Petring v. Chrisler
| Decision Date | 14 February 1887 |
| Parties | Petring, Appellant, v. Chrisler; Herr Dry Goods Co., Interpleader |
| Court | Missouri Supreme Court |
Appeal from Lawrence Circuit Court. -- Hon. M. G. McGregor, Judge.
Affirmed.
Goode & Cravens for appellant.
(1) The mortgage was fraudulent per se, because it purported to convey property thereafter to be acquired -- property not then owned by the mortgageors and perhaps not in existence. Phelps v. Murray, 4 Cent. Law Jour. 583. The court so held, but also held that the defect was cured by a subsequent delivery of possession. We concede that technical fraud, apparent on the face of an instrument, is cured by a delivery of possession. This was decided in Nash v Norment, 5 Mo.App. 545. But in this case there was no subsequent delivery of possession. (2) The court gave the above doctrine too wide a scope. It held that the change of possession not only cured technical fraud, but fraud in fact. The second declaration given at plaintiff's request holds that if the mortgagee permitted the mortgageors to sell the goods in the usual course of trade without requiring them to pay over the proceeds of the sale on the mortgage debt the transaction was fraudulent in fact. The evidence is undisputed that the Herr Dry Goods Company not only permitted the Chrislers to dispose of the stock without applying the proceeds to the discharge of the mortgage debt, but even encouraged them to do so. This was fraud in fact as to other creditors, and a change of possession does not relieve from the consequences of it. If a power of disposing of the property is left with the mortgageor by the terms of the instrument, without requiring that he account for the proceeds, it is fraudulent per se, and the court will so declare it as a matter of law. But an understanding to the same effect, but not expressed in the instrument, may be proven aliunde and this makes the transaction as vicious as the other mode. This, however, is fraud in fact. The distinction is plainly stated in State to use v. Tasker, 31 Mo. 445; State to use v. D'Oench, 31 Mo. 45; Reed v. Pelletier, 28 Mo. 170; State v. Jacob, 2 Mo.App. 183; Metzner v. Graham, 57 Mo. 404; Herman on Chat. Mort. 235. (3) The transactions between the Chrislers and Herr converted the mortgage into a conveyance of the property to the use of the former. Lodge v. Samuels, 50 Mo. 204; Armstrong v. Tuttle, 34 Mo. 432; Brooks v. Wilmer, 20 Mo. 500; Martin v. Maddox, 24 Mo. 575; Martin v. Rice, 24 Mo. 581; Reed v. Pelletier, 28 Mo. 173. (4) The mortgage debt must be held to have been satisfied as to other creditors at the time possession was taken by the interpleader. The deed required that the proceeds should be accounted for and applied to the debt, and more than enough goods were sold to pay it. Jones on Chat. Mort. sec. 640; Mastin v. Cummings, 24 Wis. 623; Conkling v. Shelly, 28 N.Y. 360. (5) The interpleader, having given a delivery bond, is estopped from claiming the goods. Bigelow on Estoppel, 436; Picard v. Sears, 6 Ad. and E. 469; Deezell v. Odell, 3 Hill, 215; Dresbach v. Minnis, 45 Cal. 223; Gaff v. Harding, 66 Ill. 61; Dewey v. Field, 4 Met. 381; Waterman v. Frank, 21 Mo. 108; Hashaw v. Guillet, 53 Mo. 208; Jones v. Jones, 38 Mo. 429; 3 Mo.App. 579.
Massey & McAffee for respondent.
