Olmstead v. Mattison

• Decision Date: 13 April 1881
• Citation: 45 Mich. 617,8 N.W. 555
• Court: Michigan Supreme Court
• Parties: OLMSTEAD and another v. MATTISON.

8 N.W. 555

45 Mich. 617

OLMSTEAD and another v. MATTISON.

Supreme Court of Michigan

April 13, 1881

Instruction to the jury to the effect that a bill of sale given to secure certain valid indebtedness would, if given with intent to hinder and delay other creditors, which was known to the creditor receiving the same, be fraudulent and void, held erroneous.

Error to Ionia.

Lemuel Clute, for plaintiffs in error.

Wells &amp Morse and John Toan, for defendant in error.

MARSTON, C.J.

The plaintiffs in error received a bill of sale of certain personal property from Henry C. Keyes, to secure them against certain liabilities they had incurred, and which they had duly filed as a chattel mortgage. Mattison as sheriff, under certain writs against Keyes, levied upon the property. His right to levy upon and sell the mortgagor's interest in the property was not questioned, but his right to levy upon and sell in parcels was denied. Upon the trial the bona fides of the security given was questioned. The court charged the jury upon this branch of the case as set forth in the margin. ^[*]

We are of opinion that the authorities will not sustain the charge thus given. In very many cases, where security is given, the mortgagee may know or have good reason to believe that his debtor is in failing circumstances. Indeed such knowledge may be the very cause of the creditor insisting upon security. And in all such cases the creditor may be fully aware of the fact, that the effect of the security given him will be to hinder and delay if not indeed defeat other creditors in the collection of their just claims, and that the debtor in giving the security must indeed so intend. All this however does not take away or deprive a creditor from insisting upon payment or security of an honest existing indebtedness--or to secure him against indorsements or other liabilities incurred. The rule in this case laid down would put the honest, vigilant creditor on an equal footing with the negligent, and such has not been the aim of the law. It is true that the value of the property upon which security is given may be out of all proportion to the debt secured, and this would be a circumstance that could be considered by the jury, and from which, with other facts they might find that the creditor's intention was not in good faith to secure himself, but to hinder, delay or defraud others. Such however was not the theory upon which this case was submitted to the jury. See Allen v. Kingon, 41 Mich. 285; Loomis v. Smith, 37 Mich. 595.

The judgment must be reversed with costs and a new trial ordered.

(The other justices concurred.)

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Notes:

^[*] I come now to the point as to whether this was or was not a good and valid chattel mortgage. It is claimed by the plaintiff that all that is necessary for them to establish is the fact...