Rock Island National Bank v. Powers
| Decision Date | 02 June 1896 |
| Citation | 34 S.W. 869,134 Mo. 432 |
| Parties | Rock Island National Bank, Appellant, v. Powers et al |
| Court | Missouri Supreme Court |
Appeal from Jackson Circuit Court. -- Hon. J. H. Slover, Judge.
Reversed and remanded.
Muckle & Winn and Wash Adams for appellant.
(1) The evidence showed that the mortgage to C. H. V. Lewis, cashier was one in part for the use of the mortgagor, and therefore fraudulent in law and ground for attachment. The court therefore erred in giving instruction number 1 at the instance of defendant. When the mortgagor of personal property is allowed to continue in possession and sell the mortgaged property and buy other property with the proceeds of sales, the mortgage is fraudulent as to creditors. Bank v. Lumber Co., 59 Mo.App. 317; State to use v. Busch, 38 Mo.App. 440; Goddard v. Jones, 78 Mo. 518; Smith v. Ham, 51 Mo.App. 433; Petring v. Chrisler, 90 Mo. 649; Grocery Co. v. Miller et al., 53 Mo.App. 107; Thompson v. Foustal, 10 Mo. 297; Hepburn v. Muller, 10 Mo.App. 87. If a conveyance is fraudulent in law it is ground for attachment and no proof of an actual intent or purpose to defraud is required in such a case. Bank v. Lumber Co., supra; Reed v. Pelletier, 28 Mo. 173; Douglas v. Cisna, 17 Mo.App. 54; Temple v. Cochran, 13 Mo. 119; Gens & Tiede v. Hagardine & Co., 56 Mo.App. 248; Noyes v Cunningham, 51 Mo.App. 194; Sauer v. Behr, 49 Mo.App. 89. (2) The court erred in giving instruction number 9, at the instance of defendant. First. A delivery after the suit was commenced, could not purge the mortgage of fraud. Second. There was no competent evidence tending to prove a delivery of possession before the suit was commenced. Third. There was evidence tending to show that the chattel mortgage was fraudulent in fact, upon which evidence the court based instruction number 8 given at the instance of plaintiff. If a mortgage of personal property is fraudulent in fact this fraud is not purged by a delivery of the mortgaged property to the mortgagee. Boland v. Ross, 120 Mo. 208. (3) The court erred in giving instruction numbered 10 at the instance of defendant. A deed of conveyance of property, real or personal, absolute in form, made by one indebted to others besides the grantee, accompanied by a secret agreement between the parties to it inconsistent with its terms, and securing some right to the grantor in the property conveyed, or in the rents and profits thereof, or showing that the conveyance was intended as security for the payment of a debt, while valid between the parties to it, is fraudulent in law as to existing creditors of the grantor, and this is especially so if the grantor was at the time financially embarrassed. This doctrine with reference to such conveyances of real estate was applied and upheld in the following well considered cases: Stratton v. Putney, 63 N.H. 679; Beeler v. Crane, 135 Ill. 27; Reese v. Bromberg, 88 Ala. 628; Holcombe v. Roy, 1 Iredell, 340; Gregory v. Perkins, 4 Dev. 50; North v. Belden, 13 Conn. 276; McNeil v. Glenn, 3 Md. Ch. 349; Sims v. Gains, 64 Ala. 392; Bryant v. Young, 21 Ala. 264; Hartzhorn v. Williams, 31 Ala. 149; Whitney v. Hill, 9 N.H. 32; Smith v. Lowell, 6 N.H. 69; Watkins v. Arms, 64 N.H. 99; Ladd v. Wiggins, 35 N.H. 421; Lukin v. Aird, 8 Wall. 78; Moore v. Wood, 100 Ill. 451; Strong v. Lawrence, 58 Iowa 55. The same doctrine applies to conveyances of personal property absolute on their faces and intended not to be absolute sales but securities for payment of debts. Beeler v. Crane, 135 Ill. 27; Long v. Stockwell, 55 N.H. 563; McCulloch v. Hutchinson, 7 Watts. 434; Passmore v. Eldridge, 12 Serg. & R. 198; Chenery v. Palmer, 6 Cal. 119; Mfg. Co. v. Steele, 36 Mo.App. 502; Twyne's Case, 3 Coke's Rep. 80; Patterson v. Letton, 56 Mo.App. 325. (4) The court erred in refusing plaintiff's instruction numbered 1. First. The false and feigned deeds of conveyance, absolute in form, made to Coleman, Littlefield, Patterson & Olney, while defendant was financially embarrassed, carried falsehoods, on their faces, concealed from creditors defendants' interest in the property conveyed and in its right to the rents thereof, and by reason of the falsehoods and deceptions, whereby defendant's property was concealed, tended to hinder and delay them, and are fraudulent in law. See authorities cited under last head. Second. Since the defendant remained in possession of the personal property mortgaged to C. H. V. Lewis, cashier, and sold a considerable portion of the mortgaged property on credit, as well as for cash, and with the proceeds of sales paid for other property -- lumber and materials, and a horse -- with the knowledge and consent of the Union National Bank, the mortgage is fraudulent in law and ground for attachment. Bank v. Lumber Co., supra; State to use v. Busch, 38 Mo.App. 440; Goddard v. Jones, 78 Mo. 518; Smith v. Ham, 51 Mo.App. 433; Reed