Kingman and Company v. Cornell-Tebbetts Machine and Buggy Company
| Decision Date | 30 May 1899 |
| Parties | Kingman and Company v. Cornell-Tebbetts Machine and Buggy Company, Appellant |
| Court | Missouri Supreme Court |
Appeal from Jasper Circuit Court. -- Hon. Edward C. Crow, Judge.
Reversed and remanded.
Seneca N. Taylor, Charles Erd and E. O. Brown for appellant.
(1) The mere fact that one of the creditors secured by a chattel deed of trust, fails to accept under the same, affords an unsecured creditor no ground for attachment where all the debts secured are bona fide. In such case the act of the grantor amounts simply to an offer to secure the creditors so failing to accept. His act is a lawful act, and mere failure of one of the several creditors secured to accept can not make the act a fraudulent one. (2) Where a chattel deed of trust secures debts in favor of holders, and for which a surety is liable, though not named in the instrument, the surety can accept the same for himself and principals, and upon such acceptance the conveyance becomes operative as against attaching creditors levying subsequent to such acceptance. In the case at bar L. B. Tebbetts, surety as to all the secured debts, did accept before the attachment suit was begun. Sonnentheil v. Trust Co., 30 S.W. 945; McLaughlin v. Carter, 37 S.W. 666. (3) All securities given to a surety, whether in terms to pay the debt for which he is surety, or to indemnify and save him harmless from any harm or loss by reason of his suretyship inure to the benefit of the creditor who is entitled to have the same applied in satisfaction of the debt. Thornton v Bank, 71 Mo. 221; Hampton v. Fitz, 108 U.S 260; Eastman v. Foster, 8 Met. 19; Aldridge v. Blake, 134 Mass. 582; Plant v. Story, 30 N.E. 886; Curtis v. Tyler, 9 Paig. 432; Brandt on Suretyship (2 Ed.), sec. 324; Bank v. Rich, 106 Mich. 319; Bank v. Wright, 45 Neb. 23. (4) As soon as a surety has paid the debt an equity arises in his favor to have all the securities, original and collateral, which the creditor held against the person or property of the principal debtor, transferred to him and to avail himself of them as fully as the creditor could have done, for the purpose of obtaining indemnity from the principal. He is considered at once subrogated to all the rights, remedies and securities of the creditor and as substituted in the place of the creditor. Furnold v. Bank, 44 Mo. 336; Clark v. Bank, 57 Mo.App. 383; Allison v. Sutherlin, 50 Mo. 274; Ferguson's Adm'r v. Carson's Adm'r, 86 Mo. 673; Bank v. Lesper, 116 Mo. 76; 24 Am. and Eng. Ency. of Law, 188, 202, 209 and 405. (5) If the object of such chattel deed of trust is to indemnify a surety, who chanced to be a stockholder and director, this would not invalidate the deed. St. Louis v. Alexander, 23 Mo. 483; Foster v. Planing Mill Co., 92 Mo. 79; Schufeld v. Smith, 131 Mo. 280; Buel v. Buckingham, 16 Ia. 284; Hallam v. Hotel Co., 56 Ia. 179; Ringo v. Bisco, 13 Ark. 563; Duncomb v. Railroad, 84 N.Y. 190; Gould v. Little Rock, 52 F. 680; Bank v. Whittle, 78 Va. 759; Catlin v. Bank, 6 Conn. 233; Montreal v. Salt Co., 90 Mich. 374; Hospies v. Car Co., 48 Minn. 174; Wilkinson v. Bauerle, 41 N.J.Eq. 635. (6) A chattel deed of trust securing several creditors for their respective individual claims is regarded in law as independent mortgages executed simultaneously to each secured creditor; and where one such creditor accepts under it, it makes the instrument operative as to him from the date of acceptance, though others should never accept. Kuh v. Garvin, 125 Mo. 547; Woodson v. Carson, 135 Mo. 521; Teft v. Stern, 73 F. 591; Sonnenthiel v. Trust Co., 30 S.W. 945; Lutz v. Atchison, 38 S.W. 640; McLaughlin v. Carter, 37 S.W. 666; Sanger v. Henderson, 21 S.W. 114; Schunk v. Bakman, 14 S.W. 22; Burnett v. Marshall, 22 Pick. 556; Jones on Chat. Mortgs. (3 Ed.), secs. 336 and 351; Cobbey on Chat. Mortgs., secs. 150, 416 and 418.
McReynolds & Halliburton for respondent.
