Jones v. Charles P. Kellogg & Co.

• Decision Date: 09 September 1893
• Citation: 51 Kan. 263,33 P. 997
• Court: Kansas Supreme Court
• Parties: W. C. JONES et al. v. CHARLES P. KELLOGG & CO

33 P. 997

51 Kan. 263

W. C. JONES et al. v. CHARLES P. KELLOGG & CO

Supreme Court of Kansas

September 9, 1893

Error from Shawnee District Court.

Judgment affirmed.

ACTION brought by Charles P. Kellogg & Co. against W. C. Jones and T. W. Thompson, to recover damages for the alleged wrongful and unlawful seizure of certain merchandise claimed by Kellogg & Co. under a chattel mortgage given to them by one L. B. Townley, of the city of Harper. Judgment for plaintiffs for $ 5,378, at the April term, 1889. The defendants bring the case to this court. The material facts appear in the opinion.

B. P Waggener, D. Martin, and J. W. Orr, for plaintiffs in error:

1. Was this action brought and prosecuted in the court below in the name of the real party in interest? The mortgage of Kellogg & Co. expressly provides that it is subject to the mortgage of Belle M. Townley. A subsequent mortgage conveys only an equitable title in the property, if it conveys anything at all; and it conveys a title subject to the existing rights and equities of the prior mortgagee. Shoenberger v. Mount, 1 Handy (Ohio), 566; Jones, Ch. Mortg § 494; Pecker v. Silsby, 123 Mass. 108; Goodrich v Willard, 2 Gray (Mass.), 203-205; London v. Emmons, 97 Mass 37; Ring v. Nele, 114 id. 112; Rigg v. Barnes, 2 Cush. 591.

There can be no question but that the mortgage to Belle M. Townley vested in her the legal title to the property under the statutes of this state, and gave her the right of possession. Clapp v. Campbell, 124 Mass. 52.

Section 26 of the code of civil procedure provides that "Every action must be prosecuted in the name of the real party in interest," etc. Who is the real party in interest in this case, Belle M. Townley or Charles P. Kellogg & Co.? The judgment against the defendant Jones could not be pleaded in defense of an action brought by Belle M. Townley or her assignees against Jones for a conversion of the property. Ex parte Polster, 10 Kan. 204; Welton v. Deyarman, 26 Neb. 59; Clapp v. Glidden, 39 Me. 448; Sheldon v. Soper, 14 Johns. 352; Kennedy v. Strong, 14 id. 128; Corbin v. Kincaid, 33 Kan. 652; Ament v. Greer, 37 id. 650; Wilson v. Fuller, 9 id. 192.

2. Do not the circumstances under which the two mortgages and deed of assignment were executed render the mortgages invalid as to attaching creditors? The proposition is not disputed that "a debtor in failing circumstances may prefer creditors, if the same is done in good faith." Tootle v. Coldwell, 30 Kan. 125. See, also, Arn v. Hoerseman, 26 Kan. 413; Randall v. Shaw, 28 id. 419; Bishop v. Jones, 28 id. 680.

The facts in Bailey v. Manufacturing Co., 32 Kan. 73, are quite different from the facts in the case at bar. By this deed of assignment or power of attorney, reference is made to the said two mortgages, and the property is put into the possession of Adams, as assignee of and attorney in fact for L. B. Townley, to execute the trust created by the mortgages and the deed of assignment. The deed of assignment, or power of attorney, states the amount of the mortgages, and that the same is subject to the rights of the mortgagees, and shall not conflict or interfere therewith. See Perry v. Vezina, 63 Iowa 25; Farwell v. Jones, 63 id. 316; Patton v. Burr, 52 id. 521.

The circumstances under which L. B. Townley executed the mortgages and deed of assignment bring the case squarely within the decision of the supreme court of the United States in the case of White v. Cotzhausen, 129 U.S. 336-345. He had deliberately made up his mind, as found by the court below, to yield dominion over his property and quit business. "He wanted to put his property in such shape that his creditors would be protected, and not have it eaten up in costs." See, also, Winner v. White, 66 Wis. 227; Harkiaser v. Leidy, 4 Ohio St. 602; Dixon v. Rawson, 5 id. 224; Burros v. Lehndorff, 8 Iowa 96; Thompson v. Heffner, 11 Bush, 359; Kellogg v. Richardson, 19 F. 70; Perry v. Corby, 21 id. 737; Krebbs v. Ewing, 22 id. 693; Norton v. Kearney, 10 Wis. 443; Gilman v. Henry, 53 id. 468; Herbert v. Low, 65 id. 316; Backhaus v. Sleeper, 66 id. 68; Berry v. Cutts, 42 Me. 445.

