Lewiston National Bank v. Martin, Sheriff

• Decision Date: 03 March 1890
• Parties: LEWISTON NATIONAL BANK v. MARTIN, SHERIFF
• Court: Idaho Supreme Court

23 P. 920

2 Idaho 734

LEWISTON NATIONAL BANK v. MARTIN, SHERIFF

Supreme Court of Idaho

March 3, 1890

CHATTEL MORTGAGE-ATTACHING CREDITORS.-Under the laws of Idaho a mortgagor may retain the possession of the mortgaged chattels as against attaching creditors by recording the mortgage as provided by statute.

ATTACHING CREDITORS' RIGHTS.-Possession of a stock of merchandise by the mortgagor, with power to sell and retail the same without requiring the proceeds to be applied to the payment of the debt due the mortgagee, is void as to attaching creditors of the mortgagor.

APPEAL from District Court, Kootenai County.

Judgment of the lower court reversed and vacated, and a new trial ordered.

Albert Hagan, for Appellant.

A judgment based upon findings which do not determine all the issues raised by the pleadings is a decision against law, for which a new trial may be had. (Knight v. Roche, 56 Cal. 15.) A chattel mortgage reserving the right to dispose of the goods in the usual course of trade is void, and taking possession thereafter by the mortgagee will not cure the fraud. (Wells v. Langbein, 20 F. 183; Chenery v Palmer, 6 Cal. 120, 65 Am. Dec. 493; Delaware v Ensign, 21 Barb. 85; Parshall v. Eggert, 54 N.Y. 18; Blakeslee v. Rossman, 43 Wis. 116; Stein v. Munch, 24 Minn. 390.) A mortgage of a stock of goods, such as is usually kept for sale in the particular trade of the mortgagor, with provision that the mortgagor may retain possession, and use and enjoy the mortgaged property, is void on its face as to other creditors of the mortgagor; and where the mortgagee knowingly allows the mortgagor to sell the goods, and appropriate the proceeds to his own benefit, the mortgage will be void as to such other creditors, independent of any such provision. (Davenport v. Foulke, 68 Ind. 382, 34 Am. Rep. 265; Peiser v. Peticolas, 50 Tex. 638, 32 Am. Rep. 621; Lund v. Fletcher, 39 Ark. 325, 43 Am. Rep. 270.)

Philip Tillinghast and Hawley & Reeves, for Respondent.

When the mortgage on its face does not grant any power to the mortgagor to sell or dispose of the mortgaged property, its terms and conditions cannot be contradicted or varied by an unwritten agreement or understanding of the parties had at the time or contemporaneously with its execution. (Berthold v. Fox, 13 Minn. 501 (Gill. 462), 97 Am. Dec. 243; Chenery v. Palmer, 6 Cal. 122, 65 Am. Dec. 493; Adair v. Adair, 5 Mich. 204, 71 Am. Dec. 779.) Statutes providing for the recording of mortgages of personal property are the substitute for possession by the mortgagee, and repel all imputation of fraud which would arise from the want of it. (Jones on Chattel Mortgages, sec. 380; Berson v. Nunan, 63 Cal. 550; Bullock v. Williams, 16 Pick. 33; Forbes v. Parker, 16 Pick. 462; Shurtleff v. Willard, 19 Pick. 202; Hughes v. Cory, 20 Iowa 399; Torbert v. Hayden, 11 Iowa 435; Smith v. Moore, 11 N.H. 55.) The assignee of a mortgage takes it subject to the equities between the parties of which he had notice, either from the mortgage itself or from other sources. (Croft v. Bunster, 9 Wis. 503; James v. Morey, 2 Cow. 296.)

SWEET J.

OPINION

SWEET, J.

On the thirty-first day of December, 1887, James McGrail executed and delivered to S. R. Smith a chattel mortgage, as security for three promissory notes, one note for $ 319.71 and two for $ 717.95 each--the first note payable sixty days after date, and the two latter payable seven months after date--said notes bearing even date with the mortgage above mentioned. The mortgaged property consisted of the contents of a drugstore, including the fixtures thereof, and an apparatus for bottling soda. Among other provisions in said mortgage contained we find the following: "Until default be made in the payment of said sums of money, the said party of the first part, his administrators or assigns, may remain and continue in the quiet and peaceable possession of the said goods and chattels, and in the free and full use and enjoyment of the same." On January 15, 1888, the mortgagee, Smith, transferred said notes and mortgage to plaintiff herein, the Lewiston National Bank. On March 2, 1888, McGrail sold the entire stock of goods then on hand to the mortgagee, S. R. Smith, who immediately took possession of the same, and carried on a retail drug business from said stock of goods, together with such additional purchases as he may from time to time have added thereto, until the twenty-sixth day of May, 1888, when, in an action wherein Porter & Co. were plaintiffs and said mortgagor and mortgagee, McGrail and Smith, were defendants, a writ of attachment was issued, under and by virtue of which defendant and appellant, William Martin, as sheriff of Kootenai county, took possession of the goods, wares and merchandise in said store. The action brought by Porter & Co. was prosecuted to a judgment in the probate court of said county; and thereupon an execution was issued under and by virtue of which, on the twentieth day of August, 1888, defendant, as sheriff aforesaid, proceeded to sell the contents of said store seized by him under the said writ of attachment at the time said action was commenced. On the 11th of September, 1888, the Lewiston National Bank, in an action against said McGrail, obtained a judgment in the sum of $ 1,623, and an order for the sale of the goods, wares and merchandise described in said mortgage, adding, as a further description thereto, as follows: "Being the property that was in said store on December 31, 1887." Defendant returned said execution, with an indorsement thereon to the effect that, after due and diligent search, he was unable to find the goods and chattels described therein, save and except the said bottling apparatus, which he had seized and sold for the benefit of plaintiff. Thereupon plaintiff brought an action against the defendant herein, the said sheriff, for the sum of $ 1,623.31, the alleged value of the goods described in said mortgage. In its complaint plaintiff avers that, by reason of defendant's failure to seize and sell said goods, or, in other words, that by reason of defendant's seizure and sale of said goods under and by virtue of the attachment and judgment above set forth, the plaintiff was damaged in the amount specified, and asked judgment therefor. Defendant, answering the complaint, sets forth the facts already detailed herein, and asks that plaintiff's action be dismissed. Plaintiff obtained judgment in the lower court for the sum above set forth, and defendant forthwith appealed to this court.

The question presented to this court is as follows: Is a mortgage on the goods, wares and merchandise of a store, under the terms of which the...