(1) The provision in the chattel mortgage conveying or intending to convey "all goods and property that may be placed in the store hereafter, at Chesapeake, by purchase or otherwise," was rendered effectual by the delivery of the possession of said after acquired goods to Herr & Company before the levy of plaintiff's attachment, so as to vest title in said interpleader, Herr & Company. Phelps v. Murray, 4 Cent. Law Jour. 583; Nash v. Norment, 5 Mo.App. 545; Greeley v. Reading, 74 Mo. 309; 21 Am. Law Reg. 155. (2) This mortgage was good in equity between defendants, Chrisler & Son, and interpleader, and while standing left legal title in mortgageor and equitable title in mortgagee. The taking possession of said after acquired property by mortgagee before levy of plaintiff's attachment, blended the legal and equitable title and completed and perfected same in mortgagee, the interpleader. The interpleaders' delivery bond does not estop them from claiming the goods in this suit. The interest of plaintiffs was, in no wise, prejudiced by such claim; there was no other property of defendants to seek; no other property upon which attachment could be levied, and the giving of said bond did not induce plaintiffs to alter their condition as to any property of defendants, or in any wise to jeopardize their claim, or to prejudice their interest. Bigelow on Estoppel, 436; Dewey v. Field, 4 Met. 381; Heath v. Keys, 35 Wis. 668.
OPINION
In April, 1881, plaintiff began this suit against defendants, John and A. J. Chrisler, by petition in the ordinary form, for actions on account, with affidavit and bond for attachment against the property in controversy, which consists of a certain stock of dry goods and merchandise. The attachment writ was thereafter levied by the sheriff upon the said stock of goods whilst the same was in the possession of the Herr Dry Goods Company. Said Herr Dry Goods Company gave the sheriff a forthcoming bond, as provided in section 421, Revised Statutes, and retained the possession, and by permission of the court filed its interplea in the cause, claiming the property under a chattel mortgage, executed by the said Chrislers, and acknowledged and recorded in December, 1878, conveying to C. H. Herr & Company the said stock of goods, and other described property, to secure the payment of a certain note therein specified.
It was stipulated, on the trial, that the interpleader, the Herr Dry Goods Company, was the successor to, and had duly acquired the rights of the said C. H. Herr & Company, the mortgagee in said mortgage. The defendants, John and A. J. Chrisler, filed no answer and judgment was taken by default against them. The trial of the interplea, before the court, sitting as a jury, resulted in a finding and judgment in favor of the interpleader, from which the plaintiff has appealed. The mortgage further contained a provision purporting to convey property to be thereafter acquired, viz.: "all goods and property that may be placed in the store thereafter, at Chesapeake, by purchase or otherwise," and was otherwise valid and operative on its face. The mortgagor, it is true, was authorized by the terms of the mortgage to sell the goods in the usual course of trade, but he was also thereby required to account for and pay over the proceeds of sales to the mortgagees. Prior to the institution of the attachment suit by plaintiff, the said Chrislers, father and son, delivered to the interpleader the possession of the goods in controversy under the following agreement:
This, we think, brings the case within the operation of the rule, heretofore declared by this court, in Greeley v. Reading, 74 Mo. 309, and by the St. Louis court of appeals, in Nash v. Norment, 5 Mo.App. 545. The doctrine of these cases is, that where the mortgagee, in good faith, takes actual possession of the goods prior to the levy of the attachment, for the purpose of securing the payment of his debt, and continues to hold the actual possession up to the time of the levy, he will be protected, and will, in that event, hold the goods as against the subsequent attaching creditor, and that, under this state of facts, it is immaterial that the mortgage contains stipulations which render it void, except as between the parties.
Treating of this subject, Mr. Jones, in his work on Chattel Mortgages says: "Delivery of possession under a mortgage, before rights have been acquired by others, will cure any invalidity there may be in the instrument, whether arising from an insufficient execution of it, the omission to record it, or from its containing a provision which makes it void, except as between the parties." Sec. 178. In this case, the debt secured by the mortgage was due and unpaid, and as the possession was delivered under said agreement some time prior to the levy of the attachment by plaintiff, the trial court, evidently, as appears from its ruling upon declarations of law asked by the parties, tried and determined the case in favor of the interpleader, in harmony with the rule supported by these authorities. Some effort is made to distinguish this case, and to take it out of the rule announced in those cases, but not, as we apprehend, upon any solid grounds. The execution of said agreement, of March 22, 1881, and the delivery of the possession was, we think, entirely voluntary on the part of said Chrislers, father and son, and whether or not they, or either of them, supposed the sheriff could take the possession under the mortgage is not, we think, material or important. Nor do we perceive why the stipulation in said agreement, that such...
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