Lawrence v. McKenzie
| Decision Date | 22 May 1893 |
| Citation | 55 N.W. 505,88 Iowa 432 |
| Parties | LAWRENCE, MANNING & CUSHING, Appellees, v. J. R. MCKENZIE, Appellee; AMERICAN HAND-SEWED SHOE COMPANY, Intervenor, Appellant |
| Court | Iowa Supreme Court |
Appeal from Cass District Court.--HON. N.W. MACY, Judge.
ACTION by attachment against the defendant, in which certain creditors of the defendant were attached as garnishees. The American Hand-Sewed Shoe Company intervened, claiming to be the owners of the indebtedness due from the garnishees to the defendant. Trial to the court. Judgment against intervenor dismissing its petition, and for costs, from which it appeals.
Affirmed.
Willard & Willard and C. S. Patterson, for appellant.
De Lano & Meredith, for appellee.
The case, as between the plaintiff and the intervenor, was submitted to the court below upon an agreed statement of facts, from which we condense the following as being material to the determination of this controversy:
The defendant, J. S. McKenzie, was engaged in the boot and shoe business in Cass county, Iowa from August 14, 1888, to February 15, 1889. On the first named date he executed to the plaintiff an assignment of "all accounts due me, as shown by my ledger and day books" which he had used and was using, in his business; also, "all accounts I hereafter make in my said business." This assignment was made to secure notes given to the plaintiff. By the terms of the writing, when the indebtedness to secure which the assignment was made was paid, the assignment was "to be surrendered to him, and all the uncollected accounts turned back to him." It also provided that he should collect the accounts and pay over the money to the plaintiffs as called for, until his indebtedness to them was paid. This assignment was pasted on the inside cover of the defendant's ledger and remained there until after the book was seized by the mortgagees, hereinafter referred to.
Thereafter the defendant executed chattel mortgages upon his stock of goods, including accounts as follows: January 15, 1889, to H S. Albright & Co., to secure five hundred and twenty-seven dollars and ninety-six cents; February 4, 1889, to D. M. Wells & Co., to secure eight hundred and eighty-nine dollars and twenty-four cents; January 4, 1889, to R. G. Dunn & Co., as trustees, eight hundred dollars; February 5, 1889, to Hathaway, Soule & Harrington, two hundred and eighty-three dollars and eighty-five cents; February 5, 1889, to American Hand-Sewed Shoe Company, to secure two thousand and thirty-four dollars; February 23, 1889, to Little & Co., to secure an amount not shown by the record. All these mortgages were duly recorded on the same day or the day following their execution. All of them were in the usual form, and the accounts in controversy were described in the several mortgages as follows: In the Wells mortgage and in the intervenor's mortgage, after describing other property, occur the words "and book accounts." In the other mortgages the description is, "and book accounts for goods sold." The several mortgagees at the time they took their mortgages, had no notice or knowledge of the assignment to the plaintiff.
February 13, 1889, the mortgagees took possession of the property, and foreclosed said mortgages by notice and sale. February 22, 1889, the plaintiff brought an action by attachment against the defendant on the notes secured by said assignment of accounts, and, after the foreclosure sale, caused the parties owing said accounts to be garnished therein. At the time of the service of said garnishments, the plaintiff had no actual notice that said mortgagees had or made any claim to the several sums of money owing by the garnishees to the defendant, and no constructive notice of such claims, except what the record of said mortgages and an examination of the mortgages afforded, together with actual notice that the books of account kept by the defendant were in the hands of the agent of the mortgagees, and that they were claiming them under said mortgages. February 23, 1889, the property described in the mortgages was offered for sale under the foreclosure proceedings, when one of the plaintiff's firm, being present, gave notice, prior to the sale, of the plaintiff's claim to the accounts. At his request the accounts were last offered for sale. The plaintiffs made a bid thereon, which they afterwards withdrew, and the accounts and notes were purchased by the intervenor for three thousand, three hundred and fifty dollars. The proceeds of the sale paid all the mortgages upon the stock of goods and book accounts prior to the intervenor's mortgage, but nothing was left to apply thereon, and the same is unpaid. None of the property was advertised or sold under the intervenor's mortgage. June 10, 1889, the plaintiff recovered a judgment against the defendant for three hundred and fourteen dollars and ten cents debt, and twenty-five dollars and seventy-five cents attorney's fees, and eighty-five dollars and thirty cents costs, no part of which is paid.