v. Pelletier, 28 Mo. 173; State to use v. Tasker, 31 Mo. 445; Weber v. Armstrong, 70 Mo. 219; Bullene v. Barrett, 87 Mo. 186; Douglas v. Cisna, 17 Mo.App. 54; Sauer v. Behr, 49 Mo.App. 89. Delivery of possession of mortgaged personal property to a mortgagee must be actual, open, unequivocal and exclusive. Jones on Chattel Mortgages [3 Ed.], secs. 186, 187; Moser v. Class, 23 Mo.App. 420. When facts are undisputed or clear the court should apply the law and determine the case. Wright v. McCormack, 67 Mo. 426; Stewart v. Nelson, 79 Mo. 523; Reichenbach v. Ellerbe, 115 Mo. 595; Powell v. Powell, 23 Mo.App. 363. It is only necessary for the court to instruct the jury upon disputed facts. Russell & Co. v. Ins. Co., 55 Mo. 585. (5) The court erred in refusing plaintiff's instruction number 11. See authorities cited under the second subdivision of specification 4. (6) The court erred in refusing instruction number 9 asked by plaintiff. A defendant can not be allowed after admitting the existence of grounds for attachment before suit to deny the existence of such grounds after suit is brought, and thus place plaintiff in a trap. Where an attachment is sued out, based on statements made by the defendant before the writ was issued, which, if true, would be ground for attachment, the defendant will be estopped to deny them. Roach v. Brannan, 57 Miss. 493; Cooke v. Kuy Kendall, 41 Miss. 65; Morgan v. Nunes, 54 Miss. 308; Myers v. Farrell, 47 Miss. 281. 1 Wade on Attachments, secs. 90-95, 97. An agreement between mortgagor and mortgagee that a chattel mortgage shall be withheld from record so as not to affect the mortgagor's credit renders the mortgage fraudulent as to creditors. Sauer v. Behr, 49 Mo.App. 89; Cent. Nat. Bk. v. Doran, 109 Mo. 40; Hillard v. Cagle, 46 Miss. 340; Hafner v. Irwin, 1 Iredell (N. C.) Law, 490; Gill v. Schley, 2 Md. Ch. 270; Hildebran v. Brown, 17 B. Mon. 782; Blennerhasset v. Sherman, 105 U.S. 100; Field v. Liverman, 17 Mo. 218; Collins v. Willhoit, 35 Mo.App. 590; Goldsby v. Johnson, 82 Mo. 606; Bank v. Buck, 123 Mo. 141.
Trimble & Braley for respondents.
(1) The evidence shows that the mortgage given to the Union National Bank was not for the use of the mortgagor, and a verdict for the defendant was the only one which could have been rendered under the law and the evidence. L. L. Bowen went into possession as respondent's agent and used the assets to pay the mortgage debt. He did not apply a cent of it to any other purpose. The authorities say this is strictly legitimate and is no fraud. Hubbell v. Allen, 90 Mo 574; Metzner v. Graham, 57 Mo. 404; Brackett v. Harvey, 91 N.Y. 214, and cases cited; Wilson v. Sullivan, 58 N.H. 260; Kleine v. Katzenberger, 20 Ohio St. 110; Overman v. Quick, 8 Bissell, 134; Hawkins v. Benk, 1 Dillon, 462; Goodheart v. Johnson, 88 Ill. 58; McLaughlin v. Ward, 77 Ind. 383; Abbott v. Goodwin, 20 Me. 408; Marks v. Hill, 15 Gratt. 400. Appellant's authorities on this proposition are all cases where the mortgagor remained in possession and kept the money arising from sales, and are, therefore, not in point. No objection can be made to the purchase of such stock as was necessary to keep the mortgaged property in salable shape. The bank could have done it had it been formally in possession, and it could, under the law, permit Bowen to do it; in fact, it was its duty to instruct Bowen to do so, and to use every effort to realize as fully and as rapidly as possible from the property. Brackett v. Harvey, supra. Whether the sales were for cash or for credit is immaterial. The record does not show that the bank directed Bowen to sell on credit, but if it did, the proceeds of the goods so sold are deemed to be applied on the mortgage debt. Wilson v. Sullivan, supra. (2) Under the evidence and the law, as laid down in the foregoing authorities, if there was any error in the giving of defendant's ninth instruction, it was in not instructing favorably enough to defendant. (3) Appellant is estopped by the acts of Tileston from objecting to the conveyances complained of, but Robinson's active participation in their benefits as effectually precludes their complaining as though it had executed a sealed instrument releasing respondent from all claim therefor. If there was any fraud in these transactions the plaintiff was as guilty as anybody, and can not ask relief because it has not "clean hands." (4) If there was any error in not instructing peremptorily, it was in not instructing to find for the defendant. (5) Appellant's fifth point is not well taken, and the instruction referred to therein was properly refused. It did not quote the evidence correctly because the Western Lumber Company was not in possession after the execution of the mortgage, and if it was, the Union National Bank had the right to permit or consent to the lumber company doing whatever it could do itself, and if it, the bank, had been in...
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