3. The court committed error in receiving and refusing to strike out the contract of date July 28, 1887. It was delivered to Standish by L. B. Townley. It seems to us that it is not necessary to do more than call the attention of the court to the circumstances under which this paper was delivered. The court below committed an error in receiving it, and committed another error in refusing to strike it out when the circumstances under which it was delivered were made apparent. Without this paper, Kellogg & Co. had no standing in court whatever. It was offered in evidence for the purpose of sustaining a material allegation of the plaintiff's petition; and upon no other theory than that the paper was operative and valid, and transferred to Kellogg & Co. in the interest of Belle M. Townley, could the court below have rendered a judgment against the defendant for $ 4,600? Without giving effect to the terms and conditions of this paper, Kellogg & Co. had no interest whatever in this controversy, and could not possibly maintain an action to recover damages which the evidence shows they have never sustained.

4. If plaintiffs were entitled to recover, what was the measure of damage? It is well settled that

"One who takes a mortgage in terms made subject to a prior mortgage named acquires only a right to redeem the property from such prior mortgage. . . . The legal effect of such a mortgage is the same as if it had been in terms of the right of the mortgagor to redeem the first mortgage." Dwight v. Scranton Lbr. Co., 36 N.W. 752; Howard v. Chase, 104 Mass. 249; Tuite v. Stevens, 98 id. 305. See, also, Cushing v. Seymour, 30 Minn. 306, 307; Becker v. Dunham, 27 id. 32; Parish v. Wheeler, 22 N.Y. 511; Goulet v. Asseler, 22 id. 225; Manning v. Managhan, 28 id. 585; Tosp v. Gulseth, 37 Minn. 135; Packet Co. v. Robertson, 13 id. 291; Dodge v. Chandler, 13 id. 115; Treat v. Gilmore, 49 Me. 39; Warner v. Vallilly, 13 R. I. 483; Hurst v. Coley, 15 F. 645; Chamberlain v. Shaw, 18 Pick. 278; Spoor v. Holland, 8 Wend. 445; 24 Am. Dec. 39, note; Baldwin v. Bradley, 69 Ill. 32; Ingersoll v. Vanbokkilen, 7 Cow. 670; Clark v. Bell, 61 Ga. 147; Sheldon v. Express Co., 48 id. 625; Case v. Heart, 11 Ohio 354; Shahan v. Smith, 38 Kan. 474; Dolan v. Van Demark, 35 id. 309; Wolfley v. Rising, 12 id. 535.

J. D. McFarland, and W. C. Webb, for defendants in error:

Has this court jurisdiction of this case as presented here? We think not. Not a line or word appears in the record stating or showing that the time for making and serving a case was extended beyond the 19th of September, and the case was not in fact served until five days after that time had expired. See Dunn v. Travis, 45 Kan. 541.

It is contended by plaintiffs in error that the mortgage under which defendants in error claim is void because of the execution by the mortgagee of the deed of assignment for the benefit of creditors set forth in the findings of fact. In this state it has been expressly held, that under our Kansas statute different instruments made by the debtor to his several creditors, though made at the same time and covering all his property, do not together constitute a general assignment for the benefit of creditors, and do not come within the statute governing voluntary assignments for the benefit of creditors. Tootle v. Coldwell, 30 Kan. 125. See, also, Hargadim v. Henderson, 99 Mo. 375; National Bank v. Sands, 47 Kan. 596.

In order to reverse this case, the court must hold that the special findings of the court below necessarily and unavoidably show affirmatively every fact necessary to be found in order to have the mortgage declared void. The findings of fact do not show that it was the primary purpose to make an assignment. On the contrary, it fairly appears that the primary object of the debtor was to secure certain creditors by mortgage, namely, the defendants in error, because he had promised them he would do so, and his wife; and having done so, to then assign the balance of the property to his other creditors. Clearly, it was not the intention of the debtor in executing the mortgages to make them a part of the assignment; nor were they executed pursuant to a plan to make a general assignment with preferences. His intention was, first and primarily, to secure these two creditors. See Loomis v. Stewart, 75 Iowa 387; Dodd v. Hills, 21 Kan. 708; DeFord v. Nye, 40 id. 665; Bailey v. Manufacturing Co., 32 id. 73; Hardware Co. v. Implement Co., 47 id. 423; National Bank v. Sands, 47 id. 596; Farlin v. Sook, 30 id. 404; Root v. Potter, 59 Mich. 506; Van Patten v. Burr, 52 Iowa 518; Gilbert v. McCorkle, 110 Ind. 215.

Kellogg & Co., at the time of the seizure of the goods, were in the actual and exclusive possession thereof under their said mortgage; by virtue of said mortgage, they were entitled to the possession of said property as against the plaintiffs in error, and as against the whole world except the first mortgagee; the first mortgagee, prior thereto, had agreed with them that they might take possession; prior to the commencement of this suit, the first mortgagee had executed to them an agreement whereby, as to them, she waived her right and claim under her first mortgage, and agreed that their rights under their mortgage should be prior to hers.

The question now to be determined is simply, whether the defendants in error, under the facts of this case, can maintain an action against the plaintiffs in error for damages for taking and converting the mortgaged property in the manner and under the circumstances appearing in the case. In the case at bar, the defendants in error were in the actual and...