I. This is a controversy between the plaintiff and the intervenor as to which of them has the better right to the money which was due the defendant on said accounts, and is now in the hands of the several garnishees. The plaintiff claims under both the assignment and the garnishment. The intervenor claims by purchase at the sale under the mortgages. We will first consider the plaintiff's claim.
Our statute provides: "No sale or mortgage of personal property, where the vendor or mortgagor retains actual possession thereof, is valid against existing creditors, or subsequent purchasers without notice, unless a written instrument conveying the same is executed, acknowledged like conveyances of real estate and filed for record with the recorder of the county where the holder of the property resides." Code, section 1923. It will be remembered that no such instrument was made and filed in the case at bar; hence the plaintiff's rights, so far as the assignment is concerned, depend upon the construction of the statute above quoted. At the time the mortgages were taken, and even at the time the mortgagees took possession of the books of account, they had no knowledge that the assignment had been made.
The question then is, were these accounts "personal property," within the meaning of the statute. If they were, then the assignment of them to the plaintiff was void as against the mortgagees, and also against the intervenor, who claims under them, if they were sufficiently described in said mortgages. Whether this section of our recording act applies to accounts was suggested, but not decided, in Sandwich Manufacturing Co. v. Robinson, 83 Iowa 567, 49 N.W. 1031. The statute of New Jersey uses the words "goods and chattels," and under it it has been held that corporation stock was not included. The court said: "The act has reference to pledges of personal property of a kind which is capable of visible possession." Williamson v. N. J. Southern Railway Co., 26 N.J.Eq. 398. The same court held that a legacy was not covered by the act; that it did not apply to "mortgages of choses in action." Bacon v. Bonham, 27 N.J.Eq. 209. So it has been held that a policy of insurance is not "property," in such a sense that a transfer of it is required to be recorded under our statute. Aultman v. McConnell, 34 F. 724. In Massachusetts the statute uses the words "personal property," and it was held, per SHAW, C. J., that an assignment of a legacy was not a case covered by the act, as it "applied only to goods and chattels capable of delivery, and not to the defeasible or conditional assignment of a chose in action." Marsh v. Woobury, 1 Metc. (Mass.) 436. In New York the act is held not to apply to the case of the assignment of a lease as security; that the statute relates "to goods and chattels which can be removed from one place to another, and the possession thereof changed, and not to chattels real, or to a chose in action." Booth v. Kehoe, 71 N.Y. 341. In Ohio the statute is held not applicable to legacies. Kilbourne v. Fay, 29 Ohio St. 264. The supreme court of Virginia holds that such statutes only include personal property which is visible, tangible, or movable, and that an assignment of a mere chose in action is valid without recording, as against a subsequent attachment of the same debt or claim. Kirkland v. Brune, 72 Va. 126, 31 Gratt. 126. In West Virginia the holding is the same. Tingle v. Fisher, 20 W.Va. 497; Bank v. Gettinger, 3 W.Va. 309. In Michigan the statute reads "goods and chattels," and it is held: Preston Nat. Bank v. George T. Smith Middlings Purifier Co., 84 Mich. 364, 47 N.W. 502. A leading text writer says: "Statutes respecting the recording of mortgages of personal property apply only to goods and chattels capable of delivery, and not to defeasible or conditional assignments of choses in action." Jones on Mortgages, section 278. The following cases...
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