Crowley v. Langdon
| Decision Date | 04 June 1901 |
| Citation | 86 N.W. 391,127 Mich. 51 |
| Court | Michigan Supreme Court |
| Parties | CROWLEY v. LANGDON. |
Error to circuit court, Ionia county; Frank D. M. Davis, Judge.
Action by Joseph J. Crowley, trustee, against Henry C. Langdon. From a judgment for defendant, plaintiff brings error. Reversed.
S. L. Merriam and Chaddock & Scully, for appellant.
Morse & Locke and F. A. Lyon, for appellee.
The plaintiff, after demand, replevined from the defendant a stock of goods, claiming a right to their possession by virtue of a chattel mortgage executed and delivered to him by the defendant. He makes claim to a right of possession under his mortgage upon two grounds, viz.: First, that the mortgage was due and unpaid; second, that he felt insecure by reason of defendant's failure to comply with the terms of the mortgage as to insurance, and his failure to replenish the stock as provided in the mortgage. Defendant answered these claims by the contentions: First, that the mortgage was not due; and, second, that it was obtained by fraud. To sustain the first of these defenses, counsel claimed upon the trial the right to show by parol that the payment of the installments of the sum secured by said mortgage was postponed for periods of three, six, and nine months. To this it was objected that the mortgage fixed the maturity of said sum, and that its terms were not subject to change by parol evidence. The learned circuit judge admitted the testimony. The mortgage contains some recitals which indicate that it was the culmination of negotiations between the parties; but that is nothing unusual, as it is necessarily true of all mortgages. These recitals become significant, however, for the reason that the mortgage did not in express terms fix the time when the debt then existing and secured by it should become due, and counsel claim that they imply an understanding that it should not become immediately due, according to the ordinary rule in cases where the mortgage fails to specify the date of maturity, but that the mortgagor should have a period of credit; and, that being so, parol testimony was admissible to show the agreement of the parties in that regard. The facts which he was permitted to show are briefly, that Huff and the defendant were co-partners in a mercantile business in the village of Portland, and were indebted to the persons for whose benefit this mortgage was subsequently made. Trouble having arisen between the co-partners, Huff commenced a suit in the Ionia circuit in chancery to wind up the affairs of the firm, and prayed for the appointment of a receiver. The defendant thereupon went to Detroit to consult with some of the creditors of the firm and at a meeting of the creditors it was determined that they should be represented at Ionia on the day set for the hearing of the application for a receiver, and at that time counsel representing four of the heavier creditors were present. A consultation was had between counsel and this defendant, wherein it was arranged that the latter should buy Huff's interest, and assume the debts of the firm, and that the creditors should release Huff, and take the defendant's chattel mortgage for their claims. Huff was to assign his interest to the defendant. The defendant claims that, in consideration of his agreement to this arrangement, the time for the payment of the sums due creditors was to be extended for periods of three, six, and nine months; that they, or some of them, were to continue to sell him goods on credit, and he was to be permitted and aided to continue the business. Among the recitals and provisions of the mortgage are the following: 'Whereas, the said party of the first part is justly indebted unto the said party of the second part, trustee, in the sum of fifty-one hundred dollars; and whereas, the said party of the first part expects to buy from said parties of the second part, from time to time during the continuance of this mortgage, goods on time, and on such terms of credit as may be agreed upon; and whereas, the indebtedness of the said party of the first part to said parties of the second part is therefore liable to change in amount and time of payment; and whereas, the said party of the first part has agreed that the payment of the existing indebtedness of the said party of the first part to the said parties of the second part, and also the payment of the other indebtedness for goods to be purchased by the said party of the first part from the said parties of the second part, shall be secured in the manner hereinafter mentioned: Now, therefore, this indenture witnesseth that in the pursuance of said agreement, and in consideration of the premises, the said party of the first part does hereby for himself, his heirs, executors, administrators, and assigns, covenant and agree that the said party of the first part, his heirs, executors, and administrators, will pay to the said party of the second part, his executors, administrators, or assigns, or his successors, the said sum of fifty-one hundred dollars; and that the said party of the first part will pay to the said parties of the second part such bills, notes, and accounts as shall [hereafter] be made at such time and times as they shall become due.' It then conveyed to Crowley, as trustee, all of the stock, fixtures, etc., including future accessions, that 'may be owned or possessed by him and added to said stock during the continuance of this agreement, and until payment in full of all sums of money, and the interest thereon, herein and hereby to become due and payable: provided always, and these presents are upon this express condition, that, if the said party of the first part shall pay or cause to be paid to the said party of the second part, his executors, administrators, or assigns, the said sum of fifty-one hundred dollars, with the interest thereon at six per cent. per annum until paid at the times hereinbefore set forth, and shall also pay or cause to be paid all bills, notes, and accounts hereinafter made by said party of the first part to said party of the second part during the continuance of this agreement, as the same shall become due, respectively, together with the interest thereon, then these premises shall cease, and will be null and void. It is hereby expressly agreed that the said party of the first part, his executors, administrators, and assigns, shall keep the stock on hand replenished as fast as sold out, as nearly as may be, so that the stock on hand shall at no time be worth less than seventy-five per cent. more (if inventoried at cost price) than the entire indebtedness from time to time existing. And it is also agreed by and between the parties hereto that the said party of the first part shall and will keep the said goods, wares, merchandise, material, fixtures, furniture, and personal property, including all such as shall be added, after-acquired, substituted, insured against loss and damage by fire, by insurers and in amount approved by said party of the second part, and assign the policy and certificate thereof to said party of the second part; and in default thereof it shall be lawful for the said party of the second part to effect such insurance, and the premiums paid for effecting the same shall be a lien on said goods, wares, merchandise, materials, fixtures, furniture, and personal property, including all such as may be added, after-acquired, or substituted, in addition to the amount secured by these presents, and payable on demand, with interest at the rate of ten per cent. per annum. It is hereby expressly agreed that, should the
said party of the first part neglect or refuse to keep up the stock, so that the value thereof shall not be as high as the standard hereinbefore stated then and from thenceforth, or should he neglect to insure as hereinbefore...
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