Lutz v. Kinney
| Decision Date | 21 July 1897 |
| Docket Number | 1,492. |
| Parties | LUTZ v. KINNEY. Sheriff. |
| Court | Nevada Supreme Court |
Appeal from district court, Ormsby county; C. E. Mack, Judge.
Action by Martin Lutz against William Kinney, sheriff of Ormsby county, to recover for mortgaged goods sold under execution. From a judgment in favor of plaintiff, and from an order denying a new trial, defendant appeals. Reversed.
Trenmor Coffin and Alex J. McGowan, for appellant.
Alfred Chartz, for respondent.
On the 18th day of March, 1896, Archer Baker, who was at the time a retail grocer in failing circumstances, executed a mortgage on his stock of merchandise to the respondent to secure the payment of a loan of $700, a part of which sum was used in the discharge of an existing mortgage upon the same goods. The debt secured by the respondent's mortgage was evidenced by a promissory note of the same date, payable on or before the 18th day of March, 1897. The mortgage expressly stipulated that until default in payment of the said sum the mortgagor, his executors, administrators, and assigns, should "remain and continue in the quiet and peaceable possession of the said goods and chattels, and in the full and free use and enjoyment of the same." The mortgage was duly recorded, and the statutory affidavit was annexed thereto. At the time of the execution of the note and mortgage an action was pending in favor of A. J. McGowan against said Baker, and on the 3d day of April, 1896 judgment was rendered therein against said Baker for the sum of $405.24, with interest and costs. On the 6th day of April 1896, writ of execution was issued therein, and delivered to the appellant, sheriff of Ormsby county, who levied upon the goods covered by respondent's mortgage, and sold the same to satisfy said writ. It appears that the said McGowan and sheriff had actual notice of respondent's mortgage before levy and sale as aforesaid, and that the goods were sold without regard to said mortgage, and without payment thereof. It further appears that the mortgagor and mortgagee had a parol agreement, entered into at the time of the execution of the mortgage, whereby the mortgagor was to sell the goods in the course of business, and pay off the mortgage as he "went along," but it does not appear that the appellant had notice of this agreement. After the execution of the mortgage, and until the sheriff took possession of the property, Baker continued in possession thereof, and sold thereof about $300 in value, no part of which sum was paid by said Baker to the respondent, but all of said sum was appropriated by him for his own use. The respondent testified that during this period he was sick. The value of the goods at the date of the mortgage was $1,800, and at the date of the levy of the writ, on the 6th day of April, 1896, $1,200. The judgment of the district court was in favor of the respondent, and from that judgment, and an order refusing a new trial, this appeal has been taken.
The important question herein presented for decision is the validity of the mortgage. Appellant contends that it is fraudulent and void as to the creditors of the mortgagor that it is rendered so by the stipulation therein permitting the mortgagor to retain possession of the mortgaged property authorizing him to sell the same, and appropriate the proceeds to his own use and benefit, and from the further fact that he did make such appropriation. This question is for the first time presented to the court since the amendment to the law relating to chattel mortgages was passed in 1885. Prior to the 2d day of March, 1885, no mortgage of personal property, except a growing crop, was valid against any other persons than the parties thereto, unless the possession of the mortgaged property was delivered to and retained by the mortgagee. St. Nev. 1869, p. 55. This court, in the case of Wilson v. Hill, 17 Nev. 407, 30 P. 1076, say that under the above-cited act, a failure to deliver and retain possession of the mortgaged property is conclusive evidence of fraud in law; that in such a case the courts will not stop to inquire whether there is actual fraud or not; that the law imputes fraud under such conditions, and the statute does not permit this conclusive proof to be overcome by evidence of an honest purpose. By an act of the legislature the above statute was so amended that a mortgage upon all kinds of personal property was made valid against all persons, without the possession of the mortgaged property being delivered to and retained by the mortgagee by attaching the certain affidavit of the parties thereto, and duly recording the same. St. Nev. 1885, p. 53. The statute was again amended, but the amendments in no manner affect the above provisions. St. Nev. 1887, p. 66. The amended acts of 1885 and 1887, above cited, changed the rule announced in Wilson v. Hill, supra, and since then the fact that the mortgagor retains and continues in possession of the property, and is so permitted by the express stipulation of the mortgage, does not render the mortgage void per se, where the conditions of the statute have been complied with. Counsel for respondent contends that the amendments above cited have so changed that rule that under section 72 of the same act the question of fraud is one of fact, and not of law; in other words, that the courts have no right to declare a mortgage void per se when the same has annexed thereto the affidavit required, and has been duly recorded. A large number of cases have...
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