Northwestern Nat Bank v. Freeman, 18

• Citation: 171 U.S. 620,19 S.Ct. 36,43 L.Ed. 307
• Decision Date: 24 October 1898
• Docket Number: No. 18,18
• Parties: NORTHWESTERN NAT. BANK et al. v. FREEMAN et al
• Court: United States Supreme Court

171 U.S. 620

19 S.Ct. 36

43 L.Ed. 307

NORTHWESTERN NAT. BANK et al.

v FREEMAN et al.

No. 18.

October 24, 1898.

The appellees recovered judgment in the district court, which was affirmed on appeal to the supreme court of the territory, from which an appeal has been taken to this court.

The facts found by the territorial supreme court are as follows:

'On July 10, 1890, Harry Fulton, one of the defendants in the court below, executed an alleged chattel mortgage for $7,500, payable in one year, in favor of the Arizona Central Bank, one of the appellees herein and plaintiffs in the court below. That the description in said mortgage of the property purporting to be covered by it is as follows: '1,200 lambs, marked: Ewes with hole in left ear and split in right; wethers, hole in right ear and split in left ear; 1,600 ewes marked hole in left ear and split in right ear; 2,200 wethers marked hole in right ear and split in left ear; making 5,000 sheep in all with the Fulton brand.'

'That on said day said Fulton executed another alleged mortgage for $4,000, payable in ninety days, in favor of John Vories, one of the appellees herein, and one of the defendants in the court below. That the description in said alleged mortgage is as follows: 'Wethers and dry ewes to the number of 1,000; the wethers marked with a split in the left ear and a hole in the right; ewes marked with a hole in the left ear and a split in the right.'

'That on said day said Fulton owned and possessed 6,200 sheep that were herded and run together, and this was all he owned; said sheep being marked as follows: 'Ewes and ewe lambs split in the right ear, hole in the left; wethers and wether lambs reverse;' and both of the said appellees had knowledge of this fact at the time they accepted their alleged mortgages, the one on 5,000 head and the other on 1,000 head,* 200 head not being included in either of said mortgages; all of said sheep having the same mark and running in the same herd, and none of them being capable of identification, save only by the ear mark put on them as aforesaid, and that, therefore, there was no way by which any of said sheep could be distinguished from any of the others.

'That said Fulton continued in the ownership and possession of all of said sheep, save only such as died, were sold by him, consumed, or lost, until the 18th December, 1893. At no time did appellees, or either of them, ever take or ever have possession of said sheep, or any of them, or of the increase thereof; nor were any of said sheep or the increase thereof ever by any one identified, fied, designated, or in any way segregated, apportioned, or substituted to the, or on account of the, said pretended mortgages, or of either thereof. From date of said mortgages (July 10, 1890) to January 4, 1893, said Fulton from time to time sold of said sheep as follows: 1,700 head, at $3 per head, that were by said Fulton accounted for, and the proceeds of which he deposited with the appellee Arizona Central Bank. That both of said appellees knew of these sales, and consented to them.

'On January 4, 1893, said Fulton executed a mortgage for $8,885 in favor of Arizona Lumber & Timber Company, one of appellants herein, and one of the defendants in the court below, covering, among other property, the following described sheep: 'About 3,000 ewes, 1,000 wethers, and 2,000 lambs; same being all the sheep now owned by mortgagor, and including all wool and increase which may be produced by said sheep marked: Ewes, split in right ear, hole in left; wethers, reverse.' At the instance of appellees, said appellant Arizona Lumber & Timber Company permitted the following recital to be inserted in said last-mentioned mortgage, namely: 'This being subject to a mortgage on 5,000 of above sheep to Arizona Central Bank, and one on 1,000 head, and the residence property to John Vories; said number, as described in mortgages, to be kept good out of increase.' There was consideration for the foregoing recital in the mortgage of January 4, 1893, namely, that the appellees should forbear to foreclose their mortgages, and should release their claim on the wool clip of 1893; the wool at that time not having been shorn.

