Gee v. Van Natta-Lynds Drug Co.
| Decision Date | 07 December 1903 |
| Parties | JOHN H. GEE et al., Interpleaders, Respondents, v. VAN NATTA-LYNDS DRUG COMPANY, Appellant |
| Court | Kansas Court of Appeals |
December 7, 1903;
Rehearing Denied 105 Mo.App. 27 at 34.
Appeal from Nodaway Circuit Court.--Hon. A. D. Burnes, Judge.
Cause reversed.
B. R Martin and Culver & Phillip for appellants.
(1) The court erred in refusing the demurrer to the evidence. The mortgage under which interpleaders claim title is void as against appellant. Sanford v. Wheeler, 33 Am. Dec 389; Ayers v. Husted, 15 Conn. 513; Bramhall v Flood, 41 Conn. 71; Pattison v. Letton, 56 Mo.App. 325; Mokaska Mfg. Co. v. Steele, 36 Mo.App. 496; Bank v. Lime Co., 43 Mo.App. 496; Galbreath v. Cook, 30 Ark. 417. (2) The mortgage is fraudulent and void because to the use of the mortgagor. Lodge v. Samuels, 50 Mo. 204; Gutta Percha Mfg. Co. v. Supply Co., 149 Mo. 538; McDonald v. Hoover, 142 Mo. 484; Leather Co. v. Hardware Co., 57 Mo.App. 297; Grocer Co. v. Miller, 53 Mo.App. 107; Kuh v. Garvin, 125 Mo. 547; Bank v. Powers, 134 Mo. 432; McCarthy v. Miller, 41 Mo.App. 200; Bullene v. Barrett, 87 Mo. 185; Mercantile Co. v. Perkins, 63 Mo.App. 310; Shoe Co. v. Gallant, 53 Mo.App. 423; Rubber Mfg. Co. v. Supply Co., 149 Mo. 550.
Shinabargar & Cook for respondents.
(1) An indemnity chattel mortgage is valid as against attaching creditors, although it appears on its face to secure the payment of a definite sum, and parol evidence is admissible to show the true consideration. Sparks v. Brown, 33 Mo.App. 505; Sparks v. Brown, 46 Mo.App. 529; Minor v. Sheehan, 30 Minn. 419, 15 N.W. 687; Goodheart v. Johnson, 88 Ill. 58; Williams v. Alnutt, 72 Mo.App. 62; Biglow v. Casper, 145 Mass. 270; Jones on Chattel Mortgages (4 Ed.), sec. 90. (2) It is insisted by opposing counsel that this provision renders the mortgage void as being to the use of the mortgagor. According to the decisions of our Supreme Court, such a provision does not vitiate the mortgage. Dunham v. Stevens, 160 Mo. 95; State ex rel. v. Fidelity & Deposit Co., 94 Mo.App. 184.
The undisputed facts taken from appellant's statement are as follows:
On June 20, 1902, the Van Natta-Lynds Drug Co. sued Geo. Aley, Jr., on account for merchandise sold for $ 251.46 and obtained a writ of attachment in aid of said suit which was levied upon a stock of drugs belonging to the debtor, situated in his store at Quitman, Mo. Afterwards the respondents interpleaded for the goods, claiming the right to possession by virtue of a chattel mortgage executed to them by Aley, Jr. on March 25, 1902, to secure a note for $ 1,290. A trial resulted in a verdict and judgment for the interpleaders and the drug company appeals.
It appears from respondents' evidence without dispute that in 1900 Aley, Jr., purchased the stock from Dr. Carter. He borrowed $ 800 of the purchase price from a Mr. Weber, a banker, to whom he executed a first mortgage on the goods and the balance of the purchase money was secured to Dr. Carter by a second mortgage on the same property. Aley took possession of the store and conducted his business in the usual course of trade for about two years, during which time he paid nothing upon his debt. In March, 1902, Mr. Weber became dissatisfied with his security and thereupon he advanced sufficient money to pay off the Carter mortgage, and Aley executed to Weber his personal note due on or about one year after date for the entire indebtedness, amounting to $ 1,290 for the payment of which Aley's father and brother-in-law, interpleaders herein, became sureties. At the same time, Aley, Jr., executed to his father and brother-in-law an unconditional note for $ 1,290 payable on or before one year after date and secured it by mortgage upon his stock of drugs--the mortgage under which they claim title here.
The testimony for the interpleaders is that Aley, Jr., was not indebted to them in any sum and that the note and mortgage was given to indemnify them against any loss they might sustain as sureties upon the Weber note. But the note upon its face is an unconditional promise for value received to pay the sum of $ 1,290 at maturity and the mortgage upon its face purports to secure an absolute existing indebtedness evidenced by the note aforesaid in consideration of the sum of $ 1,290 paid by the interpleaders to the mortgagor. The mortgage provides that "if the mortgagor shall pay to the mortgagees the aforesaid sum of $ 1,290 according to the terms of said note," it shall be void, otherwise the mortgagees are empowered to take and sell the property and apply the proceeds to the payment of said note. In other words, the note and mortgage which was duly recorded, created and secured an apparent indebtedness which, it is conceded, never in fact existed, for the interpleaders had paid nothing upon the Weber note nor had had they assumed the payment of it. It was further provided in the mortgage that until default or until such time as the mortgagees should deem themselves insecure the mortgagor might remain in possession of the property with "permission granted (him) to sell at retail from the above stock and to apply the proceeds on said note as the same can be spared from running expenses of said business." From the time the mortgage was given to the levy of the attachment, Aley, Jr., continued in possession of the store and conducted his business, buying and selling just as he did before the mortgage was given, during which time he paid but $ 100 on the Weber note. The interpleader Gee (who was the only witness) testified that he lived seven or eight miles from Quitman, that he was the brother-in-law of the mortgagor and had been for twenty-five years; that after the giving of the mortgage and the levy he was in Aley's store three or four times; that Aley, Jr., was in possession, running the business, selling his goods in the regular way and buying from wholesale houses whatever was necessary, if he needed anything, just like any other merchant; that there was no difference in the manner in which the business was conducted before and after the mortgage was given; that he did not know that Aley, Jr., was buying from the wholesale houses partly on credit and partly for cash but supposed he was, that being his idea of the way Aley was doing, that there was no agreement or understanding as to what Aley, Jr., was to receive for his services nor what the expenses were to be, nor was there any limit put upon them, nor did the interpleaders know how much had been used for expenses; that the mortgagor made no report or account of either his expenses or sales and none was required or requested; that none of the proceeds were turned over to the interpleaders nor up to the time of the levy had the interpleaders required the mortgagor to apply any of the proceeds of the sales to the payment of the debt, because it was not due; and that the mortgagor "had been permitted to run that business since the execution of the mortgage just as he had before that mortgage was given." Gee further testified that he and his father-in-law took the mortgage to secure themselves and so that George could go on with his business. The evidence showed that at the time the interplea was filed that no default had occurred in the mortgage but as the interpleaders "deemed themselves insecure," they claimed the right to possession under the clause in the mortgage which authorized them to take possession on that ground.
On these undisputed facts disclosed by respondents' evidence, it is insisted by appellant that the mortgage is invalid and that the court erred in refusing a demurrer to the evidence. Error in the instructions is also assigned. Appellant...
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