First National Bank v. North
| Decision Date | 03 February 1892 |
| Citation | 2 S.D. 480,51 N.W. 96 |
| Parties | FIRST NATIONAL BANK, Plaintiff and respondent, v. NORTH, Sheriff, Defendant and appellant. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Lincoln County, SD
Affirmed
C. B. Kennedy
Attorney for appellant.
R. B. Tripp, Yankton, SD
(Bartlett Tripp of Counsel)
Attorneys for respondent.
Opinion filed February 3, 1892
The respondent bank, plaintiff below, brought this action against appellant, defendant below, to recover possession of a stock of goods, claiming the same under a chattel mortgage made to it thereon by M. B. Dean & Co., who it is conceded were the owners of the goods. The mortgage was set out in the complaint. Appellant was the sheriff of Lincoln county, and claimed to hold the goods under an attachment, and that respondent’s mortgage was void for the reason that it could not be reasonably gathered therefrom who was the mortgagee therein, and that it was fraudulent and void as against the attaching creditors, the answer alleging that at and for a long time prior to the giving of the said chattel mortgage the said Dean & Co. were insolvent; that they applied to and received from the respondent bank a loan of money, giving as security therefor a mortgage upon their said stock of goods, which by agreement between said bank and said Dean & Co. was to be and was kept from the records; that afterwards Farwell & Co., the attaching creditors herein, having made inquiry and found no incumbrance on said goods, and believing there was none, sold said Dean & Co. a large amount of goods on credit; that said note for money so borrowed of said respondent bank was from time to time renewed, but with the same agreement that the said chattel mortgage which secured the same should remain unrecorded; that afterwards, to-wit, October 22, 1885, the said indebtedness of said Dean & Co. to said bank then amounting to 81,800, the said bank, through its president, obtained from said Dean & Co. a renewal of their said chattel mortgage upon the said stock of goods, upon the agreement between them that, while the mortgage should in terms cover the entire stock, yet Dean & Co. should be allowed to withdraw therefrom goods to the amount of $1,500 or $2,000, and also about $900 worth which they were to turn over to one Frank M. Dean, which said goods were afterwards, with the knowledge and consent of said respondent bank, so taken and withdrawn from said stock.
At the commencement of the trial appellant objected to the introduction of any evidence under the complaint, for the reason that it did not state facts sufficient to constitute a cause of action, and the overruling of this objection is the first error assigned. The objection was based upon the fact, as appears by argument of counsel, that the complaint, while pleading the chattel mortgage as the source of respondent’s possession, did not allege default in any of its conditions which would explain or justify such possession. The complaint alleges that, on and prior to November 9th, respondent was in and entitled to the possession of the goods in controversy. Appellant concedes that if respondent had stopped with that allegation, relying upon his bare possession and its invasion, a cause of action would have been stated; but insists that when he goes further, and shows that his right of possession is derived from and depends upon his chattel mortgage, he must plead the conditions, in connection with the mortgage, which entitle him to such possession. The objection, for the purpose of its disposition, admits the facts that respondent was in possession of the goods. and that appellant took them away unlawfully. It is true that respondent exhibits its mortgage as the basis of its possession and right of possession, and if, under the terms of said mortgage, respondent could not possibly have been rightfully in possession, there would perhaps be force in appellant’s claim. The mortgage shows that the indebtedness it was made to secure matured October 24th, and, if unpaid after that date, respondent might take possession of the goods and foreclose its mortgage. The complaint further alleges that prior to the 9th day of November—how long is not stated—it had so taken possession, and while so in possession appellant unlawfully, and without consent of respondent, took the goods from its posses sion. No more in this case than generally is the respondent required in the first instance to justify its possession. As against appellant, it does not base its right to recover the goods upon broken conditions in the mortgage, but upon the fact that appellant found them in the peaceable possession of respondent, and took them away unlawfully. The case is not like that of Bank v. Farmer, 5 Dak. 282, 40 N.W. 345. There the plaintiff bank never had possession, but sought to compel Farmer, who was in possession, to surrender the property claimed by the bank, and, of course, was