Embree v. Roney

• Decision Date: 02 January 1911
• Citation: 152 Mo. App. 257,133 S.W. 83
• Parties: EMBREE v. RONEY.
• Court: Missouri Court of Appeals

133 S.W. 83

152 Mo. A. 257

EMBREE v. RONEY.

Kansas City Court of Appeals. Missouri.

Rehearing Denied January 2, 1911.

1. CHATTEL MORTGAGES (§ 201) — ACTION — PRIOR MORTGAGEE — POSSESSION—QUESTION FOR JURY.

The question whether a prior chattel mortgagee obtained immediate possession of the property so as to defeat the rights of a subsequent mortgagee was for the jury.

2. CHATTEL MORTGAGES (§ 190)—POSSESSION BY MORTGAGOR — EFFECT ON SUBSEQUENT MORTGAGE.

Though a chattel mortgage is fair on its face, yet, if it permits the mortgagor to remain in possession and dispose of the property in the usual course of business for his own benefit, it is void as to creditors.

3. CHATTEL MORTGAGES (§ 190)—POSSESSION BY MORTGAGOR — SALE OF PROPERTY FOR MORTGAGOR'S BENEFIT.

It is not the right granted to a mortgagor to remain in possession of the property with power to sell in the ordinary course of business that renders the chattel mortgage fraudulent as to creditors, but the right to remain in possession and to convert the proceeds to his own use.

4. CHATTEL MORTGAGES (§ 201)—APPROPRIATION OF PROCEEDS BY MORTGAGOR—EFFECT ON SUBSEQUENT MORTGAGEE—INSTRUCTION —EVIDENCE—SUFFICIENCY.

In an action by a subsequent chattel mortgagee to recover property from a prior mortgagee, the instruction that "if defendant at the time he took possession of the stock of goods took no steps to apprise the community that a change of possession had been made, and that, if no change in the management and surroundings was made so as to indicate that a change had been effected, then the jury is instructed that no open and notorious change of possession was made," so as to cut off the rights of a subsequent mortgagee was sustained by evidence showing that the mortgagor, not only retained possession of the property, selling the goods in the usual course of business, but was also converting the proceeds to his own use.

5. CHATTEL MORTGAGES (§ 201)—PROCEEDS OF PROPERTY—CONVERSION BY MORTGAGOR —EVIDENCE.

Evidence that a mortgagor deposited the proceeds of the property in a bank to his own credit was evidence that he had converted them to his own use.

6. CHATTEL MORTGAGES (§ 185) — INSTRUCTIONS.

In an action by a subsequent chattel mortgagee to recover property from a prior mortgagee, the court's modification of the instruction that no open and notorious change of possession of the property was made, if the prior mortgagee took the stock of goods and made no steps to apprise the community that a change of possession had been made, and did not change the management and surroundings so as to indicate such change, by adding that, if the subsequent mortgagee's assignor of the mortgage had notice of the prior mortgagee's possession, then it would not be material whether said possession was notorious or not, was error, since such notification that the prior mortgagee was in possession under his mortgage could not affect the rights of creditors if his possession was a shield to defraud the mortgagor's other creditors.

7. CHATTEL MORTGAGES (§ 190)—CONVERSION OF PROCEEDS BY MORTGAGOR—INTENT—EFFECT ON SUBSEQUENT MORTGAGE.

If a prior mortgagee permitted the mortgagor to retain the property and convert the proceeds to his own use, thereby injuring a subsequent

mortgagee, it was immaterial whether he intended to defraud other creditors, but they could obtain relief regardless of it.

Appeal from Circuit Court, Ray County; Francis H. Trimble, Judge.

Action by D. W. Embree against J. H. Roney. Judgment for defendant, and plaintiff appeals. Reversed and remanded.

Clark & Joiner and Metcalf, Brady & Sherman, for appellant. M. G. Roberts, George W. Crowley, and Lavelock & Kirkpatrick, for respondent.

BROADDUS, P. J.

This is a suit for conversion. Plaintiff claims title to a stock of drugs located in a store at Lawson, Mo., by virtue of a chattel mortgage dated March 8, 1909, and filed for record March 10th. The mortgage was executed by one A. K. Goodyear to secure 20 promissory notes dated September 30, 1907, each for the sum of $100, payable consecutively the 1st day of the month beginning the 1st day of April, 1909, bearing interest at the rate of 7 per cent. and payable to one A. S. Houck. They were indorsed in blank by the payee, and the mortgage was made to E. C. and W. H. Gatlin, the then holders. Subsequently they came into the hands of plaintiff, Embree. The defendant claims the goods under a prior mortgage executed by Goodyear December 12, 1908, to secure defendant as his surety on a note of that date for money borrowed at the time. This mortgage was filed for record December 14, 1908. It provided that defendant Roney was to have immediate possession of the stock of goods and continue in such possession of the same and receive the proceeds of goods sold and apply them to the payment of the note until the same was fully paid. The plaintiff's evidence tends to show that defendant did not take possession of the goods at the date of his mortgage, but that Goodyear was in possession and dealing with them as if they were his own property. About the 30th day of April, 1909, Goodyear turned the goods over to a Mr. Engle, plaintiff's agent, with the key to the building, at which time plaintiff and Goodyear entered into a contract in writing, by the terms of which plaintiff employed Goodyear to work in his store at a compensation of...