Greeley v. Winsor

• Decision Date: 12 May 1890
• Citation: 45 N.W. 325,1 S.D. 117
• Parties: Greeley v. Winsor et al.
• Court: South Dakota Supreme Court

45 N.W. 325

1 S.D. 117

Greeley v. Winsor et al.

Supreme Court of South Dakota

May 12, 1890

Syllabus by the Court.

1. A written lease contained the following provision: "That said rents, whether due or to become due, shall be a perpetual lien on any and all goods, merchandise, furniture and fixtures now contained, or which may at any time during the continuance of this lease be contained, in the building except such goods as are sold in the usual course of retail trade." The lease was executed and filed as required by the law concerning chattel mortgages. Held, that such provision constituted, and must be treated as, a chattel mortgage.

2. The clause, "except such goods as are sold in the usual course of retail trade," was an implied permission to the mortgagor to make such sales; and, there being nothing in the lease indicating any appropriation or intent to appropriate the proceeds of sales to any other purpose, it was permission to the mortgagor to sell such goods, being a part of the mortgaged property, for his own benefit, and is at least presumptively fraudulent as to creditors of the mortgagor; CORSON, P. J., expressing the opinion that it should be held conclusively so.

3. Such mortgage, being presumptively fraudulent as to a portion of the property therein described, is presumptively invalid as to all. So held, where a portion of the property "furniture and fixtures," was not included in the power of sale.

Appeal from district court, Minnehaha county.

Winsor & Kittredge, for appellants. Wynn & Nock, for respondent.

KELLAM J.

On the 3d day of October, 1883, respondent, who was then the owner of a store-building in the city of Sioux Falls, leased the same, by a written contact, to Waxman & Co., for the term of five years, which lease was duly filed for record October 12 1883, in the office of register of deeds of the proper county, and was "duly entered upon the chattel mortgage calendar of said office." The lease contained the following provision: "That said rents, whether due or to become due, shall be a perpetual lien on any and all goods and merchandise, furniture, and fixtures now contained, or which may at any time during the continuance of this lease be contained, in the building, except such goods as are sold in the usual course of retail trade." Afterwards the lessees, Waxman & Co., gave several chattel mortgages, to secure different creditors, upon the stock of merchandise, furniture, and fixtures contained in the said leased store-building, being the same personal property described and referred to in the provision of said lease above quoted. Afterwards the appellants Winsor & Swezey, as the attorneys and agents of the several mortgagees, undertook to foreclose said chattel mortgages, and to that end took possession of said mortgaged property and advertised the same. Greeley, the lessor, and respondent herein, then commenced an action against said Winsor & Swezey to restrain such foreclosure sale. At this time, by an arrangement between the parties, the respondent dismissed the said action and released his claim upon said goods, furniture, and fixtures, in consideration of a bond from said appellants to secure him against loss of rent on said lease to an amount therein named; the condition of the bond being, "that if the said Charles A. Greeley shall and does sustain any damages from the loss or decrease of rents during said four years, and had at the time of the commencement of his said action a valid and subsisting lien, legal or equitable, upon or against said property, or any part thereof as security for said rents according to the terms of said lease, and the undersigned shall pay or cause to be paid," etc., "then this obligation," etc. Upon this obligation, respondent Greeley brought this action against appellants, obligors therein named. To the complaint, setting out the history of the bond and a copy of the lease, appellants demurred for insufficiency. The demurrer was overruled, and from such decision this appeal is taken.

The controversy is over the force and effect of the provision in the lease for a lien for rent. If, as against the mortgage creditors represented by appellants, respondent had "a valid and subsisting lien" upon the property taken by them under their mortgages, then the condition of the bond is met under which appellants' liability as obligors should attach, and the complaint would state a cause of action against them. If such provision is effectual at all as against creditors, it is plain it must be as a chattel mortgage. The rents were to be a "perpetual lien." The possession of the property did not change, and no lien except that of a chattel mortgage is tolerated by our statute, unless accompanied by possession in the lienor. It seems to have all the requisites of a chattel mortgage, both as to its construction and its execution, and the statutory requirements as to filing as a chattel mortgage were fully complied with.

The pivotal question, then, is, what was the legal value of respondent's chattel mortgage upon his lessee's stock of goods, furniture, and fixtures, "except such goods as are sold in the usual course of retail trade?" for the answer to this question must determine whether or not respondent held a "valid and subsisting lien" upon such property, or any part of it. While there is here no express and affirmative reservation in the lessee and mortgagor of a power to sell any of the mortgaged property such power is so specifically recognized and provided for as to be tantamount to express authority; and the immediate...