Grand Ave. Bank v. St. Louis Union Trust Co.

• Decision Date: 26 January 1909
• Citation: 115 S.W. 1071,135 Mo. App. 366
• Parties: GRAND AVE. BANK v. ST. LOUIS UNION TRUST CO. et al.
• Court: Missouri Court of Appeals

115 S.W. 1071

135 Mo. App. 366

GRAND AVE. BANK v. ST. LOUIS UNION TRUST CO. et al.

St. Louis Court of Appeals. Missouri.

January 26, 1909.

1. ASSIGNMENTS FOR BENEFIT OF CREDITORS (§ 228) — RIGHTS OF ASSIGNEE — ATTACKING CONVEYANCE OF ASSIGNOR.

Under Rev. St. 1899, § 365 (Ann. St. 1906, p. 472), giving an assignee for the benefit of creditors power to prosecute such actions for property and make such defense to claims against the assigned property as a trustee in a deed of trust or an attachment or execution creditor could prosecute or make, an assignee may call in question the validity of a prior transfer by his assignor as collateral security.

2. FRAUDULENT CONVEYANCES (§ 206)—CREDITORS PROTECTED—PRIOR CREDITORS.

Prior as well as subsequent creditors are protected against a fraudulent sale in violation of Rev. St. 1899, § 3410 (Ann. St. 1906, p. 1940), or a fraudulent mortgage in violation of section 3404.

3. CHATTEL MORTGAGES (§ 8)—PLEDGE DISTINGUISHED.

A transaction whereby neither an absolute nor a defeasible title to personalty is transferred by the owner, but only possession with the power to sell if default is made in the payment of the note secured, is not a sale or a mortgage, but a pledge.

4. PLEDGES (§ 12) — DELIVERY AND POSSESSION —DELIVERY OF RECEIPT.

The mere assignment of a receipt for pianos, reciting that they had been received at the owner's storage room, and were held subject to his order, was not a sufficient delivery of the pianos to create a valid pledge, where the owner was not a warehouseman, but simply kept some of his pianos in such storage room.

5. PLEDGES (§ 11) — DELIVERY AND POSSESSION.

Delivery and retention of possession are essential to a valid pledge.

6. PLEDGES (§ 11) — DELIVERY AND POSSESSION.

A piano dealer obtained a loan from a bank on the agreement that it was to be secured by a pledge of pianos in his storage room. The storage room was apart from his salesroom, and, when the loan was made, the cashier of the bank visited it with the dealer, and the tops of the pianos were opened and the cashier saw the number and make of each, and checked them off on a storage receipt which had been delivered to him. A piano repairer, who was employed by the dealer, worked in the end of the storage room, but the bank supposed him to be in charge of the room on his own account, as there were no signs on the building bearing the dealer's name or other indications that the premises were his. The repairer was informed that the cashier had come to take possession for the bank, and was placed in charge by him. A few days later the president of the bank went to the storage room, looked over the pianos, and told the repairer that they were the property of the bank, showing him the receipt and the repairer said he understood he was taking care for the bank. Held that, as against an assignee for the benefit of the creditors of the dealer, possession had been delivered to the bank and retained by it, notwithstanding the repairer was an employé of the dealer, so as to create a valid pledge and continue it in force.

Appeal from St. Louis Circuit Court; Virgil Rule, Judge.

Action by the Grand Avenue Bank against the St. Louis Union Trust Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.

This action was begun to recover from defendant, in its own capacity and as trustee under a deed of general assignment, the proceeds of 16 pianos conveyed by said deed, and afterwards sold by defendant. Prior to May 22, 1907, John Feld was a piano dealer in St. Louis. His salesrooms were in the Odeon Building on Grand avenue, and his storage room at No. 3505 Easton avenue. On said date he failed for some $40,000, with assets of about $30,000, he estimated. These assets, including the 16 pianos in dispute in the present controversy, he conveyed by a general deed of trust to the St. Louis Union Trust Company on the date mentioned to secure his various creditors in proportion to their demands. On March 28, 1907, two months before the execution of the deed of trust, Feld had borrowed from plaintiff bank $1,600 on a promissory note. The money was lent on the credit of the 16 pianos which were then in Feld's storage room on Easton avenue, and the note was accompanied by documents constituting a written assignment in pledge of the pianos, which were described and their numbers and location given. The documents follow:

Exhibit A.