(1) The chattel deed of trust having been made by defendant without the knowledge or consent of the beneficiaries therein, and certainly not accepted by two of the beneficiaries at any time, and probably not accepted by the third beneficiary before the levy of the attachment, the effect of this deed of trust was to place on record a false showing of the title of defendant's property, and the effect was to hinder and delay defendant's other creditors. The conveyance is therefore fraudulent and void as to other creditors, and will sustain attachment. Reed v. Pelleiter, 28 Mo. 177; Donnell v. Byern, 69 Mo. 468; Bulene v. Barrett, 87 Mo. 135; Kennedy v. Dodson, 44 Mo.App. 550; White v. Graves, 68 Mo. 218; Bank v. Powers, 134 Mo. 432; Pattison v. Letton, 36 Mo.App. 325; Wait on Fraud. Convey. (2 Ed.), secs. 8, 9 and 10. (2) This chattel deed of trust comes under the same rule that would apply in the case of an unrecorded chattel mortgage of personal property and has the same effect as to creditors, to wit, as to creditors it is fraudulent and void. Bevin v. Bodeman, 31 Mo. 437; Conrad v. Fisher, 37 Mo.App. 352; Jewett v. Priest, 43 Mo.App. 509; Johnson v. Jeffries, 30 Mo. 423; Hughes v. Menefee, 29 Mo.App. 203; Kollock v. Emmert & Co., 34 Mo.App. 566. (3) This chattel deed of trust being made to a trustee for three separate and independent beneficiaries is the same as though there were three separate and independent chattel deeds of trust, and in passing on this case as between plaintiff and defendant, the law is applied, so far as each beneficiary is concerned, as though the mortgage was for his benefit alone. Woodson v. Carson, 135 Mo. 521. (4) A conveyance to be fraudulent need not originate in any meditated design to commit a positive fraud or to injure others. Many acts are, from their tendency to deceive others, or from their injurious consequences to the public, prohibited by the law as being within the same reason and mischief as actual fraud. Reed v. Pelleiter, 28 Mo. 173; Farmers and Traders Bank v. Harrison, 57 Mo. 508; Wait on Fraud. Convey., sec. 9; Bishop on Contracts, secs. 456, 457 and 458; Pattison v. Letton, 56 Mo.App. 325; Molaska Mfg. Co. v. Steele, 36 Mo.App. 496; State to use v. Koch, 40 Mo.App. 635; Bigelow v. Stringer, 40 Mo. 206; Snyder v. Free, 114 Mo. 376; Cole Mfg. Co. v. Jenkins, 47 Mo.App. 668. (5) A conveyance may be fraudulent so as to support attachment though the assignee or grantee obtain a good title. Enders v. Richards, 33 Mo.App. 598; Sauer v. Behr, 49 Mo.App. 86; National Tube Works Co. v. Machine Co., 118 Mo. 375. (6) In determining whether an instrument is of such character as to support an attachment, the intent or motive which prompted the conveyance or assignment is immaterial; it is the legal effect of the deed which makes it valid or fraudulent. Potter v. McDowell, 31 Mo. 62; Douglass v. Cissna, 17 Mo.App. 44; Noyes v. Cunningham, 51 Mo.App. 194; Gens v. Hargadine, 56 Mo.App. 245; Field v. Liverman, 17 Mo. 218; Kritzer v. Smith, 21 Mo. 296; Glacier v. Walker, 69 Mo.App. 288. (7) The only trouble being that before a principal or surety can be subrogated to securities given to the other they must be valid and binding securities that the other could enforce. And in this State the party would have to go into equity to enforce the right.
McReynolds & Halliburton for respondent in support of motion for rehearing.
This chattel mortgage may be declared fraudulent and void as between plaintiff and defendant and yet declared valid and binding as to one or more of the beneficiaries. If a mortgage is valid as to any one of the beneficiaries therein it can be declared invalid by reason of fraud as to other beneficiaries. That very thing has been done time and again in this State. Woodson v. Carson, 135 Mo. 521; Wait on Fraud. Convey. (2 Ed.), secs. 8, 9 and 10.
Seneca N. Taylor, Charles Erd and E. O. Brown for appellant on motion for rehearing.
(1) Mere failure to record a deed of trust, where possession is not to remain in the maker, but is at once assumed by the trustee, has never been held substantive ground for attachment in this State. It is only where the conveyance is made to the grantor's use that the giving of such a mortgage constitutes a fraudulent conveyance. Sauerwein v. Champaign Co., 68 Mo.App. 32. (2) No case has been cited by counsel for respondent holding that the mere failure of one of several distinct creditors, secured by a single deed of trust, to accept its terms, before an attachment is levied, affords substantive grounds for such attachment. (3) A chattel deed of trust is valid when executed as indemnity to a person who has become surety on the negotiable paper of the maker of the deed of trust. In other words, a chattel deed of trust can be lawfully made as indemnity for a contingent liability. Fountaine v. Lumber Co., 109 Mo. 55; Guarantee Co. v. Baker, 54 Mo.App. 79; Jewett v. Warren, 12 Mass. 300; Adams v Nieman, 46 Mich. 135; Lyons v. Sherman, 25 Neb. 845; Hackley v. State, 91 Ind. 437; Conley v. State, 85 Ga. 348. (4) The indorser is entitled to the benefit of all the securities for the debt taken by the creditor of the debtor, and is discharged from his liability to the extent that the creditor parts with any securities, and this though the securities which were given were without his knowledge. Taylor v. Jeter, 23 Mo. 250; Wilcox v. Todd, 64 Mo. 388; Brandt on Suretyship and Guaranty, secs. 291 and 378; Hidden v. Bishop, 5 R. I. 29; Dulany v. Willis, 5 Leigh. (Va.) 329; Walendy v. Austin, 69 Ill. 15. (5) A chattel deed of trust executed in favor of a trustee to secure certain designated notes properly described, becomes collateral to such notes, and any transfer of such notes carries also such collateral. Therefore, a chattel deed of trust made to a trustee for the purpose of securing the payment of designated notes without...
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