required to affirmatively show some facts or conditions that would justify the court in aggressively taking the possession from Farmer, and giving it to the bank. The court found Farmer in peaceable possession of the property, and only asserted the common learning of all the books in holding his possession was good against everybody but one showing a better right. This the plaintiff bank in that case did not do. It neither showed the conditions of the mortgage, nor that any of its conditions had been broken, and so exhibited no reason for the interference of the court in taking the possession from Farmer and giving it to the plaintiff bank; but here the court finds respondent first in possession. That fact is distinctly alleged. It is further indirectly alleged that such possession was by virtue of the mortgage, but we do not think this allegation made it necessary for respondent to go further, as against the attaching creditor, and show some default or broken condition in the mortgage which justified taking possession. The right or fact of respondent’s possession was not antagonized by anything in the mortgage or in the complaint, and the fact of possession was sufficient against a wrongful taker, as appellant was alleged to be. The justifiableness of the possession under the mortgage was a matter between the mortgagor and mortgagee. Otherwise an attaching creditor, as in this case, could make use of a defense in which he could have no interest. Respondent’s possession might have been unjustifiable as against the mortgagor, but, if submitted to by him, the attaching creditor had no cause of complaint. The complaint charges that respondent was in rightful possession of the goods, and that appellant took them away unlawfully and as a wrong doer. Under these conditions, appellant could not prevent their restoration, even by affirmatively showing an unasserted right of possession in the mortgagor or any other third person. We think the objection to the introduction of evidence on account of the insufficiency of the complaint was properly overruled.
Upon the trial plaintiff offered in evidence a chattel mortgage purporting to be from M. B. Dean & Co. to “The First National Bank,” as the Exhibit A referred to in the complaint, and made a part thereof. Defendant objected on grounds which have already been considered, and for the further reason “that the mortgage on its face does not show that it is a mortgage to the plaintiff, as alleged in the complaint;” the particular defect being that the mortgagee therein named was “The First National Bank,” and not “The First National Bank of Canton,” which was the plaintiff. This objection being stated, the plaintiff asked, and the court allowed, that it might make proof that The First National Bank named in the mortgage was the plaintiff in this action. The allowance of such evidence, and the subsequent admission of the mortgage, are assigned as error. The exhibit offered was plainly indorsed: This indorsement or memorandum was a part of the exhibit. The offer was of the whole of it. It was not limited to what appeared upon its face, or to so much of it as constituted the alleged mortgage. This indorsement was probably sufficient to explain any doubt appearing upon the face of the instrument as to who was intended by “The First National Bank;” but, if not, we entertain no doubt of the competency of parol testimony to explain such doubt and identify the mortgagee. It would be a plain case of the use of parol evidence to explain an ambiguity in a written instrument, and has been frequently, resorted to to establish the identity of a corporation misnamed in a contract. In President v. Meyers, 6 Serg. & R. 12, Gibson, J., says: “I take the law of the present day to be that a departure from the strict style of the corporation will not avoid its contracts, if it substantially appear that the particular corporation was intended, and that a latent ambiguity may, under proper averments, be explained by parol evidence in this as in other cases, to show the intention.” See, also, 2 Kent, Comm. 292; Distilling Co. v. Brant, 69 Ill. 658; Cotton Manufactory v. Adams, 10 Mass. 360; Ang. & A. Corp. (10th Ed,) § 234.
The sixth assignment is “that the court erred in not permitting the defendant to show that prior mortgages had been made and held by the plaintiff on this same stock of goods, and that the mortgage in question was a continuation of a systematic scheme to defraud creditors.” This and the eighth, ninth, and tenth assignments must be considered together, as there was no ruling of the trial court upon the subject of the sixth, except in connection with the subject of the others. Together they present the question of error in rejecting defendant’s offer of testimony, appearing in appellant’s abstract, of which an extract is given hereinafter. It may be proper to observe, however, that the language of the sixth assignment is...
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