Ryan v. Rogers

• Decision Date: 17 February 1908
• Citation: 94 P. 427,14 Idaho 309
• Parties: A. T. RYAN, Trustee, Respondent, v. WILLIAM S. ROGERS, Administrator, etc., et al., Appellants
• Court: Idaho Supreme Court

94 P. 427

14 Idaho 309

A. T. RYAN, Trustee, Respondent, v. WILLIAM S. ROGERS, Administrator, etc., et al., Appellants

Supreme Court of Idaho

February 17, 1908

CHATTEL MORTGAGE-PROPERTY COVERED BY MORTGAGE-AFTER-ACQUIRED PROPERTY-SALE OF MORTGAGED PROPERTY BY MORTGAGOR WITH CONSENT OF MORTGAGEE-SUCH SALE AVOIDS MORTGAGE-CONSTRUCTION OF STIPULATION-FILING PETITION IN BANKRUPTCY EQUIVALENT TO ATTACHMENT BY CREDITORS-LAW OF THE CASE.

1. Where a chattel mortgage is executed covering a stock of goods or merchandise constituting the stock in trade of the mortgagor, and contains no provision that it shall also cover after-acquired property, the mortgagee will not be authorized to seize an after-acquired stock of merchandise that has been purchased and put in the business by the mortgagor subsequent to the execution of the mortgage and after a sale of the original stock, where the sale has been with the consent and permission of the mortgagee.

2. Where the mortgagor, with the knowledge and consent of the mortgagee, remains in possession of the chattels mortgaged and with the knowledge and consent of the mortgagee continues to sell and "dispose of the same without applying the proceeds of the sales to the reduction of the mortgage debt," the existence of such facts, whether shown by the mortgage itself or by evidence aliunde, will invalidate and avoid the mortgage as against creditors and other interested third parties.

3. ID.-In such case, however, the mortgage will be good as between the mortgagor and mortgagee as to any and all property not so disposed of, and the fact of such consent and permission having been given by the mortgagee cannot avail the mortgagor as a defense.

4. Although a chattel mortgage is defective or invalid as to third parties, if the mortgagee take possession of the mortgaged property prior to any creditor or interested third party asserting his right and acquiring a claim against the property by attachment or execution or other lien, the security will be held valid, and the mortgagee will be protected to the extent of his claim.

5. The filing of a petition in bankruptcy, followed by a due and regular adjudication, amounts to a seizure of the property by the law which is equal in rank to a seizure on attachment or execution, and with respect to the right to attack transfers or encumbrances by the bankrupt as either actually or constructively fraudulent, the trustee stands in the same position as an attaching or execution creditor.

6. Where a party appeals from a judgment against him, and secures from the appellate court a construction of a stipulation, and at the same time a new trial is granted him and upon the second trial judgment goes against him, and he again appeals, he cannot on the second appeal have any different construction placed on the stipulation from that given on the first appeal. In such case, the former construction of the stipulation becomes the law of the case in that respect.

7. Where a trustee in bankruptcy has commenced an action for conversion of personal property and alleges that he was appointed on a certain day, and that thereafter, and on a subsequent date, the defendant converted the property, and the defendant demurs to the complaint and the demurrer is overruled, and upon the trial the evidence shows that the conversion was prior to the date on which the plaintiff alleges that he was appointed trustee, the variance between the allegations of the complaint and the proofs cannot be considered on an objection raised by the demurrer, but should be raised by proper and timely objection to the evidence.

(Syllabus by the court.)

APPEAL from the District Court of the Sixth Judicial District for the County of Bingham. Hon. J. M. Stevens, Judge.

Action by A. T. Ryan as trustee in bankruptcy of the estate of Peter B. Van Blaricom, against William S. Rogers, as administrator of the estate of Walter A. Rogers, deceased, and Peter A Steers, as sheriff of Bingham county, for conversion of personal property. Judgment for the plaintiff and defendants appealed. Affirmed.

Judgment affirmed, with costs in favor of respondent.

John W. Jones, and S. J. Rich, for Appellants.

A provision in a chattel mortgage "that the mortgagor shall continue in possession, doing a retail business, but the proceeds derived from sales shall be, as the same is received, applied on the payment of the mortgage," does not invalidate a chattel mortgage, even as against attaching creditors. (Noyes v. Ross, 23 Mont. 425, 75 Am. St. Rep. 543, 59 P. 367, 47 L. R. A. 400, overruling the doctrine of Leopold v. Silverman, 7 Mont. 266, 16 P. 580; Atchison v. Gray, 63 Kan. 79, 64 P. 987; Etheridge v. Sperry, 139 U.S. 266, 11 S.Ct. 565, 35 L.Ed. 171; 1 Cobbey on Chattel Mortgages, secs. 219-312; Jones on Chattel Mortgages, sec. 381; Ephraim v. Kelleher, 4 Wash. 243, 29 P. 985, 18 L. R. A. 604.)

"A creditor has the right to attach the validity of a chattel mortgage by attaching the property described therein, giving indemnifying bond to sheriff and selling the property." (McConnell v. Langdon, 3 Idaho 157, 28 P. 403; Blumaur-Frank Drug Co. v. Branstetter, 4 Idaho 557, 95 Am. St. Rep. 151, 43 P. 575.)

