Jones v. Loree

• Decision Date: 04 October 1893
• Citation: 37 Neb. 816,56 N.W. 390
• Parties: JONES, SHERIFF, v. LOREE ET AL.
• Court: Nebraska Supreme Court

37 Neb. 816

56 N.W. 390

JONES, SHERIFF,

v.LOREE ET AL.

Supreme Court of Nebraska.

Oct. 4, 1893.

Syllabus by the Court.

1. Where several chattel mortgages are executed simultaneously for the purpose of securing debts owing by the mortgagor to the mortgagees, the aggregate of such indebtednessnot being unreasonably less than the value of the property mortgaged, such mortgages will not be held void merely because no one of such debts is in itself sufficient to justify so great a security.

2. Several chattel mortgages, made and delivered simultaneously to secure different creditors of the mortgagor, the delivery being to one of the mortgagees, who in the transaction acts for himself and on behalf of all the other mortgagees, do not constitute an assignment for the benefit of creditors.

3. Bonns v. Carter, 31 N. W. Rep. 381, 20 Neb. 566, overruled.

4. A mortgage taken by a creditor to secure a pre-existing debt will not be held void merely because the creditor, when he took the mortgage, had notice of an intent upon the part of the mortgagor to hinder, delay, or defraud his creditors. In order to avoid such mortgage, the creditor must have participated in such intent.

5. An intention to defraud cannot be inferred merely from the fact a preference was given to a certain creditor.

6. Certain instructions requested examined, and held to be rightly refused.

7. Error committed in the admission in evidence of a written instrument without proof of its execution is cured where such proof is afterwards made before the party offering the instrument has rested his case.

8. Where several mortgagees joined as plaintiffs in an action to replevy property covered by their mortgages, which had been taken from their possession under writs of attachment against the mortgagor, and the issue was as to whether these mortgages were void as to creditors, the facts differing as to the different mortgages, an instruction to the jury to find generally for the plaintiffs if they should find that any one of the mortgages was good, is erroneous.

Commissioners' decision. Error to district court, Gage county; Broady, Judge.

Action in replevin by William M. Loree and others against William R. Jones, sheriff. Plaintiffs had judgment, and defendant brings error. Reversed.

Griggs, Rinaker & Bibb, J. E. Cobbey, and Geo. B. Everitt, for plaintiff in error.

Rickards & Prout, for defendants in error.

IRVINE, C.

Charles E. Briggs was the owner of a stock of boots and shoes in Beatrice. Upon the 23d day of December, 1890, he executed a chattel mortgage to William M. Loree for $1,723.55, one to Emeline M. Briggs for $1,035.62, one to Mary Higgins for $1,549, and one to Anne Higgins for $430.33. These four mortgages were all made to cover the stock of goods referred to, were recorded in the order named, and by the terms of the mortgages themselves were given priorities in that order. Subsequently, upon the 24th day of December, there was executed to W. V. Morse & Co., Smith, Blazland & Co., and the W. W. Kendall Boot & Shoe Company another mortgage to secure indebtedness to the parties named amounting to $601.30. Upon the delivery of the four mortgages first named Loree, on his own behalf and as agent of the other three mortgagees, took possession of the stock of goods. After the execution of the last mortgage he was requested to hold possession under that mortgage on behalf of the mortgagees named therein. Subsequently attachments and executions were issued against Charles E. Briggs on behalf of a number of creditors, and the plaintiff in error, as sheriff of Gage county, seized the stock of goods under these attachments and executions as the property of Charles E. Briggs. This suit was brought in replevin by the mortgagees, and the goods were taken under the writ, and delivered to the plaintiffs, in whose favor, upon the trial, there was a verdict and judgment. The plaintiffs, of course, claimed under their mortgages. The defendant justified under the attachments and executions, claiming the mortgages were fraudulent as against creditors whom he represented. Numerous errors are assigned.

The plaintiff in error undertakes to present a dilemma as follows: That if the several mortgages are to be construed separately and as independent transactions, then each of them is void, because covering all the property of the debtor, and property greatly in excess of the debt; and, upon the other hand, if the mortgages are to be taken together as constituting a single transaction, then the same amount to an assignment for the benefit of creditors, and are void, because not in conformity with the assignment law.

Upon the first branch of this argument it is sufficient to say that the mortgages to Loree, Mrs. Briggs, and the two Higginses are shown conclusively by the evidence to have been given at one time as part of the same transaction, Loree acting, in taking the mortgages, on his own behalf and as agent for the other mortgagees. For the purpose of considering the proportion existing between the property mortgaged and the debts secured the court instructed the jury that they were to be considered as one transaction. The reason of the rule avoiding as against creditors conveyances of property in value greatly in excess of a debt secured by such conveyances is that such a conveyance necessarily operates to hinder and delay, if not to defraud, other creditors; that it evinces an intention upon the part of the debtor to do more than secure the creditor preferred, and practically conclusively proves an intent upon his part to deprive other creditors of their remedies. From the nature of the transaction the creditor preferred is chargeable with notice of such design, and is shown by his act of taking grossly disproportionate security to have participated in the fraudulent intent. But when a number of small debts are secured upon property not disproportionate to the aggregate amount of these debts, no such effect follows, and no such intention can be imputed either to grantor or grantees. This court has repeatedly sustained a series of conveyances of this character. Among such cases are Hershiser v. Higman, 31 Neb. 531, 48 N. W. Rep. 272;Hamilton v. Isaacs, 34 Neb. 709, 52 N. W. Rep. 279.

Upon the second branch of the dilemma counsel rely upon the case of Bonns v. Carter, 20 Neb. 566, 31 N. W. Rep. 381;Id., 22 Neb. 495, 35 N. W. Rep. 394. There the decision was that a mortgage made to one person as trustee to secure debts owing several creditors amounted to an assignment because of the trust created. In this instrument no such trust was created upon the face of the instrument, and such cases have not been held within the rule in Bonns v. Carter. Hershiser v. Higman, supra; Hamilton v. Isaacs, supra; Range Co. v. Meyer, 31 Neb. 543, 48 N. W. Rep. 395. But if the case can be considered as falling within the rule of Bonns v. Carter by reason of the fact of Loree's actual agency for all the mortgagees, still we do not think the transaction offended against the assignment law. Bonns v. Carter was decided by a divided court, upon a rehearing. The views expressed by Judge Maxwell in announcing that the majority of the court adhered to its former judgment show that in that adhesion the court was influenced chiefly by other elements rendering that particular transaction fraudulent. Recently the case has not been adhered to, and in Hamilton v. Isaacs, supra, it was practically overruled. The views expressed by Judge Reese in the dissenting opinion, (22 Neb. 495, 35 N. W. Rep. 394,) and by Judge Post in Hamilton v. Isaacs, supra, present very clearly and forcibly the reasons against the adoption of any such rule. Bonns v. Carter, in this respect, can no longer be considered the law of the state.

2. The next question presented is raised by the fourth paragraph of the court's instructions. In this instruction the jury was told: “If the mortgagor intended to hinder or defraud creditors, and the mortgagee knew it, that would not make the mortgage void, unless the mortgagee also intended, by taking the mortgage, to hinder or defraud creditors, and that was in part his purpose in taking it. A creditor has a right to take a chattel mortgage on a reasonable amount of his debtor's personal property as...