King v. Hubbell
| Citation | 4 N.W. 440,42 Mich. 597 |
| Court | Supreme Court of Michigan |
| Decision Date | 11 February 1880 |
| Parties | KING v. HUBBELL. |
Evidence in this case, as to the bona fides with which a certain chattel mortgage was given, considered, and held, such cause was erroneously taken from the jury. Property covered by a chattel mortgage may be attached for the debts of the mortgagor, but where the validity of the mortgage is not disputed, the mortgagee may on demand, and after inventory and appraisment are completed, be entitled to the possession as against the officer; in either case the rights of the one to be so exercised as not to interfere with the rights of the other.
Error to Iosco.
Seth G. Hutchins and H.E. Burt, for plaintiff in error.
Dan. P Foote, for defendant in error.
We are not satisfied that the circuit judge was justified in taking this case from the jury on the facts. It cannot be said that there were no facts and circumstances in evidence calculated to cast suspicion on the bona fides of the mortgage. The mortgagor was the son of the plaintiff below, and according to his own evidence had started in business on money borrowed from the plaintiff but a short time before, and there is nothing in the case to show that either father or son had reason to believe that the son had made money in his business.
Under these circumstances that the father should sell to his son $1,500 of railroad stock at par when it had no market value and apparently no intrinsic value, and take for it a mortgage on his son's stock in trade, was certainly a very extraordinary transaction, and might have been expected to result as it did, in the father soon claiming the goods on his mortgage, while the parties who supplied the goods on credit were left to look to the worthless railroad stock for their satisfaction The trade may have been perfectly honest and it is not our province or intention to raise any question of that, but if a jury were to conclude that it was entered into for the purpose of relieving the father of his railroad investment at the expense of the son's creditors, it could not be said there were no circumstances favoring that view. This and some other circumstances, which we need not refer to, fairly entitled the defendant to go to the jury on the facts.
The circuit judge was laboring under a misapprehension when he assumed that if any portion of the mortgage debt was valid and unquestioned, that fact must put an end of all controversy as to the validity of the mortgage. That fact would by no means preclude the bona fides of the mortgage being called in question. This mortgage was upon a merchant's stock in trade, and the nominal amount seems to have been sufficient to exhaust the stock or nearly so. It was sufficient, at any rate, to deter creditors from any attempt to collect their debts, unless they believed they could successfully assail its validity. If the morgage was in fact given, and received for any considerable sum more than was fairly and honestly due to the mortgagee, this of itself would be a badge of fraud; and if the purpose was to keep the debtor's interest in the goods from being reached by other creditors, it would be fraud in law. And the fact that the debtor was allowed to remain in possession of the goods and make sales in the ordinary course of business would be a circumstance tending to show that the mortgage in its inception had a purpose beyond securing the mortgagee's demand. And this view would be strengthen rather than weakened by the plaintiffs explanation of his claims on his son; for this, if accurate, would show that the son must from the very start have been unable to meet his engagements, and that any credit which his father's assistance to him gave was deceptive.
The principal question in the case, however, is whether personal property covered by a chattel mortgage is subject to be taken on attachment against the mortgagor. The circuit judge held that it was not. No question is made that property thus situated is subject to be taken in execution. The statute expressly provides that "when goods or chattels shall be pledged, by way of mortgage or otherwise, for the payment of money or the performance of any contract or agreement, such goods and chattels may be levied upon and sold on execution against the person making such pledge, subject to the lien of the mortgage or pledge existing thereon," (Comp.Laws, � 6097;) and although the statute provides further that the execution creditor may pay off the mortgage or satisfy the terms and conditions of the pledge, and thereby acquire the interest of the mortgagor or pledgor, yet this is not intended to be and is not a condition precedent to an execution sale. Cary v. Hewitt, 26 Mich. 228.
But it is contended, on behalf of the plaintiff below, that this statement is expressly limited to levies and sales on execution, and cannot be extended by construction; that a levy by virtue of an attachment is not within its terms, and if the statute were by construction extended to cover the case, the levy would be wholly inconsistent with the legal interest of the mortgagee or pledgee, and in many cases would result in serious injury to if not destruction of his lien. The levy of an execution must be followed immediately by a sale, and can, therefore only displace the mortgagee's or pledgee's right to possession for a brief period, and at most only subject him to temporary inconvenience.
On the other hand it is justly said that, when property is seized upon attachment, the law fixes no time within which it must be brought to sale, and it may never be brought to to sale as...
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