First Nat. Bank of Abilene v. Naill

• Decision Date: 11 November 1893
• Citation: 52 Kan. 211,34 P. 797
• Parties: THE FIRST NATIONAL BANK OF ABILENE v. D. W. NAILL et al
• Court: Kansas Supreme Court

34 P. 797

52 Kan. 211

THE FIRST NATIONAL BANK OF ABILENE v. D. W. NAILL et al

Supreme Court of Kansas

November 11, 1893

Error from Dickinson District Court.

THE First National Bank of Abilene, as plaintiff, brought this action against D. W. Naill, as sheriff of Dickinson county and Lawrence, Manning & Cushing, to recover the value of a stock of boots, shoes, and other merchandise, claiming under a chattel mortgage executed by M. P. Shearer & Co. on the 4th of June, 1888, to secure a note for $ 4,444, and alleging the wrongful conversion thereof by the defendants. Defendant Naill answered, alleging that the mortgage to plaintiff was given to defraud, hinder and delay the creditors of M. P. Shearer & Co., and that, as sheriff he had levied six writs of attachment, each having duly come into his hands, on the property in controversy. Lawrence Manning & Cushing also answered, denying that Shearer & Co. were indebted to the plaintiff, and alleging that Shearer & Co. were indebted to them in about the sum of $ 1,586.50, and that the bank was, and had been, their agent for the collection of their claim; that plaintiff, while acting as their agent, had colluded with Shearer & Co. to defraud them, and to hinder and delay them in the collection of their debt; and that they had caused the property to be attached to satisfy their claim. The case was tried with a jury, and a general verdict rendered in favor of the defendants. Three special questions were also answered-one submitted by plaintiff, as follows:

"What amount did M. P. Shearer & Co. owe the plaintiff on the 4th day of June, A. D. 1888? Ans. $ 4,444."

And two by defendants:

"1. Was it a part of the inducement of the plaintiff in taking the mortgage to enable M. P. Shearer & Co. to accomplish a preference of creditors? A. Yes.

"2. Was it part of the inducement of plaintiff in taking the mortgage to enable M. P. Shearer & Co. to place their property beyond the reach of creditor or creditors not sustaining confidential relations with M. P. Shearer &amp Co.? A. Yes."

A motion for a new trial was overruled, and judgment entered in favor of the defendants on the verdict. The evidence tends to show that the value of the stock of goods was about $ 5,000. The plaintiff Bank brings the case here.

Judgment reversed and a new trial ordered.

Stambaugh & Hurd, for plaintiff in error:

Two questions are presented upon the facts as they appear in this record: First, was the mortgage made to the plaintiff in error by M. P. Shearer & Co. fraudulent as to the creditors of M. P. Shearer & Co. generally? Second, did the plaintiff in error sustain such relation to Lawrence, Manning & Cushing, defendants in error, as would prevent it from securing its own claim to the exclusion of Lawrence, Manning & Cushing? If these questions must be answered in the negative, then the judgment herein should have been for the plaintiff and not for the defendants, and this case should be reversed.

The cross-examination of Mr. Hayes by Mr. Burton traces the indebtedness from its inception to the note for $ 4,444, and none of this testimony is attempted to be contradicted; therefore, the fact is that M. P. Shearer & Co. owed the plaintiff bank the money for which this note is given, and for the indebtedness of the firm and on account of the business in which they were engaged. It follows that the debt was a bona fide debt, and, as to the general creditors of M. P. Shearer & Co., the bank had a right to take the mortgage and secure the debt, if taken in good faith and for such purpose. The bank took the mortgage; it filed the same in the office of the register of deeds; it went into immediate possession of the stock; and there is no attempt to show that there was any agreement, understanding or intention that M. P. Shearer & Co. would be protected or aided in any manner by the taking of the mortgage to the bank. It was an endeavor, pure and simple, to secure the claim of the bank, and no attempt was made upon the trial of this case to show to the contrary. If this is correct, the first question is disposed of.

The second question should not have been submitted. This is answered in the affirmative. It was error to submit this question. It also implies that the plaintiff bank was inducing M. P. Shearer & Co. to make a note and mortgage in this case for the purpose of securing it and other creditors to the exclusion of creditors not sustaining confidential relations with M. P. Shearer & Co. Now, as we have said, if there was no evidence of, and no intention on the part of Shearer or the bank, either to secure any other creditor of M. P. Shearer & Co. than the bank by the mortgage in controversy--and this question implies in its language, and the jury would likely to be misled by such implication, that if it was the intention of the bank in taking this mortgage to enable M. P. Shearer & Co. to prefer the bank to the other creditors of M. P. Shearer &amp Co. because the bank sustained a confidential relation to M. P. Shearer & Co.-- then the mortgage would be void and fraudulent as to these defendants. If this interrogatory is to be construed, together with its answer, to be what it should have been -- simply an inquiry as to whether or not the bank was attempting by the taking of this mortgage to have itself preferred to the other creditors of M. P. Shearer & Co., and M. P. Shearer & Co. were attempting to prefer the bank to the other creditors, and whether or not the bank was able to attain this result by reason of the confidential relations existing between it and M. P. Shearer & Co.-- then it is entirely consistent with the legality of the transaction between the bank and...