A general creditor cannot, before he has secured a lien upon the property in question, be heard to question the validity of a mortgage under the provisions of which property is being sold. (People's Savings Bank v. Bates, 120 U.S. 556, 7 S.Ct. 679, 30 L.Ed. 754; Thompson v. Van Vechten, 27 N.Y. 568-582; Wolcott v. Ashenfelter, 5 N. Mex. 442, 23 P. 780, 8 L. R. A. 691; Ullman v. Ducan, 78 Wis. 213, 47 N.W. 266, 9 L. R. A. 683; Sherwin v. Gaghagen, 39 Neb. 238, 57 N.W. 1005; Coykendall v. Ladd, 32 Minn. 529, 21 N.W. 733; Manson v. Phoenix; 64 Wis. 26, 54 Am. Rep. 573, 24 N.W. 407; In re New York Economical Printing Co., 110 F. 514, 49 C. C. A. 133; In re Sewell, 111 F. 791; Folsom v. Peru Co., 69 Neb. 316, 111 Am. St. Rep. 537, 95 N.W. 635.)

A chattel mortgage of a stock of merchandise, providing for retention of possession by mortgagor and sale of goods and the use of proceeds until default, is valid as between the parties, and, when the mortgagee takes possession on condition broken, his title becomes complete as against general creditors. (Thompson v. Fairbanks, 196 U.S. 516, 525, 25 S.Ct. 306, 49 L.Ed. 577; Fisher v. Zollinger, 149 F. 54, 79 C. C. A. 76.)

If part of the goods were not covered by the mortgage and they were commingled with goods that were covered by the mortgage, it was the duty of Van Blaricom or his representatives in the bankruptcy proceeding to point out the goods which were claimed not to be covered by the mortgage. (Hawkins v. Spokane, 3 Idaho 650, 33 P. 40; Jones on Chat. Mort., 2d ed., secs. 481, 482; Pingree Chat. Mort., sec. 126; Willard v. Rice, 11 Met. 493, 45 Am. Dec. 226.)

Even if the mortgage were invalid as against the plaintiff, the defendant Rogers has a right to setoff, and plaintiff at most could only recover the difference between the value of the property seized and the indebtedness due Rogers from Van Blaricom. (Jones v. Annis, 47 Kan. 478, 28 P. 156; Burton v. Randall, 4 Kan. App. 593, 46 P. 326; Jacobson v. Aberdeen Pkg. Co., 26 Wash. 175, 66 P. 419.)

G. F. Hansbrough, and Hawley, Puckett & Hawley, for Respondent.

"When jurisdiction in bankruptcy attaches, which it does as soon as the petition is filed, it extends over the bankrupt and his estate, and all parties and questions connected therewith. The filing of the petition is a caveat to all the world, and is in effect an attachment and an injunction." (Love-land on Bankruptcy, 76; Bankrupt Act, sec. 1, clause 10; In re Rodgers, 125 F. 169, 60 C. C. A. 567.)

There must be something more than a naked stipulation in a chattel mortgage permitting the mortgagor to remain in possession of a stock of goods and sell the same and apply the proceeds to the payment of the debt. There must be a strict compliance with the stipulation of the mortgage; otherwise the mortgage is void. (Lewiston Nat. Bank v. Martin, 2 Idaho 734, 23 P. 920; Wells, Fargo & Co. v. Alturas Com. Co., 6 Idaho 506, 56 P. 165; Meyer v. Monro, 9 Idaho 46, 71 P. 969; Byrd v. Forbes, 3 Wash. Ter. 318, 13 P. 715; Wineburgh v. Schaer, 2 Wash. Ter. 328, 5 P. 299; Wilson v. Voight, 9 Colo. 614, 13 P. 726; Leopold v. Silverman, 7 Mont. 266, 16 P. 580; Stevens v. Curran, 28 Mont. 366, 72 P. 753.)

If a mortgage is void for any purpose, it is void for all purposes, and if it is void as to a part of the goods, it is void as to the whole. (Russell v. Winne, 37 N.Y. 591, 97 Am. Dec. 755; Grover v. Wakeman, 11 Wend. 187, 25 Am. Dec. 624; Horton v. Williams, 21 Minn. 187.)

Suffering property covered by a chattel mortgage to remain in the hands of the mortgagor for an unreasonable time after default is a fraud per se, not open to explanation. (Reed v. Ames, 19 Ill. 594; 9 Cent. Dig., tit. "Chattel Mortgages," sec. 377.)

Where a bankrupt on the eve of his bankruptcy fraudulently sells and delivers goods to one of his creditors, the assignee may disaffirm the contract of sale and recover the value of the goods in trover, in which case the creditor cannot set off his debt. (Benoist v. Darby, 12 Mo. 196; Bankrupt Act, sec. 68; Brandenburg on Bankruptcy, 3d ed., p. 723.)

AILSHIE, C. J., SULLIVAN, J. Sullivan, J., Stewart, J., and Ailshie, C. J., concurring.

OPINION

AILSHIE, C. J.

This action was commenced in the district court by Albert T. Ryan as trustee in bankruptcy of the estate of Peter B. Van Blaricom v. Walter A. Rogers and Peter A. Steers, as sheriff of Bingham county. Plaintiff sought to recover the sum of $ 3,000 alleged to be the value of a stock of merchandise which he claimed belonged to the estate of the bankrupt and which had been wrongfully converted by the...