Ottenberg v. Corner

• Citation: 76 F. 263
• Decision Date: 05 October 1896
• Docket Number: 598.
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: OTTENBERG et al. v. CORNER et al.

76 F. 263

OTTENBERG et al. v. CORNER et al.

No. 598.

United States Court of Appeals, Eighth Circuit.

October 5, 1896

J. V Daugherty and R. R. Vermilion (Kos Harris was with them on the brief), for appellants.

F. W Bentley and David Smyth, for appellees.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

THAYER Circuit Judge.

This action was brought by Simon Ottenberg, Henry Ottenberg, and Herman Ottenberg, the appellants, against the Wichita National Bank, W. J. Corner, H. R.Farnum, W. S. Corbett, and W. B. Hanscom, the appellees, to recover from said Wichita National Bank the value of certain property that had come into the possession of the bank, and had subsequently been sold by the bank, and converted to its own use. The bill of complaint alleged, in substance, the following facts: That Simon Ottenberg, Henry Ottenberg, and Herman Ottenberg, who were engaged in business in the city of New York, under the firm name of Simon Ottenberg & Bros., were general creditors of W. J. Corner, H. R. Farnum, and W. B. Hanscom, three of the appellees above named, who were engaged in business at Wichita, Kan., under the firm name of Corner & Farnum; that on July 2, 1891, the firm of Corner & Farnum was in a failing condition, and insolvent; that said last-mentioned firm on said day executed a chattel mortgage covering its entire stock of merchandise, in favor of the Wichita National Bank to secure an alleged indebtedness of said firm to said bank in the sum of $24,534, and at the same time also executed a deed of assignment, whereby said firm conveyed to W. S Corbett, one of the appellees, all of its property for the benefit of all of its creditors, the property so conveyed being the same property that was conveyed and described in the aforesaid chattel mortgage. The bill charged, in substance, that the determination to execute both the chattel mortgage and the deed of assignment was arrived at after a consultation had between the firm of Corner & Farnum and the president of the Wichita National Bank; that the intention to execute the mortgage and the deed of assignment was communicated to said bank by Corner & Farnum before either instrument was in fact executed; that the chattel mortgage and the deed of assignment were executed at the same time, and constituted one transaction, the intent being by such device to give the Wichita National Bank a preference over the other creditors of Corner & Farnum. The bill charged, in substance, that the Wichita National Bank had taken possession, under its chattel mortgage, of all the property of Corner & Farnum therein described, and had caused the same to be sold at public and private sale, and had thereby realized a large sum of money, which it had appropriated to its own use; that W. S. Corbett, the assignee named in the deed of assignment, had been requested to bring an action against the aforesaid bank to compel it to account for the money and property by it received, and that he had refused to bring such a suit. In view of the premises, the complainants below, who are now the appellants, prayed that an account might be taken of the property that had been appropriated by the Wichita National Bank under the aforesaid chattel mortgage, and that it be compelled to pay the value thereof to W. S. Corbett, assignee, to the end that it might be distributed pro rata among all the creditors of Corner & Farnum, pursuant to the laws of the state of Kansas regulating general assignments. The circuit court sustained the validity of the chattel mortgage, but, inasmuch as the proof showed to its satisfaction that the Wichita National Bank had realized out of the property conveyed to it more than enough to satisfy the mortgage debt, it decreed that the bank pay the excess of money in its hands to a special master appointed for that purpose, to the end that it might be distributed by him pro rata among all the creditors of Corner & Farnum who had proved their demands against the assigned estate. The complainants below have appealed from that decree.

One of the questions discussed at considerable length on the hearing of the appeal was whether the assignment that was executed by Corner & Farnum to W. S. Corbett was a valid assignment, the contention on the part of the appellees being that it was invalid, for the reason that it was not signed by W. B. Hanscom, one of the members of the firm of Corner & Farnum. Since the case has been under advisement in this court, the assignment in question has been adjudged to be a good and sufficient conveyance by the supreme court of Kansas in the case of Corbett v. Cannon, 45 P. 80, where that was the sole question in controversy. We fully agree with the conclusion announced in that case, and for that reason shall follow the ruling there made, and accept the decision as controlling authority upon the point raised in the case at bar.