'That to August 30, 1893, $3,000 of the amount claimed to be due on the mortgage of January 4, 1893, was paid out of wool proceeds, and that on said day said Fulton, for the purpose of securing a $500 advance, and applying the remainder as a payment on said mortgage of January 4, 1893, executed his promissory negotiable note, payable in 90 days, securing the same by a chattel mortgage for the sum of $6,000 to the Arizona Lumder & Timber Company.

'That said mortgage was a conveyance, as a security for the payment of said note, of sheep; the same being in said mortgage described as follows, namely: 'About 3,200 ewes, more of less; about 1,300 wethers, more or less; about 1,400 lambs, more or less; being all the sheep now owned by mortgagor, including all the wool and increase which may be produced by said sheep, marked: Ewes and ewe lambs, split in right ear, hole in left; wethers and wether lambs, reverse.'

'That in said last mentioned mortgage no recital or reference was made in any way nor in any manner to the existence of any other mortgage or mortgages whatsover.

'That on the 29th day of September, 1893, and prior to the maturity of said last-mentioned note of $6,000, said appellant Arizona Lumber & Timber Company, representing that said mortgage was a first and prior lien on said described sheep, and by means thereof sold, assigned, indorsed, and delivered said note and mortgage to the Northwestern National Bank, one of the appellants herein, and one of the defendants in the court below; said Northwestern National Bank becoming an innocent purchaser for value.

'That on December 18, 1893, said Fulton being then indebted to Riordan Mercantile Company, one of the appellants herein, and a defendant in the court below, in the sum of $810.91, it brought its action in said district court against said Fulton whereby to collect the same, and at the same time caused to be issued out of the clerk's office of said court a writ of attachment, which was then levied on the property following namely: 'All the right, title, and interest of the defendant Harry Fulton in and to the following described sheep: 2,926 ewes, marked hole in left ear, split in right; 900 wether sheep, marked hole in right ear, split in left ear; 1,287 lambs,—ewe lambs marked hole in left ear, split in right; wether lambs marked hole in right ear, split in left; 118 rams;' same being all of the sheep then owned by said Fulton.

'That on 16th March, 1894, judgment was rendered in said suit in favor of said plaintiff company and against said Fulton for said amount, and said attachment lien was foreclosed. That on the 31st day of March, 1894, the sheriff of said county of Coconino, by virtue of and pursuant to said judgment, sold said property and delivered the same to the appellant Riordan Mercantile Company, who then entered into the possession thereof, was so in the possession thereof when this cause was tried in the lower court, and is still in possession thereof.

'That by virtue of said writ of attachment the sheriff attached all the sheep then owned by said Fulton, and that on said day, to wit, on the 18th day of December, 1893, there were of said sheep only 1,000 head of ewes remaining out of all the sheep that existed on July 10, 1890, the date of said alleged mortgages to appellees. That the remainder of said ewes, all the male sheep, and the lambs had by that time died, been consumed, sold or lost.

'That subsequent to the making of said alleged mortgages to said appellees an oral agreement between them and the said Fulton was made, that the securities of appellees were to be kept good out of the increase by substitution, the consideration therefor being that said Fulton might sell and dispose of the said sheep without interference from appellees.

'That Sisson, a witness for appellants in this case, is and was during all of said transactions the treasurer of both the Riordan Mercantile Company and the Arizona Lumber & Timber Company, appellants herein, and that these two corporations have practically the same officers.

'That in said district court said Arizona Central Bank brought its suit as plaintiff against said Fulton, Vories, Donahue as sheriff, the Arizona Lumber & Timber Company, the Riordan Mercantile Company, and the Northwestern National Bank, as defendants, asking for a foreclosure of its said alleged mortgage; the same being the above-entitled cause.

'That said action was tried, and judgment was rendered foreclosing said alleged mortgages of both of appellees herein, and also the said mortgage dated January 4, 1893, of said Arizona Lumber & Timber Company, and the mortgage owned by said Northwestern National Bank, as aforesaid, in which said judgment said court adjudged that appellees have a prior and first lien on said property,...