A. Peiser & Co. v. Peticolas

• Decision Date: 01 January 1879
• Citation: 50 Tex. 638
• Court: Texas Supreme Court
• Parties: A. PEISER & CO. ET AL. v. A. B. PETICOLAS AND J. E. CARPENTER.

50 Tex. 638

A. PEISER & CO. ET AL.

v.A. B. PETICOLAS AND J. E. CARPENTER.

Supreme Court of Texas.

1879.

ERROR from Victoria. Tried below before the Hon. H Clay Pleasants.

This suit was brought by A. B. Peticolas against J. E. Carpenter in the District Court for Victoria county upon a promissory note and mortgage upon a stock of goods.

The mortgaged goods were sequestered. Pending the suit A. Peiser & Co. and Ralph Levy each obtained judgment against Carpenter before a justice of the peace, had executions issued thereon, and levied on the same goods which had been seized under the writ of sequestration sued out by Peticolas. These levies were made by the same officer who levied the writ of sequestration. The goods, not having been replevied, had remained in the possession of the officer.

A. Peiser & Co. and Ralph Levy each intervened in the suit of Peticolas against Carpenter, and prayed that their debts be satisfied out of the proceeds of the goods, upon the ground that the mortgage given to Peticolas by Carpenter was invalid and void as to them, as creditors of Carpenter. A jury was waived and the cause submitted to the court.

It was adjudged that intervenors take nothing, and that Peticolas have judgment against Carpenter for his debt and foreclosing his mortgage upon the goods seized.

Ralph Levy having died since the trial of the cause, Samuel Levy, as the executor of his last will and testament, prosecuted the suit by writ of error, as did also A. Peiser & Co., one transcript containing the entire cases.

The facts concerning the mortgage, as shown, are as follow:

On the 23d of September, 1875, Carpenter was indebted to Peticolas, on the settlement of a partnership business, in the sum of $1,300, for which he executed his promissory note, due one day after date.

At the same time Carpenter executed to Peticolas an agreement, by which he sought to mortgage to him all of his goods, wares, and merchandise in trade, and all additions which he might make, by purchase or otherwise, to the stock which he had at the time of the execution of said instrument. There was no enumeration of the several articles, but the instrument contained a general statement of the kinds of articles of which the stock consisted.

At the time the instrument was executed Carpenter was carrying on a small mercantile business, which he continued until a few days before the entire stock which he had, was seized under a writ of sequestration, which was sued out by Peticolas and levied on the 9th of May, 1876.

There was no agreement that Carpenter would use the proceeds of sales to pay off the debt due to Peticolas. Peticolas knew at the time the instrument was executed that Carpenter had no money with which to purchase goods, except such as he might obtain by sale of stock on hand, and he also knew that Carpenter was selling the mortgaged stock from the time the mortgage was made until the seizure.

Carpenter was not indebted to any one when the note and mortgage were executed. The mortgage upon the stock was the only security Carpenter could give on his note. It was expected by Peticolas that Carpenter would sell in the usual course of trade, and with the proceeds of sales so made replenish the stock. The debts on which the intervenors claimed, were incurred subsequent to the execution and the registration of the mortgage. The mortgage was recorded September 24, 1875.

The note was given in settlement of a business begun under a contract between Peticolas and Carpenter, of date December 29, 1874. Peticolas advanced to Carpenter the money to buy the first stock of goods and leased him a storehouse in Victoria. Carpenter, by the contract, was to manage the business and on a cash basis, Peticolas to receive quarterly the half of the net proceeds; the business to extend two years, when Peticolas was to receive the money advanced, Carpenter the balance.

September 23, 1875, this contract was annulled, and the note sued on executed for the indebtedness of the business to Peticolas. The mortgage was executed upon the stock of goods. The mortgage recited that “the note was for money by Peticolas advanced to buy my first stock of goods.” In addition, and signed by Carpenter and wife and recorded with the mortgage, was the following: “The stock of merchandise now in the hands of my husband, J. E. Carpenter, and mentioned in the within mortgage, having been purchased by money advanced by A. B. Peticolas, and recognizing his right to have the purchase-money thereof returned to him out of the goods, I hereby forever renounce any right in law to have any part of said goods in lieu of homestead or year's allowance to which I might become entitled in the event of J. E. Carpenter's death before the debt due A. B. Peticolas is paid; and I covenant never to claim any interest in J. E. Carpenter's stock in trade in lieu of homestead or year's allowance so as to defeat the collection of said debt due A. B. Peticolas.”

Subsequent to the mortgage Carpenter carried on the business, had part of the goods still on hand, had goods bought with proceeds of sales of the mortgaged stock, and goods bought on credit in the store when seized under the writ of sequestration.

Lackey & Stayton, for plaintiffs in error.