The appellants, who are general creditors of Corner & Farnum, found their right to maintain the present action upon the deed of assignment, and, inasmuch as that instrument must be treated as valid, it becomes necessary to determine whether the chattel mortgage which was executed by Corner & Farnum was also a valid conveyance, and operated to create a lien in favor of the Wichita National Bank. The appellants contend that the chattel mortgage was void, because the mortgage and the deed of assignment were executed at the same time, and constituted but one transaction, and because they were so executed, as it is claimed, in pursuance of a previous understanding or agreement between Corner & Farnum and the bank to the effect that the two instruments should be thus executed for the purpose of giving the bank a preference over other general creditors of the assignors. The weight of evidence shows, we think, that the execution and delivery of the deed of assignment to the assignee by about two or three hours, so that the two instruments cannot be said to have been executed at the same time. Nevertheless, the execution of the assignment was so closely related to the execution of the mortgage in point of time that it is perhaps fair to infer that Corner & Farnum had in fact resolved to make an assignment when they executed and delivered the chattel mortgage. It is a much more debatable question, however, whether, as is claimed by the appellants, the firm of Corner & Farnum and the Wichita National Bank did in fact agree that the delivery of the mortgage should be followed immediately by the execution of a general assignment, and whether the bank did in fact accept the mortgage with that understanding. With reference to this latter issue the evidence was somewhat conflicting. The trial court evidently found, in accordance with the bank's contention, that it demanded security for its debt from Corner & Farnum, and obtained security in compliance with its demand, and that it was not advised of the mortgagor's purpose to execute a general assignment until some hours after it had accepted and recorded the chattel mortgage. This finding by the trial court upon a disputed issue of fact, depending, as it does, upon the weight of conflicting testimony, is entitled to every reasonable presumption in its favor. This court, and the supreme court of the United States as well, have frequently declared that the findings of a chancellor on an issue of fact should be taken as presumptively correct, and that a decree should be permitted to stand, unless some obvious error has intervened in the application of the law, or some serious or important mistake has been made in the consideration of the evidence. Warren v. Burt, 12 U.S.App. 591, 600, 7 C.C.A. 105, and 58 F. 101; Gaines' Ex'r v. Granger, 32 U.S.App. 342, 15 C.C.A. 228, and 68 F. 69; Paxson v. Brown, 27 U.S.App. 49, 10 C.C.A. 135, 144, and 61 F. 874; Snider v. Dobson, 74 F. 757; Tilghman v. Proctor, 125 U.S. 136, 8 Sup.Ct. 894; Camden v. Stuart, 144 U.S. 104, 12 Sup.Ct. 585; Crawford v. Neal, 144 U.S. 585, 596, 12 Sup.Ct. 759; Furrer v. Ferris, 145 U.S. 132, 12 Sup.Ct. 821. It is also well settled that a decree will not be reversed by an appellate tribunal merely upon a doubt created by conflicting testimony. Philadelphia, W. & B. R. Co. v. Philadelphia & H. D. G. Steam & Towboat Co., 23 How. 209; Morewood v. Enequist, 23 How. 491. Applying these rules to the case at bar, we are unable to say, after an attentive examination of the testimony, that the trial court was mistaken in its view of the evidence, and that it erred in finding, as it appears to have found, that the bank was not privy to the alleged scheme whereby the execution of the chattel mortgage in its favor was to be immediately followed by a deed of assignment. The conclusion which the trial court reached on this branch of the case, that the bank simply demanded security for its debt and obtained it, and that it was not a party to, nor in any way concerned in, the subsequent acts of Corner & Farnum, is not an unreasonable conclusion, when judged in the light of the evidence. The finding of the trial court on this issue is supported by the oral statements of several witnesses, and, so far as we can see, it is not inconsistent with any of the admitted facts or circumstances in the case. For these reasons we think that the presumption which exists in favor of the finding of the trial court has not been overcome, and that such finding should be adopted by this court.

It is contended, however, by counsel for the appellants, that the chattel mortgage was and is void, even though it be true that the bank was not concerned in the execution of the deed of assignment, and was not advised, prior to the delivery of the mortgage, that an assignment was to be executed. It is urged in substance, that, although the Wichita National Bank may have acted in...