Oliver v. Eaton
| Decision Date | 15 July 1859 |
| Citation | 7 Mich. 108 |
| Court | Michigan Supreme Court |
| Parties | William M. Oliver v. Silas W. Eaton |
Heard July 9, 1859 [Syllabus Material] [Syllabus Material]
Case reserved from Monroe circuit.
Action of replevin to recover possession of a stock of goods. Declaration in the usual form, to which the general issue was interposed by the defendant. The case was tried at the February term of said court, 1859, the Hon. B. F. H Witherell, circuit judge, presiding. On the trial, it appeared that one John M. Oliver, a son of the plaintiff, had owned and carried on a drug store for several years in Monroe, Michigan, and that, to assist him, the plaintiff had given and loaned to him, and indorsed for him, to the amount of several thousand dollars; that, to secure his indebtedness to the plaintiff, said John M., on the twenty-eighth day of January, 1858, executed a chattel mortgage, which was duly filed in the city clerk's office, on the entire stock of goods, to the plaintiff, conditioned to pay him said indebtedness, and indemnify him against said indorsements; which said chattel mortgage contained the usual power to take possession of the goods, and sell them, in case of default, and to take possession of them in case the plaintiff should at any time deem the property unsafe in the hands of the mortgagor. The said John M. went on with the business, as his own, the same after the mortgage was given as before, making sales of the goods for cash, and on credit, in the usual course of trade, and applying the proceeds of the sales in buying other goods to keep up the stock, in the support of his family, and in paying debts owing by him, but applying no part thereof to the payment of the plaintiff's claims secured by the mortgage, or to pay the debts to collect which a levy was made on the goods, as hereinafter mentioned. When said mortgage was given, John M. Oliver owed debts to a considerable amount; two of which debts having been put in judgments in said court, and executions issued thereon, the defendant, who was sheriff of said county, in the month of August, 1858, levied on the entire stock of goods then in the store, by virtue of said executions, except a small amount purchased subsequent to the mortgage; whereupon, the goods were replevied, the plaintiff claiming them under said chattel mortgage. It further appears in evidence that the plaintiff resided in Penn Yan, N. Y., but that from the time of giving the mortgage to the levy, he had in Monroe an agent, having full power from him to take possession of the goods at any time, and to do what might be necessary to protect his interests in the premises. The agent was well acquainted with John M. Oliver, owned, and rented to him, the store in which he did business, himself did business in the same block, and was often in the store of John M. Oliver, but he never took or claimed possession of the goods, or interfered with the business of the mortgagor, till the levy was made. The jury found a verdict for the plaintiff, upon which the defendant moved for a new trial, on the ground that the verdict was against law and evidence.
Upon this motion, the following question was reserved by the circuit judge for the opinion of this court: "Whether the leaving of goods, covered by a chattel mortgage, in the hands of a mortgagor, by a mortgagee, with power to sell and dispose of the same in the usual course of trade, for cash or on credit, the mortgagor applying the proceeds of sales in the purchase of other goods to keep up the stock, and in the support of his family, and in paying his debts other than those secured by the mortgage, the mortgagee not asserting a right to the possession of the property, or the specific proceeds of sales thereof, or forbidding or preventing such sales, renders the mortgage null and void as against the creditors of the mortgagor, independent of the question whether there was any actual intent on the part of the mortgagor or mortgagee, or both, to defraud the creditors of the mortgagor, by means of the mortgage, or by means of such transactions subsequent to its being given.
Holbrook & Bishop, and C. I. Walker, for defendant:
1. The question of good or bad intent is excluded from the question as reserved, so that the provisions of the statute on that point do not apply: Comp. L., §§ 3198, 3201.
While the statute declares certain conveyances and transfers of chattels null and void, it by no means makes all others valid, or takes from the court the power and duty of declaring others fraudulent and void as a matter of law: Comp. L., §§ 3188, 3191; Wood v. Lowry, 17 Wend. 495; Otis v. Sill, 8 Barb. 109.
2. The real character of the transaction in question was that it was a "trust for the use of the person making the same," and it is therefore declared void by the statute: Comp L., § 3182.
3. As a matter of law, the chattel mortgage was void as against the creditors of the mortgagor: 2 Wend. 596; 17 Wend. 492; 4 Yerg. 541; 3 Metc. 117; 13 Barb. 380, 386; 5 Seld. 213; 4 Comst. 580; 3 Kern. 577. If the mortgagor could sell the goods to his customers, an execution creditor may take them by execution: 17 Wend. 495. The mortgagor was not even under obligation to account to the plaintiff for the proceeds of sales; nor did he; nor was he required so to do, or to pay them over to the plaintiff: 13 Barb. 380. The instrument was a mere could placed over the title, passing it on paper, but not passing it in fact.
G. V. N. Lothrop, for plaintiff:
It is settled by our courts, that a mortgage of chattels vests the general title in the mortgagee, and he is entitled to immediate possession, to hold until default, unless otherwise stipulated in the mortgage; and that without such stipulation, the possession of the mortgagor is the possession of the mortgagee for all the purposes of protecting the property: Tannahill v. Tuttle, 3 Mich. 110; Eggleston v. Mundy, 4 Mich. 296. And see Sweetzer v. Mead, 5 Mich. 108.
If the mortgage has no intrinsic infirmity, then it is a question of fact whether it was made in good faith, and on a valuable consideration. In the absence of a change of possession, the statute raises a presumption of fraud, and the onus rests on the mortgagee to rebut this presumption. And he proceeds to do this by showing the consideration, and any other circumstances which may tend to prove the absence of any intent to defraud. And whether this is made out is entirely a question for the jury. Intent is necessarily a fact, an actual thing. The statute gives the creditor the advantage of a presumption as to its existence in certain cases But...
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...of the mortgagees, it would not be held, as a matter of law, to be absolutely void or fraudulent as to other creditors. Oliver v. Eaton, 7 Mich. 108, 112; Gay v. Bid well, Id. 519, 523; People v. Bristol, 35 Mich. 28, 32; Wingler v. Sibley, 35 Mich. 231; Robinson v. Elliott, 22 Wall. 513, 5......
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...cases that the rulings of the court would have been the same had no statute been enacted upon the subject. In the leading case of Oliver v. Eaton, 7 Mich. 108, which was similar in point of fact to the one now before us, the question of fraudulent chattel mortgages is very exhaustively disc......
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...sell is only evidence of a fraudulent intent, for the consideration of the tribunal which has to determine the question of fraud. Oliver v. Eaton, 7 Mich. 108; Cheatham Hawkins, 76 N.C. 335; Fletcher v. Powers, 131 Mass. 333; Vanmeter v. Estill, 78 Ky. 456; Fisher v. Syfers, 109 Ind. 514, 1......
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