I. A mortgage upon a stock of goods, the mortgagor remaining in possession thereof, with full authority to sell the same in the ordinary course of business, and which does not require the proceeds of sale to be used in discharge of the mortgage debt, is void. (Robinson v. Elliott, 22 Wallace, 513;Addington v. Etheridge, 12 Gratt., 436;Lang v. Lee, 3 Rand., 410;Divver v. McLaughlin, 2 Wend., 596;McLachlan v. Wright, 3 Wend., 348;Wood v. Lowry, 17 Wend., 492;Edgell v. Hart, 9 N. Y., 213;Gardner v. McEwen, 19 N. Y., 123;Russell v. Winne, 37 N. Y., 591;Putnam v. Osgood, 52 N. H., 148;Ranlett v. Blodgett, 17 N. H., 305;Collins v. Myers, 16 Ohio, 547;Freeman v. Rawson, 5 Ohio St., 1; Chophard v. Bayard, 5 Minn., 533; Horton v. Williams, 21 Minn., 187;Steinart v. Deuster, 23 Wis., 136;Bishop v. Williams, 18 Ill., 101;Barnet v. Fergus, 51 Ill., 352;Walter v. Wimer, 24 Mo., 63;Stanley v. Bunce, 27 Mo., 269;Billingsley v. Bunce, 28 Mo., 547;Lodge v. Samuels, 50 Mo., 204; Hower v. Geesaman, 17 S. & R., 251.)

II. A mortgage upon goods to be acquired after the date of the mortgage is void as to creditors, unless it be shown that such goods were bought with money obtained through the mortgage or by the proceeds of mortgaged property sold. (Robinson v. Elliott, 22 Wall., 513; Moody v. Wright, 13 Metc., (Mass.,) 17; Edgell v. Hart, 9 N. Y., 213;Collins v. Myers, 16 Ohio, 547; National Bank v. Ebbert, 2 Southern Law Rev., (old series,) 175; Phelps v. Murray, Chancery Court Term, Nashville, Tenn., April, 1877; 4 Cent. Law Jour., 583; Levy v. Welsh, 2 Edw. Ch., 438; 2 Hill. on Mort., 337-342.)

III. The mortgage is void for the want of such description of the property to be acquired after the mortgage as would put creditors upon notice, or enable a creditor or the court to identify the property mortgaged. (Winslow v. Merchants' Ins. Co., 4 Metc., 306; Barnard v. Eaton, 2 Cush., 294;Otis v. Sill, 8 Barb., 102.)

IV. The claim of A. B. Peticolas to a prior lien upon the property seized must stand upon the validity of his mortgage, and the levy of the writ of sequestration gave no lien. (Fowler v. Stonum, 6 Tex., 72; Pitot v. Elmes, 1 Mart., 79; (1 Cond., 43;) Oddie v. Creditors, 6 Mart., 251; (9 Cond., 251;) Syndic v. Jewett, 6 La., 542.)

A. B. Peticolas, for defendants in error.

I. A mortgage upon a stock of goods, duly recorded, given to secure a note for the purchase-money of the goods, payable one day after date, the mortgagor remaining in possession thereof and selling the same in the ordinary course of trade, which mortgage does not by its terms require the proceeds of sale to be used in discharge of the mortgage debt, is never void where there are no subsisting creditors of the mortgagor. (Paschal's Dig., sec. 3876; Bryant v. Kelton, 1 Tex., 415;Baldwin v. Peet, 22 Tex., 708;Robinson v. Martel, 11 Tex., 155; Brett v. Carter, decided in the U. S. District Court, (Lowell, J.,) in December, 1875, in Mass.; Barnard v. Norwich, 4 Cent. Law Jour., 708; Hughes v. Cory, 20 Iowa, 399;Gay v. Bidwell, 7 Mich., 520; Briggs v. Parkman, 2 Metc., (Mass.,) 258; Jones v. Huggeford, 3 Metc., 515; Barnard v. Eaton, 2 Cush., 294;Cobb v. Farr, 16 Gray, 597;Mitchell v. Winslow, 2 Story, 630;Abbott v. Goodwin, 20 Maine, 408;Robinson v. Elliot, 22 Wall., 513.)

II. A mortgage upon after-acquired property is not void; and if due notice of the intent of the mortgagor to render after-acquired goods liable, is given by the registry of the mortgage, a subsequent creditor cannot attack it successfully unless he shows an express intent to defraud on the part of the mortgagor and mortgagee, or some concealment, deceit, or misrepresentation on their part. (Paschal's Dig., art. 4994; Cook v. Steel, 42 Tex., 53;McGee v. Fitzer, 37 Tex., 27;Butt v. Ellett, 19 Wall., 544;Pennock v. Coe, 23 How., 117;Galveston Railroad v. Cowdry, 11 Wall., 480;Dunham v. Railroad Co., 1 Wall., 254.)

III. The property mortgaged is sufficiently described, Carpenter having no other goods anywhere.

“All my stock of goods, wares, and merchandise in trade, (goods received by me to sell on commission excepted,) and upon all additions which I may hereafter make, by purchase or otherwise, to my stock in trade. Said stock is now situated in A. B. Peticolas' store-house in Victoria, and consists of music, books, stationery of all kinds, chromos and pictures, inkstands, pens, pencils, &c.; brackets, wall pockets, and other wood-work; picture frames, wooden and willow ware, wall paper and curtains, and curtain fixtures; hardware, matting, all kinds of house furnishing goods, household and kitchen furniture, show case, letter press; all kinds of hollow-ware, wooden, stone, and composition; notions, stereoscopic views,...