Wile v. Butler, 4 Colo. App. 154; Dodge v. Norlin, 133 F. 363 (Colo.) ; Standard Co. v. Schultz, 25 Pa. St. 625; Skelton v. Connington, 77 N.E. (N. Y.) 790; Nelden Co. v. Coml. Bank, 74 P. 195 (Utah) .) See also 5 R. C. L. 434. Under such circumstances the mortgage is a mere sham. (Rochelleau v. Boyle, 11 Mont. 469; Hasbrouck v. LaFebre, 23 Wyo. 367.)

KIMBALL, Justice. POTTER, Ch. J., and BLUME, J., concur.

OPINION

KIMBALL, Justice.

This is a replevin action in which the plaintiff, Theodore Anderson, as mortagee in a chattel mortgage, claimed the right to the possession of goods seized on writ of attachment by the defendant, the sheriff of Laramie County. The mortgage to plaintiff was dated July 12, 1920, from William Angelos, mortgagor, to secure an indebtedness of $ 6000 evidenced by 6 promissory notes for $ 1000 each, the first due January 12, 1921, and the others at 6-month intervals thereafter. The mortgaged property was a stock of merchandise employed in retail trade. The mortgage, in addition to a provision permitting the mortgagor to retain possession until default, contained the following clause:

"Permission is hereby given to said party of the first part to use, handle, operate, manage and control the above described property, and to market, sell and dispose of portions thereof as may be necessary in the course of business and to replace such property or parts sold with other property of a like kind or character which shall be subject to the operation and effect of this mortgage."

The mortgage was filed in the office of the county clerk October 7, 1920.

After January 12, 1921, when the first secured note became due, the plaintiff did not at once foreclose the mortgage, and the mortgagor continued in possession of the mortgaged property until sometime in the forepart of February, 1921, when a judgment creditor levied execution thereon. The plaintiff satisfied this creditor, and thereupon took possession under his mortgage and advertised the stock of goods for sale. On March 7, the day of sale, the defendant, under a writ of attachment in an action by certain creditors against the mortgagor for the purchase price of goods sold and delivered to him in the latter part of January, 1921, seized the goods in controversy which are the identical goods sold by the attaching creditors to the mortgagor. The plaintiff then commenced this action in replevin against the sheriff. The issues were tried to a jury, the verdict and judgment were for the plaintiff, and the defendant prosecutes error.

It is claimed that the judgment should be reversed because there was no evidence of demand. The reason for a demand is to give the defendant an opportunity to surrender the goods without being put to costs. When he contests the case upon a claim of superior right, as did the defendant in this case, he cannot afterwards set up the want of a demand to justify the taking or detention. Wells on Replevin, Secs. 372, 374; Boswell v. Bank, 16 Wyo. 161, 195, 92 P. 624, 93 P. 661. We think a demand in this case was unnecessary.

It is also claimed that replevin does not lie against a sheriff who has taken the property under a writ of attachment. Authorities are cited to the effect that defendant in attachment cannot maintain replevin against the officer making the seizure, and that replevin does not lie where the officer is not in possession of the property; also, that goods in the custody of the law cannot be replevied. In this case the property was taken from the possession of the mortgagee on process against the mortgagor, and the right of the mortgagee in such a case to bring replevin against the officer in possession is clear, at least under statutory provisions similar to ours. C. S. 1920, Sec. 6276; Cheeseman v. Fenton, 13 Wyo. 436, 448, 80 P. 823; note to 7 Ann. Cas. 907.

It is further contended that because the plaintiff did not in terms object to the taking of the goods by the sheriff, he waived his right to possession under his mortgage lien. We think his failure to object had no such result, but was entirely consistent with an intention later to assert his right to possession by replevin. Edmunds v. Hill, ...

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