"St. Louis, March 28th, 1907. For and in consideration of a loan of $1,600.00, made to me this day by the Grand Avenue Bank of St. Louis, I, John Feld, the owner of the following instruments located at 3505 Easton avenue, do hereby pledge to the said Grand Avenue Bank the following pianos, to wit: [Here follows list of pianos.] It is hereby agreed that these pianos can be removed from the above given address by payment of the amount set opposite these pianos herewith and by written order signed by some officer of the said Grand Avenue Bank. I agree to keep the above mentioned pianos insured against loss by fire and assign the policies over to the said Grand Avenue Bank. I further agree to stand the loss in the event any or all pianos are stolen. John Feld. J. Henry Kreikemeier, Witness."

Exhibit B.

"St. Louis, March 28th, 1907.

"$1,600.00. On demand after date I promise to pay to the order of the Grand Avenue Bank of St. Louis, Sixteen hundred and no-100 Dollars, for value received, with interest at the rate of 7 per cent. from date, payable at the office of Grand Avenue Bank of St. Louis. John Feld, Odeon, Grand and Finney Aves.

"Having executed a promissory note dated at St. Louis, Missouri, on the 28th of March, 1907, for $1,600, payable to the Grand Avenue Bank of St. Louis, or order, on demand after date, with interest from date at the rate of 7 per cent. per annum; and being desirous of securing the same, and all my other liabilities actual and contingent, to said bank, now existing, or which may hereafter arise, I do hereby pledge to said bank and to its successors as collateral security for said note and said other liabilities to said bank the following described property: Sixteen pianos located at 3505 Easton avenue, as per attached slip; also agreement signed under this date. The present market value of which is $____ of which I am in good faith the owner, the same being fully paid for and free from liens or claims of any kind whatever; and I agree to give additional security to keep up the present margin whenever the market value of the above collateral should decline, and upon notice so to do from the holder of the above note referred to. In default of payment of said note or other of my said liabilities at maturity, or in default of my giving such additional security within twenty-four hours after demand made on me for the same, or in case of my suspension, failure or insolvency, or the commission of any act of insolvency on my part, said bank shall, in addition to the foregoing collateral, have a lien on all notes, drafts, bills receivable or moneys held by or in transit to said bank in my name or for my account, the same to be deemed to have been assigned to said bank as additional collateral for the payment of said note, and all other of my said liabilities, actual and contingent; said bank and its successors to have the option of application of any or all of said collaterals before sale, or of the proceeds thereof after sale, upon any, either or all of said liabilities as it or they may elect; and upon such default being made, I do hereby authorize said bank by any of its officers or agents, or its successors, to sell or cause to be sold any or all of said collaterals, or any substitutes therefor or additions thereto, at public sale, upon such notice, at such place, and on such terms as said bank or its successors may deem proper, or at private sale, without notice, if said bank or its successors shall elect to sell, at private sale, and to apply the proceeds, whether of such public sale or private sale; First. To the payment of the expenses incurred in making said sale, including reasonable compensation to said bank, in case the holder of said note is, at the time of making such sale, some one other than the said bank; and, next, to the discharge of the note above mentioned, and next to the discharge of all my other liabilities to said bank as hereinbefore set out; any surplus left shall be paid to me. If the proceeds of such sale are not sufficient to pay all my liabilities hereby secured, I agree to pay the balance on demand. In case of a sale of said collaterals, said bank or the holder of any liability hereby secured, may become the purchaser thereof, without any right of redemption on my part. Notice delivered at or mailed to my last known place of business or residence shall constitute due notice for additional security. John Feld. Odeon, Grand and Finney Aves."

Exhibit C.

Besides those papers, the following so-call-warehouse receipt was signed by Feld and delivered to an officer of the bank, when the note was executed:

"St. Louis, Mo., March 1st, 1907.

"Rec'd at 3505 Easton Ave., the following described pianos, to wit:

                    Majestic       5297   D. Wal.        155
                    Mason         68383     Wal.         151
                    Cecelian      10094     Mah.  P. P.  283
                    John Feld     75223     Mah.         135
                        "         75214     Mah
                        "         75130     Wal
                        "         75232     Wal
                        "         75124     Mah.  8 large
                        "         75125     Oak   5 small to
                        "         69802      "           145
                        "         69797      "
                        "         75149     Mah
                        "         72367      "
                        "         75126      "
                        "         75123      "
                        "         73131      "
                

"These pianos are in my possession now and held subject to the orders of John Feld owner thereof. Wm. A. Muerer.

"For value rec'd deliver to order of Grand Ave. Bank. John Feld. Wm. A. Muerer."

The signature of...